VeriFone: New NFC Players to Change Point-of-Sale Landscape

About 25% to 30% of merchant locations in the United States will need to be covered by contactless terminals if service providers and mobile operators hope to get consumers interested in tapping their NFC phones for retail transactions, says POS terminal vendor VeriFone.

Hitting that target–a contactless penetration rate 10 times greater than it is today–will not be easy, but it is achievable in the next 18 to 24 months, thanks largely to planned mobile-payment and mobile-commerce schemes from such new players as the Isis joint venture and Google, predicts Paul Rasori, senior vice president of global marketing at VeriFone.

"There’s a perfect storm brewing (with) Google and Isis alone and their ability to drive a market because of their reach," he told NFC Times. "I don’t think there are two better organizations to test those waters because of their massive consumer reach. They are creating applications that consumers will want to use and merchants will provide them access to."

Isis, a joint venture of three of the four largest U.S. mobile operators, AT&T, Verizon and T-Mobile USA, plans to launch its own payment scheme and other applications on NFC phones next year. Google is building a mobile wallet for its popular Android smartphone operating system, and is expected to roll out retail couponing, loyalty and location-based mobile advertising and marketing services, many of which will use NFC. Payment applications, though probably not issued by Google itself, will also go into the wallet.

Google in Talks with Retail Players
Google has been talking to large U.S. merchants, along with the country’s largest merchant acquirer and processor, First Data, to put its mobile-commerce plan into effect, NFC Times has learned. The Web giant has also been rumored to be in discussions with such POS terminal and reader vendors as VeriFone itself, including possible talks about introducing new types of terminals.

Rasori declines to talk about any discussions with Google or other planned NFC-enabled schemes. But VeriFone, which claims a 60% to 65% market share of the U.S. POS terminal market, could provide an important link for Google’s m-commerce platform with U.S. merchants.

Google’s outgoing CEO, Eric Schmidt, has called NFC combined with smartphone technology a mega-scale opportunity, enabling Google to expand its lucrative Web advertising business to the physical point of sale, where most commerce is conducted.

But there are other prospective players that seek to move their big e-commerce businesses "offline," to the physical point of sale, that could drive merchants to deploy contactless terminals, said Rasori. These include Internet payment scheme PayPal and deal-of-the-day e-commerce site Groupon.

With a range of contactless-mobile applications, the new players could energize a lackluster U.S. contactless payment-card market, which can boast of only about 150,000 merchant locations in the United States nearly six years after the rollout began. That’s fewer than 3% of the U.S. merchant outlets that accept conventional payment cards.

"In any given geography, with mobile phones, 2% to 3% (NFC acceptance), obviously that’s not going to fly," Rasori said. "You achieve 25% to 30% penetration, that becomes interesting to the consumer. Consequently, merchants take notice of people using this in a meaningful way, and the final 70% could happen quickly."

VeriFone’s Evolving Business Model
Of course, VeriFone is angling for business. The company, which had $1 billion in sales last fiscal year and will become the largest POS terminal vendor worldwide with its pending acquisition of the No. 3 supplier, U.S.-based Hypercom, hopes to sell many of the new terminals. It also seeks to offer the expanded terminal software to support the range of services that Google and other new service providers are expected to roll out. 

In fact, the company and its aggressive CEO, Doug Bergeron, see big potential profits in the new mobile wallets and services beyond just terminal hardware. VeriFone calls the planned NFC M-commerce rollouts a "disruptive paradigm shift" and sees them as an opportunity to sell merchants and service providers on bundled services to manage what would become an increasingly complex POS environment.

The bundled services will include maintenance and upgrades. The company might also offer some trusted service management, including TSM services for some applications in the wallets. Rasori, however, said VeriFone does not yet have a TSM partner. And the focus is on the POS terminal.

Calling on Service Providers to Pay
In a rather brash move, Bergeron in a recent press release called on the new NFC service providers–presumably such companies as Google, Isis, as well as the conventional payments players, such as banks and card schemes–to foot the bill for upgrading and maintaining the infrastructure needed for the coming era of NFC m-commerce. This would include the software for the terminals.

"Until retailers are assured of receiving real value from mobile commerce, service providers who stand to gain from either carrier fees, advertising revenue or transaction charges must be willing to bear the costs of this highly disruptive paradigm shift," Bergeron said in a statement.

Without the service providers paying the upfront costs of the infrastructure to manage such smartphone-based retail applications as payments, e-couponing and social networking, these services could go the way of previous alternative-payment schemes that "only succeeded in alienating merchants," contends Bergeron.

Rasori said most POS terminals in the United States already support applications from the four open-loop payment-card schemes. These application have to be maintained regularly, he noted. But add in the new payment and other services and the environment becomes "tremendously complex."

