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CoverStory
Co v er St o r y

Fast facts some of these banks began building the infrastructure
needed to bring payment card processing back in house.
• Twenty-five years ago, The Green Sheet published a report on the Chase was the first to do so, creating Chase Paymentech in
state of POS terminals. At the time, there were 13 manufacturers of 2008. BofA followed in 2019.
standalone dial-up POS devices. Today, two of those brands remain: From knuckle busters to mobile & contactless
Verifone and Lipman.
The global POS terminal market was valued at $94.4
• In 1986, the installed base of POS terminals in the United States was billion last year and is expected to continue growing at
50,000, according to Green Sheet estimates. By 1990, that number a rate of 6.1 percent between now and 2030, according
ballooned to 5.2 million. Today, there are an estimated 10 million to Grand View Research. Traditional, countertop POS
devices dominate, accounting for nearly 62 percent of
POS terminals installed domestically, according to the software global revenue. Hardware includes card and network
company GAO Research. devices, barcode scanners, cash drawers, receipt printers,
tablets and monitors. Grand View said it expects mobile
• In 2008, the average tender time for a credit or debit card was 48.4 POS to be the fastest growing segment between now and
seconds, compared to 28.5 seconds for cash and 12.5 seconds for 2030.
contactless payments, according to the Food Marketing Institute.
By most estimates, today the entire process, from the time a credit/ Almost as soon as terminals started popping up in stores,
debit card gets swiped/dipped until a receipt is produced, takes two demand emerged for mobile and contactless payment
acceptance. Contactless payments—being able to make a
to three seconds. Contactless payments take even less time. payment without a physical contact between the payment
• Fraud goes where the action is. Case in point: in 2000, online reve- card and the terminal—can be supported using a range of
nue losses due to fraud totaled $1.5 billion, CyberSource reported at technologies, including radio frequency (RFID), near field
communications and QR codes.
the time. This year, ecommerce merchants worldwide are expected
to lose $41 billion to online fraud, according to Juniper Research. The first use of RFID for payments was not a bankcard, but
the ExxonMobil Speedpass, introduced in 1997. Motorists
Now managed by the PCI Security Standards Council, typically used a key fob or a transponder affixed to their
PCI has evolved with the industry to create standards vehicle's rear window to communicate with the pump.
encompassing these processes and far more. Today, as cars become more connected, some consumers
are making payments using dashboard screens. Analysts
Banks exit the business at J.P.Morgan predicted in a recent report that in-vehicle
payments volume would hit $86 billion by 2025.
"The original value prop for the merchant was that using
the machine would lower their rate," recalled industry For the most part, mobile and contactless payments
veteran Don Apgar. When merchants used knuckle were experimental in the 1990s. Ferne Glemby, director
busters to imprint card data after checking the card of business development at CardPlus Empower LLC,
number against a paper list (warning bulletin) of closed recalled for The Green Sheet in a 2021 interview how her
and stolen card accounts, they paid about 4 percent of the first experience setting up a mobile terminal was at a
ticket to the bank that "acquired" those charge slips. Going theater in 1999. The setup consisted of a hefty Hypercom
electronic dropped that rate down to 2 percent. T77 card reader connected to a car battery atop a rolling
cart. "We pieced together mobile terminals, car batteries
But the advent of electronic processing required extensive and manual imprinters that we called knuckle-busters,"
infrastructure investments that banks weren't inclined to she said.
make. So, Apgar noted, the banks forged "sponsorship"
deals with independent processors and served as card- In recent years, both Visa and Mastercard have developed
brand guarantors of the processors' merchant portfolios. technologies that let businesses accept payments from
"This was never meant to be an industry," he said. "It was contactless cards or mobile devices using their own mobile
only supposed to be a stop gap" until banks could take devices. Mastercard calls its product Tap on Phone; Tap to
back the business. But once residuals were introduced and Phone is the moniker Visa uses.
the ISOs and processors began accumulating that money,
there was no turning back, Apgar added. The mobile payments used today were conceptualized
and rolled out by smartphone manufacturers beginning
Reflecting on this history, Musante said, "The ISO has in 2011. Apple, alone, has more than 500 million Apple
changed this business." Pay users worldwide. The company also claims that Apple
Pay is used in 88 percent of mobile wallet transactions.
In the 1990s, many of the largest banks—JPMorgan Chase, (Mobile wallets are digital wallets consumers use to store
Citibank, Bank of America and Wells Fargo among them— credit and debit cards.) In 2022, 12 percent of U.S. POS
formed joint ventures with leading processors, such as First transactions were classified as mobile; in 2017 it was just 3
Data (now Fiserv) to sell card processing. More recently, percent, according to the website Statista.
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