VeriFone Brings Point to the U.S. as Part of a New, Managed-Payments Offering

More than 18 months after acquiring Point, a Sweden-based provider of payment gateway solutions to merchants, point-of-sale terminal maker VeriFone Systems Inc. announced Monday that it will roll out the service to U.S. merchants beginning this fall.

VeriFone intends to offer Point as a managed service through independent sales organizations and independent software vendors that sell direct to merchants to help merchants more easily administer the growing array of payment, loyalty, and rewards options they can offer consumers at the point of sale. Through Point, merchants will be able select the payment and value-added applications they want to offer through a direct link between VeriFone and their transaction processor using an administrative portal.

“While there has been a lot of innovation in payments the past several years, such as mobile wallets and social-payment schemes that are adding to the complexity of managing payment applications at the merchant level, many merchants are tightening their belt when it comes to information-technology spending,” says Brent Phillips, director of payment services, product marketing for VeriFone. “We see Point as an opportunity to provide a managed service that integrates the growing components of payments and value-added services around them for merchants.”

San Jose, Calif.-based VeriFone’s initial target market for Point will be mid-tier and small merchants in the restaurant, quick-service restaurant, and retail industries. Such merchants often don’t have the personnel to keep abreast of POS technology changes.

“Smaller retailers in particular are less inclined to manage their own POS infrastructure as it becomes more complex to integrate new applications because they lack the resources to perform the necessary integration, so this service makes sense for them,” says analyst Gil Luria, managing director for Los Angeles-based Wedbush Securities.

Although Point itself is new to the U.S. market, the core technology behind it is not much different from the technology VeriFone has used for years to allow merchants to perform remote device configuration, key coding and data encryption, Phillips adds. VeriFone acquired Point in late 2011 for about $1 billion.

VeriFone, which has already launched two pilots for Point in the U.S., will charge merchants a monthly and per-device subscription fee. Fees will vary based on the combination of services. Merchants will have the option of selecting preconfigured packages of services or doing so on an a la carte basis and adjusting them as needed.

“In Europe for example, a merchant may opt to pay a base rate for a terminal and then choose to add a loyalty application and NFC [near-field communication] acceptance for an additional cost,” says Luria. “It’s a way to reduce upfront POS technology costs for merchants by allowing them to pick and choose what they want, when they want it.”

Merchants opting for Point will need new terminals as the service is not compatible with VeriFone’s existing installed base. As part of its sales strategy, VeriFone initially is targeting merchants that are entering the terminal replacement cycle. “We are also looking for ways to work with merchants that have just completed their upgrade cycle,” says Phillips, who adds that Point will be compatible with tablet computers and other mobile devices in future releases.

VeriFone plans to distribute Point to merchants through ISOs and other partners. “We want ISOs and ISVs to understand the value of Point and that is available to add to their portfolio,” Phillips says. “We understand that ISOs want to manage the payment relationship with their merchants and we want to provide them with components to do that through Point.”