Monday, December 17, 2012

VeriFone Backs Away from Direct Merchant Acquiring

One of the things I appreciate about Digital Transactions is its grounded assessment of payments industry news.  It's reporting of today's climb down from direct merchant acquiring by VeriFone, Digital Transactionss is an example.  The post puts the small retreat by VeriFone into context.  It would have beent tempting to indulge in some schadenfreude because of the company's vociferous pronouncements about Square's launch.

What's more important is VeriFone's revenue growth in North America, the growing percentage of EMV devices it is selling in the US (26% of new terminals support EVM), and its continued focus on its Paymedia software platform.

Here's the story: 

Here's the post on the VeriFone change of direction by the Wall Street Journal's Tricia Duryee.

No one will be particularly surprised at VeriFone's choice to abandon the micro-merchant market.  Given the cost of reaching them, their tiny transaction volume, and higher risk profile, there's no way it's a particularly profitable venture. Square surely cannot be making money on its base of micro-merchants.  Its journey toward profitability will be from the set of larger merchants it's now taking on, more deals like Starbucks, and the second phase opportunity of selling marketing services to those retailers.  

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