The Way To Pay
Verifone headquarters located in San Jose,CA
|Traded as||NASDAQ: PAY
|Industry||Banking & Finance, Electronics|
|Founded||Hawaii, US (1981)|
|Founders||William "Bill" Melton|
|Headquarters||San Jose, California, USA|
|Products||Payment terminals (Vx, VX and MX lines), Tablet-based POS software (GlobalBay and GlobalBay Merchant), POS systems for the petro and convenience industry, Payment services, Taxi media and Advertising, LiftRetail loyalty and upselling solution for petro and convenience. See also..|
|Services||Payment as a Service|
|Footnotes / references
VeriFone is an American multinational corporation headquartered in San Jose, California that provides technology for electronic payment transactions and value-added services at the point-of-sale.
VeriFone sells merchant-operated, consumer-facing and self-service payment systems to the financial, retail, hospitality, petroleum, government and healthcare industries. The company’s system solutions consist of POS electronic payment devices that run its own operating systems, security and encryption software, and certified payment software, and that are designed for both consumer-facing and unattended environments.
Its system solutions process a range of payment types, including signature and personal identification number (PIN)-based debit cards, credit cards, contactless/radio frequency identification cards, smart cards, pre-paid gift and other stored-value cards, electronic bill payment, check authorization and conversion, signature capture and Electronic Benefit Transfer(EBT).
The company’s architecture enables multiple applications, including third-party applications, such as gift card and loyalty card programs, healthcare insurance eligibility, and time and attendance tracking, and allows these services to reside on the same system without requiring re certification upon the addition of new applications.
- 1 Overview
- 2 History
- 3 Products
- 4 Key Trends and Forces
- 5 Competition
- 6 Corporate affairs
- 7 References
- 8 External links
The company uses the VeriFone name and logo worldwide as a primary part of the branding of the company and its products, and registers these trademarks in the key jurisdictions where the company does business, including the U.S. and the EU. As of October 31, 2013, the company held trademark registration in 22 jurisdictions (including registration in the EU that covers various country level registrations that the company had previously filed) for the ‘VERIFONE’ trademark and in 32 jurisdictions (including registration in the EU that covers various country level registrations that the company had previously filed) for ‘VERIFONE’ trademark, including its ribbon logo. On November 3, 2014, The company unveiled a new corporate logo, new brand identity that represents a new Verifone that is driving the future of commerce in a rapidly evolving digital world where electronic payments, commerce and mobility are converging. From its beginnings as the first payment device manufacturer, verifone's product and point-of-sale service offerings have changed considerably. Verifone offer payment technology expertise, solutions and services that add value to the point of sale with merchant-operated, consumer-facing and self-service POS payment systems.
Founded in Hawaii, U.S. in 1981, verifone now operate in more than 150 countries worldwide and employ nearly 5,000 people globally. Verifone's steady growth has come both organically through a dedication to innovation and strategic partnerships, and from smart acquisitions. Core focus and growth areas for the company include mobile commerce, security, services and emerging global markets.
As a global company, verifone have headquarters representing each of its core global areas of operation: San Jose, California; London, U.K.; Singapore; Turkey; and Miami, Florida. Verifone is dedicated to supporting local markets and needs with a direct presence in more than 45 countries.
VeriFone was founded by William "Bill" Melton and incorporated in Hawaii in 1981, and named itself after its first product, the name standing for Verification telephone.
Since the late 1980s, VeriFone has held more than 60 percent of the U.S. market, and during the 1990s the company captured more than half of the international market for such systems. In 1996, the company placed its five millionth system. Domestic and international sales of POS systems continue to form the majority of VeriFone's annual sales, which hit $387 million in 1995 and were expected to top $500 million in subsequent years.
The sudden growth of the Internet, and especially the World Wide Web, in the mid-1990s created a demand for secure online financial transaction applications. VeriFone has taken the lead in designing applications conforming to the Secure Electronic Transaction (SET) standards developed by Visa Inc. and MasterCard. With the $28 million 1995 acquisition of Enterprise Integration Technologies, the company that developed the Secure HyperText Transfer Protocol(S-HTTP), and a $4 million equity investment in CyberCash, Inc., led by VeriFone founder William Melton, and with 1996 partnership agreements with Internet browser leaders Netscape, Oracle Corporation, and Microsoft, VeriFone has rolled out a suite of software products targeted at consumers, merchants, and financial institutions allowing secure purchases and other transactions online. Purchases over the Internet, which still produced as little as $10 million in 1995, are expected to reach into the billions by the turn of the century. VeriFone has also been working to marry the smart card to the Internet; in 1996, the company introduced the Personal ATM (P-ATM), a small smart card reader designed to be attached to the consumer's home computer, which will enable the consumer not only to make purchases over the Internet, but also to "recharge" the value on the card. VeriFone has also partnered with Key Tronic to incorporate a P-ATM interface directly into that company's computer keyboards.
Pioneering Transaction Automation in the 1980s
By the beginning of the 1980s, the major credit card companies began seeking methods to reduce processing costs and losses due to fraud. In 1981, Visa and MasterCard began offering merchants discounts on their transactions if they agreed to use newly developed automated transaction technology for all credit card purchases greater than $50. This move opened the way for the creation of an industry devoted to producing POS authorization systems. Early systems typically had starting prices of $900.
