he Green Sheet Online ISO Forum was abuzz in mid-January with news concerning AT&T's announcement that it was pulling out of the Cellular Digital Packet Data (CDPD) network marketplace. How will this affect the wireless POS space? How will it impact ISOs? What do the merchants stand to lose?

We posed these questions to the GS Advisory Board, and the consensus, at first glance, made sense: "For us there is none [no effect] since there are plenty of other wireless providers that give us the service we need."

However, this isn't the full story. CDPD, a data-transmission technology developed for use on cellular phone frequencies, is one of many wireless-data networks available in the U.S. marketplace, which includes Mobitex by Cingular and DataTAC by Motient. The primary obstacle to entering the wireless POS space in the domestic market is a lack of standards, according to VeriFone's Michelle Graff.

"VeriFone is happy to report that it has not deployed any wireless terminals conforming to CDPD communications," Graff says. "When the company was researching wireless technologies a few years ago, it determined that CDPD was a dead-end technology, and the company correctly forecast that CDPD would not be around for the long haul.

"VeriFone determined that investing in CDPD would have resulted in the delivery of terminals that could not be upgraded to the more reliable and robust wireless communication standards that were emerging at the time. The solutions would have become obsolete, forcing customers (acquirers, ISOs and merchants) into an expensive support nightmare."

Michael Grossman, Senior Vice President for Lipman USA, has a different viewpoint. "We've been able to succeed with multiple wireless networks, supplying modems that work with each," he says. "The key to wireless technology is coverage. Lipman's terminals are ready for the new technology. We want our terminals to work everywhere your cellphone works."

Marc Shultz, Vice President of Business Development for U.S. Wireless Data, says that, unlike changing the credit card processor on a terminal involving reprogramming the software, the wireless network configuration is a hard-wired hardware issue. A POS terminal is able to communicate with only one wireless network and cannot be changed through an upgrade.

For all POS terminals currently serviced via the AT&T wireless CDPD network, the effect of AT&T's decision is immediate obsolescence in AT&T territories unless there is another CDPD provider in the area. CDPD terminals will be able to continue to operate in other geographic areas serviced by different CDPD carriers, including Verizon and ALLTEL.

"U.S. Wireless Data offers a multitude of turn-key wireless payment solutions for the electronic payments industry using Cingular, Motient, CDPD, Nextel and satellite networks," says Daniel Lamb, Director of Marketing for U.S. Wireless Data. "Because there has never been one single wireless network that provides truly ubiquitous coverage in the U.S., we have built our Synapse wireless gateway on a latticework of wireless networks. This approach to wireless POS minimizes the impact of AT&T's announcement to our customers."

Where does this leave the leasing companies? If merchants are left holding POS paperweights - non-functional, non-upgradeable wireless terminals - they are likely to default on the lease payments. But herein lies the potential for a negative economic impact.

Can ISOs work with the lease companies to replace this equipment and maintain the revenue streams for all concerned? Can the leasing companies, ISOs and bankcard processors apply pressure on the communication networks to standardize while moving to the next-generation CDMA and GSM/GPRS networks? Perhaps this is an agenda item for the new ETA lobbyists in Washington, D.C.?

"VeriFone built its Omni 3600 terminal to support CDMA or GPRS communications - technologies that are more reliable and deliver improved price performance," Graff says. "CDMA and GPRS use IP technology, a universal standard that results in a more flexible solution than CDPD. Additionally, the Omni 3600 securely runs payment and value-added applications and supports the latest in 3DES security standards."

These next-generation wireless networks, currently operational in Europe, can offer a standard format for U.S. adoption. This would enable all of the wireless equipment suppliers to benefit from a stable network environment.

Certainly there are now thousands of wireless terminals out there that need to be replaced. This is a real opportunity for the ISO community but one that must be handled with care.

Visa and MasterCard are in the hot seat again. The associations might have to refund $500 million to consumers for not properly disclosing currency-conversion fees charged on purchases made abroad or on foreign-based Web sites using Visa- and MasterCard-branded credit cards.

California State Court Judge Ronald M. Sabraw's preliminary ruling on a lawsuit against Visa International, Visa USA Inc. and MasterCard International is sealed, but the Wall Street Journal reported the judge sided with the plaintiff's claim that Visa and MasterCard should have required their card issuers to clearly divulge fees charged for currency conversion.

The judge didn't prohibit charging the fees but did say that Visa and MasterCard should refund the cardholders and in the future require their member banks to clearly show the surcharges on statements.

When a cardholder makes a purchase overseas, Visa or MasterCard charge an exchange rate plus 1% to their member banks. The banks pass that charge on to cardholders, and many of them add on additional fees of their own, ranging from 2% to 4%.

The complaint is that many of these banks do not disclose fees they charge for the currency conversion beyond the agreement the cardholder receives in the mail with a new card.

On their monthly statements, many cardholders just see a comparison of the amount owed in foreign currency and that figure converted into local currency.

Visa might face the brunt of the California state judge's decision. Because Visa International's headquarters are in Foster City, Calif., Visa would be required to refund money to all of its cardholders nationwide, while MasterCard only would be required to reimburse cardholders residing in California. The banks that own and fund the associations might have to pay some of the money, too.

Judge Sabraw did not state an exact number Visa and MasterCard would have to pay, but the plaintiff's attorneys, Milberg Weiss Bershad Hynes & Lerach LLP, estimated that $500 million represents five years of conversion fees from 1996. The judge is expected to make a final decision soon based on review of responses to his initial ruling.