VeriFone Adapts Its Mobile Strategy for Stationary Stores

VeriFone has made several attempts to become a major player in mobile payments. A few months after altering its strategy with its second mobile card reader, the terminal maker says it is still learning.

"We're trying to figure out where people [are] and where mobile fits into the merchant experience," says Sandeep Bhanote, vice president and general manager at VeriFone.

When Square came on the scene in late 2009, VeriFone's first attempt at mobile card acceptance, Payware Mobile, offered a more traditional approach to payments in a mobile package. Though VeriFone sold the device directly and, eventually, in Apple stores, it also tried to maintain existing ties to independent sales organizations and processors.

VeriFone launched its Sail reader a year ago, taking more of a focus on micro-merchants. It sold that business' assets by the end of 2012.

VeriFone's latest approach focuses on merchants that want to use mobile devices as part of a sales process that also involves a stationary point of sale terminal.

For example, Guess, an American clothing seller, uses VeriFone's iPad application to help shoppers order products unavailable in-store.

Shoppers are "happy because rather than leaving the store empty-handed they know they're going to get the product they want," says Michael Relich, executive vice president and global chief information officer at Guess. "It helps us because rather than send the customer out we can send the item immediately without fear of they'll get distracted or waylaid by another store."

VeriFone's iPad application has "been a tremendous hit with a lot of apparel retailers that can't stock every style and color in stores," Bhanote says. The devices can also display advertising and promotions.

Guess also uses VeriFone's MX870 terminal, which has a large screen for displaying marketing and promotions, says John Gutierrez, manager of store systems at Guess, in an email. The devices are sturdy and have a low failure rate, and "the biggest issue is that the pens are damaged by kids who like to yank on them," Gutierrez says.

VeriFone, which is seeking a new CEO, has struggled recently after its stock plummeted and it disclosed it may have made prohibited deals with Iran. Its approach to mixing mobile devices with traditional retail settings could help.

"Consumers will be motivated by offers and loyalty integrated into the mobile solutions," says Gil Luria, an analyst with Wedbush Securities. "Many savvy retailers are trying to integrate a multi-channel approach." 

VeriFone recently promoted internal candidates to newly-created COO and regional president positions.

"VeriFone is still on a path to generating more revenue from recurring services, but has had to slow down the pace of transition in order to fix the core product business," Luria says. 

Correction: VeriFone's iPad technology is a software application, not a kiosk.