ditor's note: Every ISO has turnover in the staff that creats an ongoing need for quickly educating new hires on the nature of the POS funds-transfer business. This column is dedicated to serve this need. Eric Thomson can be reached at etprosc@attbi.com.

Evolution of Payment at Point-of-Sale
Author: Ingenico
Date: 2002
Size: 20 Pages
Relevance Rating: High
Web Address: http://www.ivicheckmate.com/PDF/wp_evolution.pdf

This white paper represents a good starting point for understanding POS financial transactions from the perspective of both store operations and the consumer. As you might expect from a paper authored by a major terminal manufacturer, there is considerable emphasis on what to expect from current hardware in terms of security, speed, reliability and after-sale support. Your staff will learn some of the early history of retailer card-based transactions, online authorization and, eventually, the emergence of customer-activated terminals for online debit transactions.

Check cards, electronic benefit cards and loyalty cards also are described in layman terms. Paperless transaction from the retailer's standpoint are explained and made possible with digital signature capture, achieve and retrieval. Touch screen terminals are next introduced as part of the evolution of POS terminal transactions, driven by their ease of use and low training costs. These simple devices use ATM-type transaction lead-throughs, taking the store personnel and eventually the consumer on to self-service kiosks.

The document closes with a summary of leading-edge technology components such as smart cards, wireless terminals and biometrics. All in all, it's a very good starting point in your training program for new hires to your organization.

What is Point-of-Sale? What Happens When You Buy with Plastic?
Author: Hypercom Corporation
Date: April 25, 2001
Size: 12 Pages
Relevance Rating: High
Web Address: http://www.hypercom.com/_Documents/_Whitepapers/WhatisPointofSale.pdf

This document takes you down to a level of detail that I would bet most of you reading this document don't fully comprehend. We can thank Hypercom for publishing this document, which contains no self-serving content that I could locate. It's a dry but clear description of what happens when you buy with plastic.

That same transaction may have traveled around the world in order to accomplish this objective - all within an envelope of security and controls that ensure valid transactions are being executed. The fact that this process takes less than 20 seconds to complete and occurs more than 30 billion times a year is quite amazing, especially when you consider that in the time it takes you to read this sentence, more than 5,000 transactions of this type have been processed successfully. What is missing is any description of the settlement process among the merchant and his bank and the acquirer bank and the cardholder bank.

Online Debit
Author: Ingenico
Date: 2002
Size: 16 Pages
Relevance Rating: Medium - High
Web Address: http://www.ivicheckmate.com/PDF/debitwp.pdf

Debit cards are the fastest-growing form of electronic payment for a number of reasons, as explained in this document from Ingenico. It is estimated that the more than 150 million debit cards in circulation will generate close to 9 billion transactions this year. The two forms of debit (offline and online) are described and compared against the costs of alternative methods of payment.

The analysis says that online debit is cheaper for a retailer to handle than every other method of payment except cash. One section of the document compares online and offline debit and concludes that offline is 3 1/2 times more expensive for a retailer than an online debit transaction.

By doing an excellent job of explaining this low-cost, low-risk transaction differential, Ingenico shows how easy it is to cost-justify the addition of a PIN pad to enable online debit transactions. From the standpoint of educating your new hire, the document has very clear process flow charts to diagram both the offline and online debit transactions. Controlling Online Credit Card Fraud
Author: Window Six
Date: Jan. 2002
Size: 10 Pages
Relevance Rating: Medium - High
Web Address: http://www.windowsix.com/whitepapers/Controlling_Online_Credit_Card_Fraud.pdf

This short report does a very good job of introducing the reader to the various types of online fraud merchants are exposed to and suggests precautions to take to minimize losses. The theoretical maximum loss that a cardholder can experience from credit card fraud is $50. When card fraud occurs from online transactions, chances are that the merchant will be the party that absorbs those losses.

The document goes on to explain the three primary types of fraud: organized, opportunistic (e.g., when a waiter records the cardholder's number, expiration date, etc.) and cardholder (e.g., when a cardholder makes a purchase on an authorized card and then claims that the transaction never occurred).

The document goes on to provide 12 recommended precautions to minimize these types of online fraud.

Check Imaging and the Check Conversion Process
Author: VeriFone
Date: 2001
Size: 15 Pages
Relevance Rating: Medium - High
Web Address: http://www.verifone.com/pdf/CheckImaging_wp.pdf

Check conversion appears to be the "next big thing" in the ISO product list, and this overview document from VeriFone explains why. It starts by stating why consumers continue to use checks as their preferred method of payment - second only to cash. While consumers enjoy writing checks, the white paper does a very good job of explaining and detailing the merchant costs of settling this method of payment.

Next, the document goes on to explain the electronic check conversion process with special emphasis on why incorporating imaging into this EFT transaction is so important. A little-known fact is that credit cards experience charge-backs at the rate of one in every 1,000 transactions. Checks, on the other hand, have a return rate of one in every 100 transactions.

Under the NACHA regulations for check conversion, the check is returned to the consumer at the completion of the transaction. Without an image of that check, the collection of a return item is going to be very difficult, if not impossible. This document does a good job of explaining why more and more merchants are going to have check imagers on their checkout lines in the future.

Industry Primer on Smart Cards
Author: Electronic Transaction Association & First Annapolis Consulting
Date: Oct. 2001
Size: 40 Pages
Relevance Rating: Medium
Web Address: http://www.sctn.com/pdfs/ElectronicTransactionsSmartCardPrimer.pdf

No list of introduction documents would be complete without including one of the ETA's reports. This is a rather weighty document containing an extensive amount of research on the history of smart cards, their various types and the technology platform needed to deploy these devices.

The three primary drivers behind the smart card's eventual deployment are also detailed: security features, multiple applications and reduced fraud. There is also a good glossary included in the document for your new employees.