Remarks from VeriFone’s CEO Paul Galant during the company’s first-quarter earnings call Tuesday (March 10) demonstrated its commitment to adapting with mobile and digital technologies as the company hopes its investments in EMV merchant certifications will continue to pay off.
Calling 2015, the “year of product” for VeriFone, Galant focused his comments in a call with analysts about how it plans to work with its customers to help garner widespread EMV adoption. Highlighting its momentum in EMV for its client base, he spoke of the most recent product rollout, which includes the consumer-facing payment terminals that recently launched in the U.S.
“Our incremental investments in EMV certifications have really paid dividends in our traditional North American SMB business, by helping us to get more EMV capable product and pay-at-the-table solutions into the market in order to meet growing demand,” said Galant, adding, “We continue to earn commitments in Q1 from U.S. merchants and acquirers for our next-generation Secure Commerce Architecture solution, which improves payment data security, while also accelerating EMV certifications and implementation. In Q1 alone, we signed or announced new agreements with Vantiv and TransFirst. And now, have merchant commitments to connect more than 150,000 new devices through SCA.”
Galant’s comments indicated that EMV upgrades, particularly for large retailers, continue to be a success for the company. The company saw 18 percent growth sequentially and 44 percent from the year prior from that sector. VeriFone is also seeing growth in its smaller business side — seeing 15 percent sequential growth and 49 percent increase from the year prior from that side of its business.
“Significant momentum continues in our U.S. multi-lane retail business. …Large retailers continue to upgrade to EMV in the U.S. with our MX 900 Series terminals, and new merchants are buying consumer-facing terminals for the first time to prepare for EMV card acceptance,” Galant said. “We are growing our SMB business by delivering a broader base of certified products across U.S. acquirers and benefiting from market tailwinds in security and EMV-related upgrades.”
He also gave indication about how EMV adoption is increasing across its various tiers of merchants, and with the merchant liability shift looming in October, these statistics could be particularly important for the industry. For Tier 1, which is made up by the Top 200 retailers, Galant said he expects 90 percent to be EMV capable by October 2015 (There’s about 1.8 terminals in that segment). For the mid-tier merchants (200-1,000 top merchants), that figure is closer to 60 percent being EMV capable by the deadline. Small and medium sized businesses, of course, have been discussed in the industry as a setback to EMV adoption as some merchants fear the switchover is too costly. Of the SMB category, Galant indicated that 40 percent of the merchants will be EMV capable by the October deadline.
When asked by an analyst about making the EMV switch, Galant indicated that the company is committed to helping EMV certifications get completed.
“Clients are anxious to hit their dates. We have been working with those clients especially Tier 1 and especially the large acquirers, very, very intensively,” he said. “You can think of VeriFone right now in North America as a giant project plan, right. There are war rooms everywhere to make dates and such. … We are absolutely in full execution mode across everything we do to hit as many dates as possible. You’re not going to have a 100 percent of the merchants ready, but you’re going to have an awful lot of the Tier 1s ready.”
Overall, for 2015, Galant highlighted that VeriFone’s goals are to advance the “year of product” through its service offerings. Its year ahead will focus on launches in its terminal solutions, and Payment-as-a-Service, along with its Commerce Enablement businesses.
“Our goal this year is to leverage the improvements made to our transformation to deliver more commercially-attractive and innovative solutions for our clients than ever before,” he said. “We’re doing this through a combination of organic innovations, investments to fill our portfolio gaps, and strategic tuck-in acquisitions to more quickly deploy the capabilities our clients need. And we were excited to introduce several new strategic products and services in Q1 across Terminal Solutions, Payment-as-a-Service, and Commerce Enablement. These products and services were very well received by our clients and will begin to generate additional revenue in 2015 and lead to increased earnings growth in the years to come.”