Ingenico to Buy Hypercom’s U.S. POS Business in Prep for NFC
France-based point-of-sale terminal vendor Ingenico today announced it has agreed to buy the U.S. POS terminal business of competing vendor Hypercom, in anticipation of NFC rollouts.
Ingenico said it will pay $54 million in cash for the Hypercom U.S. business, which POS terminal maker VeriFone is divesting as part of its $485 million purchase of Hypercom. In 2010, the Hypercom U.S. POS terminal business had sales of about $61 million. VeriFone will keep Hypercom’s nonpayment U.S. terminal networking products.
The acquisition helps Ingenico stay competitive in the U.S. market, where its chief global rival, VeriFone, boasts a commanding 60% market share. Both companies see the United States as a promising market for terminals that support contactless payment and other applications on NFC phones. Such huge players as Google and mobile operators AT&T and Verizon Wireless will be pushing NFC-based mobile commerce and are recruiting merchants.
"The acquisition of Hypercom U.S. business is a major step in our strategic development notably aimed at accelerating the adoption of contactless NFC technology," Philippe Lazare, CEO of Ingenico, said today in a statement, adding: "This will enable us to accelerate our presence in the U.S. through a promising combination of innovative product offers, expertise and extensive customer base."
Ingenico last month announced that 21% of terminals it shipped to merchants in 2010 supported contactless, up substantially from 2009. The terminals shipments were not only to U.S. merchants. The vendor noted in the same announcement that its new Telium line of terminals supports additional value-added NFC applications, such as couponing, loyalty and other rewards programs.
Last week, U.S.-based contactless reader and NFC software and services supplier Vivotech announced it had also approached VeriFone to talk about acquiring the Hypercom U.S. payment assets. It would have helped Vivotech expand into the POS terminal market and compensate for lost business with VeriFone. VeriFone is supplying its own contactless readers for its POS terminals.
Only about 2% of the approximately 7 million card-accepting merchants in the United States are equipped to handle contactless cards or phones. If NFC takes off, POS terminal vendors believe they will see a thriving business not only for hardware, but for software and services for payment, couponing, loyalty and other mobile-commerce applications.
In addition, U.S. banks are coming under increasing pressure to migrate their magnetic-stripe cards to more secure EMV chip technology. Although the banks have not said they would make the move, if they did, it would represent a boon to POS terminal makers.
Among other things Ingenico gets with the Hypercom acquisition are valuable sales channels to U.S. banks and multilane retailers. All told, only 15% of Ingenico’s $1.2 billion in sales in 2010 were to customers in North America.
The vendor said it appointed Thierry Denis as president of Ingenico North America, reporting to Lazare. He will handle the integration of the Hypercom payment business into Ingenico.
Ingenico said the acquisition, which is subject to "certain closing conditions," would be completed just before VeriFone’s purchase of Hypercom is finalized. That is expected to happen in the second half of this year.