Payments-terminal makers are fighting a war on at least two fronts.
One adversary wants to make terminals obsolete by replacing them with card readers that plug into mobile phones or electronic tablets. The other would make stand-alone terminals irrelevant by incorporating payment transactions into point-of-sale systems tied to personal computers.
But no one will succeed in banishing the countertop terminal anytime soon, says Scott Henry, director of North America product marketing at VeriFone Systems Inc.
In the past two or three years, the San Jose, Calif.-based terminal maker has seen a reversal in the movement toward incorporating payment transactions into POS systems, Henry tells ISO&Agent Weekly.
It makes sense to separate electronic transactions from other POS functions because payment terminals are more secure than the PCs used as cash registers, he says.
VeriFone has created technology that serves as a bridge between payment terminals and POS devices, protecting consumer data but allowing exchange of less-sensitive information, such as inventory data.
“People are trying to get payments out of it,” Henry says of POS systems.
Meanwhile, as payment cards shift to EMV in the United States, some POS systems makers may find themselves unprepared to deal with the standard, Henry says. That was the case when EMV came to Canada and provides another argument in favor of using terminals to separate transactions from other POS functions, he maintains.
But even if terminal-makers are winning the struggle against POS systems that would engulf them, they face disruption from card readers that plug into mobile devices.
Mobile payments pose a threat instead of an opportunity for terminal-makers, according to an April 4 analyst report from Gil Luria of Los Angeles-based Wedbush Securities LLC.
The Square Inc. card reader and similar devices will “circumvent the traditional terminal, eventually slowing the terminal market from double digit growth to more ATM-like mid-single-digit growth,” Luria’s report said.
Visa Inc. has indicated publicly that it may begin accepting some of Square’s mobile-to-mobile transactions as “card present,” thus lowering interchange rates, Luria wrote.
But VeriFone is meeting some of the challenges of mobile payments by entering the category itself, says Henry.
In November, the terminal maker bought Global Bay Technologies, a mobile payments software provider. The technology it acquired in the deal has enabled VeriFone to help C. Wonder, a New York-based women’s apparel and accessories chain, do away with POS stations.
Instead of three or four fixed registers, the C. Wonder stores use 15 to 20 Apple iPod Touch devices equipped with VeriFone’s PAYware Mobile Enterprise, according to the VeriFone website.
The software enables sales associates to engage in “e-tailing,” which includes ordering out-of-stock merchandise from the store’s catalogue and conducting transactions anywhere in the store, thus reducing checkout lines, Henry says.
That software is designed for large retailers but could shed some of its functions and thus find its way down to small merchants, he notes.
“VeriFone doesn’t sit idly by on the sidelines while changes are occurring in the industry,” Henry says. “We’re aggressive about going into new markets and helping to shape the future of payments.”
