With its agreement this week to acquire a Silicon Valley software company, Verifone Inc. moved to parlay its leadership in point of sale transactions into a pioneering role in electronic commerce.
Verifone agreed to buy Enterprise Integration Technologies, a five-year- old company that is the founder and manager of CommerceNet, a consortium of more than 120 companies, government, and educational organizations exploring the business potential of the Internet.
As part of Verifone's newly formed Internet commerce division, Enterprise will focus its energies on products that can be used by merchants, consumers, and processors to handle transactions conducted over the Internet.
"Our Internet strategy can be summarized in two words - payment access," said Roger B. Bertman, vice president and general manager of the Verifone division. "Our strategy is to play off the position we already have at the merchant's countertop and offer hardware and software solutions that connect the consumer's personal computer to the payment processing community."
The acquisition, valued at approximately $28 million, did not surprise Verifone watchers. They said the maturity of the terminal market spurred the Redwood City, Calif., company to seek new outlets for growth.
"I think Verifone is very appropriately looking for new business opportunities and is much more interested in being a total solution for their customers rather than just a terminal vendor," said Stephen P. White, managing director of the Atlanta office of Dove Associates Inc., a Boston- based consulting firm.
"It is clear that (Verifone) very much sees itself as a significant player in electronic commerce," he added. "They have some very aggressive product ideas."
Mr. Bertman said the division would develop a speedy, secure pathway from a buyer's PC to a merchant's World Wide Web site, with value being transferred through appropriate payment channels.
Although they said it was premature to talk about specific products, Mr. Bertman and Jay M. Tenenbaum, founder and chief executive officer of Enterprise, who will become a Verifone vice president, did hint at the types of products they hope to develop.
One will be a platform for merchants to connect their Web sites to the payment systems, provide back-end settlement, and help manage inventories.
"We're talking about evolving Verifone's box into a standard unit that is connected to the Internet, connected to the processors, and allowing even smaller merchants to enjoy the same inventory management services that previously only a Wal-Mart could afford because we'll be capturing information at the point of sale," said Mr. Tenenbaum. "It will be a system that does much more than authorize credit card payments."
Verifone also hopes to develop software that will transform consumers' home computers into the equivalent of point of sale terminals.
Mr. Bertman said Verifone is unlikely to circumvent card issuers and offer this technology directly to consumers. The more likely scenario would parallel the relationship Verifone currently has with its merchant- acquiring banks and their retailing customers.
"Banks will take the solutions we develop and then work with individual merchants and individual consumers. The banks are the key constituency through which we will be delivering our solutions."