ROAM CEO On VeriFone: SAIL Failure Not A Surprise

What's Next In Payments®
2:03 PM EDT December 27th, 2012

When VeriFone decided to pull out of the mobile payments game earlier this month by cancelling its SAIL solution, many were surprised by the company’s decision.

Ken Paull, CEO of ROAM, was not one of those people.

In an interview with Market Platform Dynamics CEO Karen Webster, Paull spoke candidly about what he viewed as VeriFone’s shortcomings with SAIL, his reactions to VeriFone’s claims about the industry and how ROAM’s business strategy follows a different path.

Paull said that while VeriFone’s decision to pull the plug on SAIL did not surprise him, its initial decision to enter the micro-merchant foray did. He characterized VeriFone’s strategy of direct competition with Square as a major one, and said it simply represented a company trying to do and be too many things at once.

“You can’t be everything to everyone, to make good hardware, good software, a good mobile platform, do solid customer acquisition, and all the things that work with it: those are too many core competencies to think that you can do all yourself,” Paull said. “I think that’s just too much for someone to take on, and I’m surprised that Verifone did attempt to take it on.”

Paull said he disagreed with two of the assertions VeriFone made as it announced the suspension of its SAIL program: that all micro-merchant acquiring is “fundamentally unprofitable,” in the words of VeriFone CEO Doug Bergeron, and that solutions for much merchants must come with additional services, such as wallets.

To counter the first point, Paull pointed to the various successful companies within the industry, and said the problem lay not with the micro-merchants, but with VeriFone’s business strategy.

“It’s a high volume game: you can’t go after small volume merchants without [getting] a lot of them, and I think that’s what didn’t add up. VeriFone needed to do high volume in the space and they didn’t, but there are plenty of folks out there that we can attest to, including ourselves, that are doing some pretty good volumes in the space and doing it profitably,” he said.

For the second point, Paull conceded that over time, offering additional solutions to basic payments functionality would likely be necessary. But for right now, he said there is “no proof” that such additions are needed.

“All the other people succeeding in this market are not doing so by wrapping services around it right now,” Paul said. “I don’t know how you can say that you have to wrap those other solutions to make money, because really, no one is doing that very successfully.”

Asked what he thought of VeriFone’s decision to switch lanes back into upmarket mobile retailing solutions, Paull gave a pointed response.

“I never underestimate a company the size of VeriFone with the brand awareness they have. They’re very respectable on the countertop,” Paull said. “But in the mobile space, they really haven’t been relevant, to be honest.”

Paull also said that some in the industry might be reluctant to deal with VeriFone as it tries to partner with companies with which it was competing through SAIL.

“The people I’m talking to are not happy at all with the arrogance demonstrated, VeriFone’s willingness to go sell against them and now try to embrace them again, Paul said. “For all the channel partners they’ve tried to disintermediate in the process, I don’t think they’ll get a warm embrace back as they attempt to partner with those same companies, which you really need to do to move upmarket.

So I think they will be challenged, but I never underestimate anybody.”

To hear more Paull and Webster on VeriFone’s SAIL collapse, ROAM’s business strategy and the unique micro-merchant market, listen to the full podcast below.

Also, be sure to check out our December MPOS Tracker that was just released for the latest on the mobile point-of-sale ecosystem.

 

*If you have trouble with the audio player above, click here.


Ken Paull

CEO of ROAM

Ken has over 20 years in senior management roles in the electronic payments industry including Senior Vice President at RBS Lynk”¨(now WorldPay), Vice President at Triton Systems and General Manager at VeriFone. He was responsible for building and rapidly growing what is now WorldPay’s national account payments division while also directing the turnaround of what had been a declining ATM processing business. While at Triton, the company surpassed NCR as the second largest domestic ATM supplier and also became the global leader in retail ATM deployments. At VeriFone, Ken built their major account, retail division which has become one of the largest segments of their business. Most recently, Ken was ROAM Data’s Executive Vice President of Sales and Marketing. Prior to joining ROAM, Ken served on the Board of Directors of Access to Money, as Director of Market Platform Dynamics and President”¨of PAX US. A native of the Boston area, Ken holds a B.S. in Marketing and Communications ”¨from Babson College, as well as an MBA in Telecommunications Management from Golden”¨Gate University.

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