The reason that what you/I would call hardware is required for PIN Debit
transactions is, truly, nothing more than a requirement from processors for
keyed firmware. If that requirement wasn't in place, the process of
transaction encryption could easily be done “on the wire”.

I think the bigger issue…and that to which I refer when I speak of
hardware vs. software….is the question of “intelligence”. It's sort of a
poor choice of words, but the best I can come up with at present.

The traditional terminal device was “it”. The end-all/be-all of acceptance
methodologies. Over time, the software based acceptance methods (be they
online, hosted, or local) were positioned as value-add for the features they
provide. And yet, there is still a benefit (financially) in performing a
swiped transaction.

So you leverage a USB card swipe. Is that hardware? Yes…but it is
hardware in the same fashion that a keyboard is hardware. Hardware, of some
sort, is required to run and interact with software.*

PIN Debit is a great example. I need a certified PED if I'm going to
perform PIN Debit transactions in a safe/compliant fashion. The hardware,
however, is truly just an encryption and input device….designed to
interact with the software that is providing connectivity, routing,
transaction qualification, and business management functions.

* At least until the Google OS Brain implant is released

The reason that what you/I would call hardware is required for PIN Debit
transactions is, truly, nothing more than a requirement from processors for
keyed firmware. If that requirement wasn't in place, the process of
transaction encryption could easily be done “on the wire”.

I think the bigger issue…and that to which I refer when I speak of
hardware vs. software….is the question of “intelligence”. It's sort of a
poor choice of words, but the best I can come up with at present.

The traditional terminal device was “it”. The end-all/be-all of acceptance
methodologies. Over time, the software based acceptance methods (be they
online, hosted, or local) were positioned as value-add for the features they
provide. And yet, there is still a benefit (financially) in performing a
swiped transaction.

So you leverage a USB card swipe. Is that hardware? Yes…but it is
hardware in the same fashion that a keyboard is hardware. Hardware, of some
sort, is required to run and interact with software.*

PIN Debit is a great example. I need a certified PED if I'm going to
perform PIN Debit transactions in a safe/compliant fashion. The hardware,
however, is truly just an encryption and input device….designed to
interact with the software that is providing connectivity, routing,
transaction qualification, and business management functions.

* At least until the Google OS Brain implant is released