This year, as holiday shoppers line up at Toys “”R”” Us to make their purchases for those who have been naughty and nice, they’ll be able to do so using a shiny new PIN pad system built on the latest in connectivity toys — an IP telephony backbone.

Toys “”R”” Us (Canada) Ltd. is replacing its 10-year-old

point of sale (POS) terminals with K23 payment terminals from Keycorp Ltd. One of the main reasons for the move was that the new terminals, which are used to process credit card and debit transactions, are IP- and smart card-enabled, says Gus Faviere, director of IT at Toys “”R”” Us in Concord, Ont.

The telcos are getting away from deploying new implementations on the X.25 communications protocol, so the toy retailer wanted to move over to an IP base. However, the older terminals would have made it difficult, if not impossible to support IP, he says.

Cost savings was just one of the drivers for the move, he says.

Connectivity on the newer systems to and from the bank can be monitored remotely, Faviere says. With the older system, only a phone call from the store would let the IT staff know there was a problem. Now the help desk will get paged on a problem before the store calls.

POS terminals connected to IP networks have significant advantages over the old X.25 system, says Roberta Fox, president and senior partner of Fox Group Consulting in Markham, Ont.

It’s like replacing a pebble road with something that’s even bigger than a 10-lane highway, she says. Some companies are taking advantage of the extra bandwidth to run other applications, she says. One retailer she knows of uses its IP network for transaction processing during the day and for e-learning in off hours.

And it’s a vast improvement on older systems such as dial-ups, she says.

“”It’s always on, always connected. That’s a big benefit.””

James Hicks, vice-president of product development and marketing for Toronto-based Global Payments Canada, which does the transaction processing for Toys “”R”” Us, also sings the praises of IP networks.

“”IP is an exciting thing that will continue to evolve over the next few years,”” he says.

It’s much faster than dial-up, which can take 10 to 20 seconds, depending on the transaction. IP can do a credit card transaction in four or five seconds.

The only way to get anywhere near that prior to IP was leased lines. But IP is much more of an international standard versus a proprietary Canadian leased line scenario, Hicks says.

“”So, it’s more open.””

Also, you can do a lot more with an IP solution.

“”With a leased line, you’re pretty much going for a transaction, and that’s it, but with IP, you can use that same connection to maybe do your inventory. You can use it for other things.””

Toys “”R”” Us also wants to be prepared for future technologies, such as smart cards, as they enter the marketplace, Faviere says.

“”As that technology becomes prevalent, we have that support built in.””

The cost of the newer technology is much lower than the cost of the original, Faviere says.

“”Because (the new terminals) cost (two-thirds less than) the old pads, we were able to build in more redundancy. We were able to afford to have more spares on hand.””

The new terminals will also give customers the ability to swipe the cards themselves — a feature Toys “”R”” Us hasn’t turned on yet, but plans to. Customers will likely feel more comfortable if they don’t have to hand their cards over to someone else, he said.

Toys “”R”” Us also took design and usability into account when choosing a new PIN pad system, Faviere says. Though this may seem like an unimportant factor, it’s not, he says.

The terminals have a long swipe on the card, giving it high reliability in reading cards, according to Paul DeRosse, managing director of Keycorp Canada in Woodbridge, Ont.

“”It has a lot more memory to it. So if there’s additional functionality they wanted to add to it, they can.””

The new systems are also easier to maintain and support, Faviere says. The terminals can be replaced quickly and can be up and running in a matter of minutes rather than hours, he says. It’s just a matter of unplugging the older ones, plugging in the newer ones and phoning the help desk for the authorization number as a security measure.

The K23 terminals are just a part of a larger plan for Toys “”R”” Us’ POS system.

The company also put in a new gift card system which is load-activated at the point of sale. Unlike many companies that sell pre-loaded gift cards of $10, $25, $35, etc., customers determine how much they want to put on their cards when they purchase them. This gives customers more flexibility, Faviere says.

The company is also looking to further integrate its POS system with its baby registry program so that it can connect with the back end applications in real time. If someone buys a gift from a registry list, and five minutes later, someone else tries to buy the same gift off the same list, the system will indicate the gift has already been purchased.

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