EMV rollout in the U.S. is not a simple undertaking, and the slow rollout is having a ripple effect on industry players because transition costs are huge. For companies such as Ingenico, the hope is that the initial cost outlays can be recouped and that ePayments can support the short-term financial challenges.
Changes in the EMV rules are affecting companies such as Ingenico. Ingenico has announced an adjustment in its revenue growth predictions for the second half of 2016, citing a rapid but temporary decline in the market and a slowdown in EMV adoption because of relaxed EMV rules. The group is a major provider of EMV technology.
According to Philippe Lazare, chairman and CEO of Ingenico Group: “The elements which have come at the same time have led us to take a more prudent approach to our objective for the end of this year. This temporary situation, to which we are giving our fullest attention, does not in any way affect the fundamentals of our strategy and the objectives which we have laid out for 2020.”
The company stated that the economic conditions in Brazil were also a factor. However, the ePayments division and all other geographies other than Brazil are expected to perform well, which will ensure continued growth in Europe and the Asia-Pacific region in the second half of 2016. This strong growth will accelerate the group’s online and mobile service delivery.
The group has decreased its projections for revenue growth for all of 2016 from 10 percent or more to 7 percent, and the EBITDA margin has been reduced from 21 percent to 20 percent. A recent decline in revenues of 10 percent has been reported, and the group is expecting a significant decline in sales for the second half of 2016.
The relaxed EMV rules are temporary, and the rollout of EMV in the U.S. is expected to continue on a steady course into 2017.
According to Chiro Aikat, SVP of EMV product delivery for Mastercard: “EMV is the biggest change in the way U.S. consumers have paid at merchants in the last 45 years.” Aikat said that EMV adoption and usage in the last nine months is significant; some markets took five to six years to hit the EMV “tipping point.”
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