No Wind Behind VeriFone’s SAIL

VeriFone CEO Doug Bergeron said in the company’s Q4 earnings call yesterday that VeriFone will be jumping off the mobile payments bandwagon.

“Earlier this year, we launched SAIL as a way to bridge the gap between the way our traditional channel partners conduct business and the specific needs of very small micro-merchants,” Bergeron said. “Our experience through 2012…tells us that the standalone economics of micro-merchant acquiring is fundamentally unprofitable and destined to be a negative gross margin business.”

VeriFone launched SAIL in May, taking Square head on in the mobile payment space. VeriFone does roughly double the annual payment processing of Square, with about $10 billion in annualized transaction volume each year. SAIL was designed to target the slightly larger entities among small and medium businesses.

Bergeron added that customer acquisition costs “will never justify the razor-thin margins produced by merchants with infrequent volumes and extremely high attrition.”

This past July at an FTC workshop, VeriFone CFO Robert Dykes foreshadowed the company’s scaling back on mobile payments. “Despite the continued growth within the mobile payments market, there continues to be barriers to adoption that center on consumer convenience and data security concerns,” he noted.

VeriFone plans to divest all assets they’ve developed around customer acquisition, risk management, and customer billing.

Conversely, the company’s GlobalBay Mobile Payment Solutions initiative is “making great progress,” Bergeron said. GlobalBay offers sophisticated retail software, which a merchant can combine with VeriFone’s PAYware Mobile Enterprise device to enable a tablet or handset to accept payments. In addition to North America, GlobalBay has recently expanded to Brazil and Mexico.

“Overall, we expect revenue from GlobalBay and PAYware Mobile to more than double to over $40M this year,” the CEO added.

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