Q&A: Some questions on Payment Terminals

From the Mail Bag:

“I have a couple of questions you can help answer. Is it normal for a manufacturer to program POS terminals themselves? I have received contradicting answers to this question. Also, from the terminal, the [encrypted] cardholder information is sent to a processor. Do processors possess unique internet addresses that they give to the merchant to where the terminal can send this information?”

Great questions – let me take a stab at answering them:

“Is it normal for a manufacturer to program POS terminals themselves?”

It really depends – There are two models in play here, a) you can pay a terminal manufacture to development a terminal application, b) terminal manufactures also generally will sell SDKs, Software Development Kits, as well as required or optional training courses for independent developers to write payment applications for. From my personal experience, we have worked with both terminal manufactures as well as independent developers, as well as wrote very few in house.

” Also, from the terminal, the [encrypted] cardholder information is sent to a processor. “

This is true in certain situations and depending on the application, terminal, and communication methods. Most dial terminals send cardholder information in the clear across a private dial line. Many IP/SSL terminals will just use SSL encryption as a transport mechanism for encryption/security. More recent generation of terminals and those that implement End-to-End Encryption (E2EE) or Point-to-Point Encryption will use both a data level and transport level encryption/security. Our message specifications and when we can enforce it, we always try to use tokenization, or surrogate numbers for subsequent transactions (Refunds, Captures, Voids, Reversals, – do not require the full PAN to be passed in many of our systems that we develop)

“Do processors possess unique internet addresses that they give to the merchant to where the terminal can send this information?””

Payment Processors and/or payment gateways will provide either dial 800 numbers for dial payment terminals or an IP address or https/SSL based URL for IP/SSL based terminals to send transaction data. OLS has integrates to various dial concentrator devices/networks – Hypercom NAC, TNS, HB.Net, now Phoenix Managed Networks, for Dial delivery. We have developed our own secure SSL Transaction Servers with various interface options for our customers, IP SSL Sockets, HTTPS Post, RESTful as well as SOAP based web services.

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