VeriFone Holdings Inc. wants to turn retail stores' payment terminals into point of sale entertainment centers.

A key player in developing interactive card-acceptance systems for taxis, VeriFone now wants to adapt the same technology for use at the checkout counter.

On Wednesday the company announced an initiative to promote what it is calling "payment-enabled media" — terminals with video screens that can stream news programs or other entertainment, support online features and deliver advertising.

Executives said that showing commercials to people as they wait in line could generate easy advertising revenue for retailers, but analysts warned that it might alienate some customers.

"Retailers acknowledge that there is a downtime as they scan the items, as you are looking at tabloids," Bulent Ozayaz, the general manager of VeriFone's payment-enabled media operations, said in an interview Wednesday.

During that downtime, the interactive terminals "may help them to advertise in-store items or even generate new top-line profit from advertising certain items that do not conflict with their business model," Ozayaz said.

VeriFone announced Wednesday that it had appointed Ozayaz to the newly created post and given him the mission of finding new markets for the interactive payments terminals it has been installing in New York taxicabs since 2007. He was previously the general manager of the San Jose company's U.S. wireless business. VeriFone also said it had recently hired Chris Polos as its vice president of U.S. media sales, another new position. He was most recently director of advertising at the marketing firm Danoo Inc.

Ozayaz said he expects to target initially grocery stores and pharmacies — places where people must wait while their purchases are completed. However, he said the initiative is very new, and the strategy is still evolving.

Adil Moussa, an analyst at the Boston market research company Aite Group LLC, called VeriFone's advertising system "a good idea" but questioned whether the system could work in stores, where people are less interested in killing time and more interested in paying and then going home.

Even companies with massive advertising budgets should be wary "about annoying the customer," if their ads are seen as intrusive, Moussa said. The system could be engaging and effective in the right environment, he said, but VeriFone and its clients will need to make sure they are presenting the right ads in the right places.

VeriFone's taxi terminals are built around a complete computer running Microsoft Corp.'s Windows operating system, which enables the devices to deliver a broad range of information on their built-in, touch-sensitive screens. Riders are presented with the sort of marketing normally seen only online, such as video ads featuring clickable links that people can follow to learn more, as well as games and interactive menus that can summon weather reports or news.

Ozayaz said that many retailers are already using terminals that can support video; these capabilities were added over the past few years when retailers upgraded their machines to comply with the Payment Card Industry Data Security Standard. Merchants will need to do little more than say 'yes,' and VeriFone will be able to switch on the video features and deliver the content directly to the stores' color PIN-pads — the same pads where people enter their PINs or signatures.

"The technology is there," he said. "The infrastructure cost is minimal or none."

(Moussa noted that some people might find the small screens hard to watch.)

VeriFone has already established relationships with advertisers for the taxi terminals, and Ozayaz and Polos said they are trying to attract more partners. Ad revenue would be shared by VeriFone and merchants.

Ozayaz said the system would be running at some large retailers within 12 to 18 months.

VeriFone's first experiments with this technology were in its 2007 deployments with New York City taxis. This year it expanded its system to taxis in Chicago, Boston, Miami, Las Vegas and Washington. The company also said this week that by June it plans to update the machines in New York cabs, using Adobe Systems Inc.'s Flash 10 technology. Polos said the upgrade would make the systems more interactive, and that anything it develops for those machines could later be reproduced at its point of sale terminals.

Taxi rides last an average of 14 minutes, Polos said, and during this time "you're looking to be entertained or distracted … from an advertiser's perspective, it's one of the best experiences you can get."

However, he acknowledged that the experience would be different at the point of sale, where the opportunity to engage consumers may be just a few seconds. "Each retail environment will be different," he said.