Banking group Nedcor and systems developer iVeri have introduced a credit card system using dual-tone multi-frequency (DTMF) designed to cut costs for small businesses.
Nedcor says the system is targeted at the tourism industry, in particular the owners and operators of bed-and-breakfast accommodation, tour boat operators, curio sales people and other such small businesses that stand to benefit from the use of foreign tourists using their own credit cards.
iVeri CEO Barry Coetzee says the system aims to reduce point-of-sale (POS) costs associated with the standard credit card terminals that often prohibit small firms having one in their business.
"Nedbank has been the sole distributor of iVeri products since 1998. The partnership was formed to meet the demands of African merchants who historically turned away business because the infrastructure required to process credit card payments was either too expensive or simply not available," Coetzee says.
On average, a credit card POS terminal would cost a merchant about R350 to install, plus bank and credit card company fees, which equate to around 4% of the transaction value.
Nedcor and iVeri`s system would cost the merchant R150 to initiate and 35c per transaction, excluding the credit card companies` handling fees.
Coetzee says the Nedcor system has access to its foreign database of lost or stolen cards that is trickle updated every 30 minutes, 24 hours a day.
The technology behind the iVeri Voice is designed to meet emerging trading conditions as identified by Nedbank. The decision was taken to go with DTMF technology because 90% of telephones in the country are able to use it and the system is person-specific rather than telephone-specific.
DTMF is the system used by touch-tone telephones. DTMF assigns a specific frequency (consisting of two separate tones) to each key so that it can be easily identified by a microprocessor.
"We looked at other technologies such as SIM cards (the cards that operate the cellphones), but we soon found that the costs were still too high," Coetzee says.
The point was to develop a system that was business application-driven, rather than one that was technology-driven, he explains.
The system has undergone development for about two years and about 300 small businesses are linked into the system. November will see further functionality introduced with free transaction confirmation SMS messages.
The system is not able to deal with the new smart cards that will begin to be rolled out next year. However, Coetzee says iVeri and Nedcor will make decisions about handling such cards as that market evolves.
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