VAR Develops RFID System For 7-Eleven and EDS

Chuck Lau, president of VAR Telenexus (Richardson, TX), knows RFID (radio frequency identification) technology. After all, his company has been specializing in RFID since 1994. Lau also knows the importance of developing relationships with large integrators such as Electronic Data Systems (EDS) (Plano, TX). Telenexus worked with EDS on an electronic meal ticketing application in Brazil and an electronic ticketing system at Southern Methodist University (Dallas). These experiences also led to another RFID project with EDS' client 7-Eleven (Dallas).

The Value Of Partners With National Accounts
Telenexus developed a virtual instant payment (VIP) system that employs Texas Instruments (TI) (Plano, TX) 13.56 MHz RFID technology. The VIP system includes a card terminal reader and the smart cards that have built-in TI chips and antennas. Users of the system can charge their cards with any amount of money at a participating bank or credit union. They use the cards to quickly check out at retail stores by moving a card within three inches of the store's VIP terminal. The terminal is connected to a VIP server that verifies the funds for purchases and approves transactions. The amount of a transaction is automatically deducted from the card.

"We marketed the product to EDS which in turn marketed the concept to 7-Eleven," Lau explains. "The goal of VIP is not to replace the credit card and cash transaction system, but to augment it with a system which is both convenient for the customer and cost-effective for the store owner."

Although VIP is a new type of technology for 7-Eleven, the company quickly realized the advantages of this RFID-based solution. With a credit card payment system, a customer has to wait for approval and sign the printout. This process can take a few minutes to complete. Furthermore, 7-Eleven has to pay a credit card company a percentage of each transaction. "The VIP system also has the capability to enhance customer loyalty through purchase discounts or cross marketing other products," Lau adds.

Integrate RFID With Point Of Sale
Telenexus and EDS tested the VIP system at 7-Eleven stores in Dallas and in Plano, TX. Two readers were sold for each of these locations and 100 cards were distributed to EDS and 7-Eleven employees. The employees loaded their cards with funds from their bank accounts or credit cards through a web site built for the VIP system. "For this proof of concept pilot, the system was connected via frame-relay networking to an EDS server," Lau explains.

EDS used Microsoft's IIS (Internet Information Server) Web server and TCP/IP (an open computer communications language) interfaced to a Microsoft SQL Server database to manage the transactions. Telenexus used embedded C code for the terminals' software and a specialized TCP/IP code.

Promise Retail Customers Quicker Transactions
Lau states the VIP system requires almost no training for a store's managers and clerks. "Essentially, the RFID reader works just like a credit card reader, but it can complete a transaction in less than a second," he says. "Furthermore, we can install this system in three hours or less, which limits the amount of interruption to a store's operations."

According to Lau, the cost structure of the project remains confidential during the testing phase. However, he does expect a VIP system to cost each store less than a credit card transaction system.