From POS terminals to payment services
Right now Ingenico is in exclusive talks over the acquisition of Sagem Monetel payment terminals activities (cf. Smart Insights #07-39), with a completion of the transaction expected for the end of the year. Globally the payment terminal industry is evolving towards a new model. The industry is to be structured around three major POS manufacturers: Ingenico, Verifone, and Hypercom. And the industry could be heading towards more concentration. These major POS vendors are in a position to leverage their innovation capabilities to develop and market new products and to anticipate and support all the major technology evolutions. Current trends in the payment terminal business include contactless, EMV, NFC, SEPA, 3G, PCI requirements, currency conversions, Bluetooth, prepaid top up, …
At the same time, and besides the industry leaders, smaller players emerge. Every year, we witness newcomers in the payment terminal industry. Most of them use technology subsets, developed by technology experts as the base for their payment terminals. What remains to be seen is whether these smaller vendors will be able to follow the innovation pace imposed by customer demand, payment organizations and major industrialists' competition. Many of them may have to concentrate on niches, either from a geographical standpoint (China, India, …) or from a technology standpoint (contactless, transport, …).
Globally, the added value of tomorrow may be found in services rather than just in supplying hardware for payment terminal. The top vendors are now developing a service-centric business model in order to increase their value added, and to be in better position in the price competition on hardware manufacturing. These top vendors will also have to remain profitable in order to allow for R&D and service development. In the near future, we will see Ingenico, Verifone, and may be a few others changing totally their business positioning and appear as service companies.