A small local company, Digital Radio Networks L.P. of Vienna, reached an agreement yesterday with Visa U.S.A. that could speed up credit card authorizations for millions of consumers across the country.
It also could mean vast new profits and a significant expansion for the three-year-old firm, which now employs only 40 people.
DRN's technology allows a merchant to use speedier radio wave transmissions rather than telephone lines to contact credit card authorization centers.
"We believe this agreement will help us expand into new market segments which have held off from accepting payment cards because of the time involved in processing the authorization," said Gregory J. Holmes, a spokesman for Visa. "That includes fast-food restaurants, cinemas, parking lots and other businesses where speed is a factor."
"This is a very significant deal for DRN," said Stewart Dougherty, executive vice president for sales and marketing for the Vienna company. "By 1995 we expect to be processing 1.8 billion transactions a year. We'll be going from the low millions to billions."
DRN's services currently are used in about 1,200 establishments nationwide, including Olsson's bookstores and the parking lots at Dulles International Airport locally.
As a result of the Visa agreement, the company estimates that its services will be used in about 150,000 establishments by 1995, roughly 20 percent of all the businesses that use the VisaNet authorization network.
Dougherty said DRN expects to have annual revenue "well over $200 million" by 1995.
The company's revenue currently is a small fraction of that, he said.
In addition, he said, DRN probably will grow to more than 100 employees.
With a radio-based system, an authorization takes about six seconds, compared with an average of 25 seconds by telephone, according to Dougherty.
In most cases, he said, radio-based authorizations also cost less.
Every transaction that DRN processes will be routed by radio from the merchant to a DRN radio tower to a VisaNet interchange center in McLean or San Mateo, Calif., which then gets authorization for the purchase from the bank that issued the credit card.
Visa said in a statement that it will launch an aggressive campaign with DRN to encourage the use of this technology.
DRN's Visa agreement comes on the heels of a pact made just two weeks ago in which Fidelity Capital, the venture capital division of Fidelity Investments Inc. of Boston, acquired a majority stake in the company.
DRN currently is the only company nationwide that offers this service because it has a license in the only radio frequency range where the Federal Communications Commission allows credit authorization transactions.
Companies such as utilities and security firms closely guard licenses in this frequency range because of the strong, uninterrupted signals, he said.