The marketplace is beginning to take shape for mobile card readers with the June 29 disclosure that VeriFone Systems Inc. plans to introduce a card-reading accessory for tablet computers this year, one analyst says.
“This version [of the tablet swipe reader] is very finely tuned for national retailers,” Paul Rasori, VeriFone senior vice president of global marketing, told PaymentsSource.
VeriFone’s strategy to tackle the big national retailers at the high end of the market differs from that of relative newcomer Square Inc., which is aiming its mobile-payment device at the gardeners, plumbers and pizza-delivery workers at the market’s other extreme, analyst Todd Ablowitz, president of Double Diamond Group LLC, said in a phone interview.
Square announced a $100 million venture-capital avalanche on June 29, reportedly bringing the company’s valuation to more than $1 billion.
The VeriFone device fits around the edges of a tablet and carries a card swipe on the right, as viewed by a user, Rasori says. The device covers the entire back of the tablet, and there the user finds an LCD screen, a keypad and a 2D bar code reader, he notes, adding that those accessories enable the product to operate as a mobile cash register or as an inventory-control device.
By nearly encapsulating the tablet, VeriFone has “ruggedized” the device, an important consideration because “store clerks may not have much pride of ownership” in the hardware, Rasori says.
Although he declines to reveal names, Rasori says VeriFone has been working with dozens of large national retailers on the product and has found a high level of interest in it.
VeriFone’s emphasis on large retailers and Square’s focus on very small merchants leaves plenty of territory in between for other vendors, analyst Ablowitz says. “A couple of players tend not to dominate such an enormous and local market,” he notes.
In fact, VeriFone said it eventually may make the product available to middle-market retailers that need only some of its features.
The gigantic middle of the market of small restaurant chains and regional retailers also will afford the most mobile-payments opportunities for independent sales organizations and their sales agents, Ablowitz says.
ISOs have established relationships with the great masses of midsize retailers that would help them spread the use of mobile card readers, he says.
However, ISOs have few footholds in the loftiest levels of retailing because national retailers typically deal directly with banks, skipping the intermediary ISO layer, notes Ablowitz.
Likewise, ISOs tend to have few connections with the smallest businesses because their deliveries and house calls have made card acceptance impractical until the recent advent of mobile payments, Ablowitz says.
While mobile payments fits the styles of those wandering merchants, it is making large retailers less stationary, according to Ablowitz.
For several years, retailers have been hailing the “line busting” made possible by dispatching sales associates with hand-held devices to move along a line at the point of sale and check out customers who are standing in the queue.
Nordstrom recently bought 5,000 Apple Inc. iPod Touch devices, and associates have praised the freedom they provide to look up information while talking to a customer instead of having to return to a stationary device to check inventory or shipping dates, Ablowitz says.
Rasori declined to verify whether VeriFone has shipped iPod devices to Nordstrom but did say the company has shipped such versions to some retailers. He also emphasized that the tablet versions would not become available until later this year.
“VeriFone is wisely realizing the nature of retailing is changing,” says Ablowitz. “Tablets change way retailers set up the shopping experience and the payments experience.”
If VeriFone were to remain dependent on stationary payments devices, the company could find itself left behind its competition, Ablowitz says.
“Tablet computing, which didn’t exist in commercial form two years ago, has quickly caught attention,” Rasori says.
VeriFone did not make a formal announcement of the tablet device but began telling reporters about it on June 29, Rasori says.