"If you start with Visa, MasterCard, American Express and Discover, and (then) adding Google, Isis, PayPal, Groupon, there could be up to 10 to 12 different applications that need to be maintained," he said. "Our message is, don’t assume that the merchant should or will support the rollout of the infrastructure. It’s in the best interest (of the service provider) to have skin in that game."

Not Giving Away Readers
Rasori said recent reports in some publications saying VeriFone would include NFC in all its new POS terminals, enabling merchants to automatically accept contactless payment, were incorrect. Merchants ordering terminals would have to specify that they want a contactless reader and pay extra.

HEADLINE NEWS

More Transit Authorities and Operators, Including Those in UK, to Support Google Pay

Nov 6 2019

NFC TIMES Exclusive – San Francisco Bay Area transit authority MTC has confirmed to NFC Times that it will support mobile payments with its closed-loop Clipper transit card, including with Google Pay, by the end of 2020.

NFC Wallets Make Up Growing Share of Contactless Payments on London Transit

NFC TIMES Exclusive – Use of NFC wallets continues to steadily increase as part of Transport for London’s landmark contactless payments service, with payments from NFC-enabled smartphones and smartwatches now accounting for 20% of all contactless payments, NFC Times has learned. 

Market Research Firm: Apple Pay Surpasses Starbucks App in Users in U.S.

NFC TIMES Exclusive Insight –Apple Pay, which launched its mobile payments service five years ago this week in the U.S., has so far failed to live up to expectations with the service, either in the U.S. or globally, in terms of users and transactions.

Cubic Strikes Deal with Google to Enable Closed-Loop Transit Payments in Google Pay

NFC TIMES Exclusive Insight – In a move that could enable more large transit agencies to offer NFC mobile payments with their closed-loop transit cards, U.S.-based Cubic Transportation Systems has signed an agreement with Google to integrate contactless transit cards with Google Pay. Among the agencies planning to support the service are those serving Google’s home base in Silicon Valley and the San Francisco Bay Area, as well as the Metropolitan Transportation Authority in New York. 

In-Depth: Persistent Consumer Security Fears about Mobile Payments Prove Difficult to Dislodge

NFC TIMES Exclusive Insight – Results of yet another survey has shown that a significant percentage of U.S. consumers continue to harbor security fears about using their smartphones for payments, a stubborn problem that has hindered growth of mobile payments from the beginning.

Mobile Suica Still Accounts for Disappointing Share of Suica Users and Transactions in Japan

NFC TIMES Exclusive – While Apple Pay next month will mark the 5th anniversary since its launch in the U.S., there is another contactless-mobile payments service that is three times as old as Apple Pay–Japan’s Osaifu-Keitai, or wallet phones, which this year turned 15. 

Rome Latest Transit System to Launch Open-Loop Fare Collection; also Enables Monthly Passes with EMV Cards

NFC TIMES Exclusive Insight – Rome has become the second major city in Italy–and one of a small but growing number of large cities globally–to enable riders to pay transit fares with EMV contactless credit, debit and prepaid cards and NFC devices.

Vivo Last of Major Chinese Smartphone Makers to Officially Launch NFC Pays Wallet

NFC TIMES Exclusive Insight – Vivo, China’s second largest smartphone maker, made it official this week, launching its NFC-enabled “vivo Pay” wallet, the last of the major Chinese phone OEMs to roll out NFC payments–though their use has been disappointing, at least for payments in stores.

In-Depth: Fit Pay’s Troubles Indicate Difficult Business Case for Provisioning to Wearables

Sep 19 2019

NFC TIMES Exclusive Insight –  Given the poor financial results of U.S.-based Fit Pay, it’s becoming clear that the business case for provisioning of payment cards to wearable devices remains difficult.

Analysis: Chase Pay Latest Bank Wallet to Shut Down; Why Did They Fail?

NFC TIMES Exclusive Insight – Plans disclosed this week by JPMorgan Chase to shut down its Chase Pay app for in-store purchases is yet another nail in the coffin–perhaps the final one–for bank wallets in the U.S. And the situation does not look much brighter for bank-issued wallets abroad.

Miami Latest U.S. City to Introduce Open-Loop Transit Payments

NFC TIMES Exclusive Insight Transit officials in Miami-Dade County, Fla. are the latest in the U.S. to introduce open-loop payments of fares with contactless credit and debit cards and bank card credentials on NFC wallets, launching the service yesterday on the city's relatively small metro network, with plans to expand to buses later.

UK Tram Riders Take to Tapping with NFC phones to Pay for Fares, According to Early Results

NFC TIMES Exclusive – Transport for Greater Manchester, which last month launched open-loop payments on its large Metrolink tram network, said Thursday that contactless credit and debit cards and NFC wallets accounted for a combined 170,000 rides during the first four weeks of the service.