Merchants appear to like VeriFone Holdings Inc.’s PayWare mobile-phone payment service on Apple Inc.’s iPhone and their customers are completing big-ticket purchases using the devices.
“What we’re finding with our first class of iPhone users, and there’s many that are up and live, is that these are surprisingly high-ticket transactions, $100 to $200 per average ticket,” VeriFone CEO Douglas G. Bergeron told analysts during a conference call Tuesday to discuss the point-of-sale terminal maker’s fiscal first-quarter results.
But the service’s volume so far is relatively low, not exceeding 20 transactions per month, Bergeron said.
VeriFone would not say how many merchants are using the service. In addition to traditional POS equipment-resellers offering it, Apple’s retail and online stores this month will sell the PayWare module, Bergeron says. About 70 independent sales organizations also are selling PayWare, he adds.
San Jose, Calif.-based VeriFone unveiled PayWare Mobile in December (
Transactions made with Payware Mobile are sent via the iPhone’s Wi-Fi or telecommunications connection to VeriFone’s gateway for routing to appropriate processors.
VeriFone’s suggested pricing plan is a $15 monthly gateway fee and a one-time $49 sign-up fee for merchants with existing merchant accounts. Payment gateways enable online connectivity to multiple processors. Merchants also pay VeriFone 17 cents per Payware Mobile transaction. Acquirers are free to develop their own pricing plans.
Given the low volume of PayWare transactions, Bergeron says VeriFone expects to make most of its money from the recurring monthly fees.
VeriFone posted a $10.6 million profit for the first quarter ending Jan. 31, a reversal of the $182.6 million loss it had in the 2009 first quarter. Revenue also improved in the quarter, rising from $214 million last year to $223.4 million during the first quarter, a 4.4% increase.
VeriFone saw quarterly revenue growth in all but Latin America, where revenue fell from $43.6 million in the 2009 first quarter to $40.6 million, a 6.9% decrease.
Asia-Pacific saw the strongest percentage growth quarter-over-quarter, going from $20.5 million last year to $23.8 million this year, a 16.9% increase.
Revenue from the United States and Canada was $89.6 million in the 2010 first quarter, a 6.9% increase from the $83.8 million for the same period last year.
Revenue from Europe was $69.4 million in the 2010 first quarter, a 5% increase from $66.1 million in revenue for the year-ago quarter.
Analysts generally liked VeriFone’s results.
VeriFone will increase in value, Andrew Jeffrey, an analyst with Atlanta-based SunTrust Robinson Humphrey wrote in a research note, “as the company moves beyond a pure hardware model.” Although VeriFone is in the early stages of its transition, Jeffrey says the company’s hardware business will continue to buoy VeriFone’s near-term results for the next few quarters.
Gil Luria, an analyst with Los Angeles-based Wedbush Securities, also is optimistic about VeriFone.
“VeriFone is well-positioned to regain double-digit growth as continued improvement in the global economy reignites the payment terminal industry,” Luria says.