VeriFone introduced its first POS product in 1982. By slashing operating costs and lowering manufacturing costs by outsourcing production, VeriFone brought its first system to the market at $500. Working with Visa, VeriFone quickly captured a strong share of the POS market. In 1984, however, the company took a major step toward achieving industry dominance with the introduction of its ZON credit card authorization system, which, taking advantage of improvements in processor speeds and the lowering cost of both processors and memory, cost as little as $125, making it easier to convince retail merchants to install the system in their stores. The following year, the company's revenues grew to $15.3 million, earning a net profit of $864,000. In that year, VeriFone moved its headquarters to Redwood, outside of San Francisco, to be closer to that area's software and hardware engineering talent pool, as well as to its customers and investors.
The company doubled revenues, to about $30 million, in 1986. By January 1988, VeriFone controlled more than 53 percent of the POS systems market. Revenues had reached $73.4 million, with net earnings of more than $6 million. The following year, the company increased its dominance in the industry with the purchase of the transaction automation business of Icot Corp., then second in the market with a 20.5 percent share. The acquisition boosted VeriFone's revenues to $125 million. By then, VeriFone had entered the international market, starting with Australia in 1988 and placing its millionth ZON system in Finland in 1989.
New Directions for the 1990s
VeriFone went public in March 1990, raising more than $54 million. As the credit card industry matured, VeriFone pushed to install its systems into new markets, such as restaurants, movie theaters, taxis, and fast food restaurants, while developing software capacity to bring its systems into the health care and health insurance markets and to government functions, such as state welfare systems. International sales also began to build, as use of credit cards became increasingly accepted in foreign markets. VeriFone was also building its global operation, opening facilities in Bangalore, Singapore, England, Dallas, and Ft. Lauderdale, in addition to its Hawaii and California facilities. Rolling out its Gemstone line of transaction systems, which added inventory control, pricing, and other capabilities, VeriFone was aided by announcements from Visa and MasterCard that the companies would no longer provide printed warning bulletins, while requiring merchants to seek authorization for all credit card transactions by 1994.
These moves further stimulated demand for VeriFone's products. Revenues jumped from $155 million in 1990 to $226 million in 1992. By then, VeriFone had placed its two millionth system (in Fouquet's restaurant, near Paris, in 1991); by 1993, VeriFone systems were in place in more than 70 countries, including its three millionth system, in Brazil, representing the company's expansion in the Latin American market. International sales, which had contributed less than ten percent of revenues before 1990, now accounted for more than 30 percent of the company's nearly $259 million in annual revenues.
New opportunities arose as banks began rolling out debit cards in the mid-1990s. VeriFone was quick to launch itself into this new market, producing terminals designed with key pads for customers to punch in their PIN numbers. But as the domestic credit and debit card markets neared saturation, VeriFone made ready to launch itself in new directions. While continuing its international expansion, topping four million installed systems in 1994, and maintaining its manufacturing capacity, doubling production capacity with a new plant near Shanghai in China in 1994, VeriFone had already evolved its primary focus to producing software applications, offering vertically integrated systems solutions, including applications for standard computer operating systems.
VeriFone moved to take the lead in the coming smart card revolution, teaming up with Gemplus International, a France-based maker of the cards, and MasterCard International to form the joint venture SmartCash. To place the company close to technological developments in France and the rest of Europe, VeriFone opened its Paris research and development center in 1994. The company launched its smart card in May 1995. The company introduced its Personal ATM, a palm-sized smart card reader capable of reading a variety of smart card formats, in September 1996, with the product expected to ship in 1997. Among the first customers already signed to support the P-ATM were American Express, MasterCard International, GTE, Mondex International, Visa International, Wells Fargo Bank, and Sweden's Sparbanken Bank. Contracts for each called for the purchase of a minimum of 100,000 units; the total market potential for the device was estimated at more than 100 million households. In addition, VeriFone began developing smart card readers to supplement and eventually replace its five million credit and debit card authorization systems.
In 1995, VeriFone began the first of its aggressive steps to enter an entirely new area, that of Internet-based transactions. In May 1995, the company partnered with Broadvision Inc., a developer of Internet, interactive television, computer network, and other software, to couple VeriFone's Virtual Terminal software—a computer-based version of its standard transaction terminal—with BroadVision's offerings, thereby extending VeriFone's products beyond the retail counter for the first time. In August 1995, however, VeriFone took an even bigger step into the Internet transaction arena, with its $28 million acquisition of Enterprise Integration Technologies, developer of the S-HTTP industry standard for safeguarding transactions over the World Wide Web. VeriFone followed that acquisition with a $4 million investment in William Melton's latest venture, CyberCash Inc., also working to develop Internet transaction systems.
By 1996, VeriFone was ready with its Payment Transaction Application Layer (PTAL) lineup of products, including the Virtual terminal interface for merchants conducting sales with consumers; Internet Gateway or vGATE, to conduct transactions between merchants and financial institutions; and the Pay Window interface for consumers making purchases on the Internet. After securing agreements from Netscape, Oracle, and Microsoft to include VeriFone software in their Internet browsers, VeriFone and Microsoft announced in August 1996 that VeriFone's virtual point of sale (vPOS) would be included in the Microsoft Merchant System to be released by the end of the year. VeriFone's announcement of the P-ATM, able to be attached as a computer peripheral, wedded the company's smart card and Internet transaction efforts.
Hewlett-Packard acquired VeriFone in a $1.18bn stock-swap deal in April 1997. Four years later VeriFone was sold to Gores Technology Group in May 2001. In 2002 VeriFone was recapitalized by GTCR Golder Rauner, LLC. In 2005, Verifone was listed as public company on New York Stock Exchange (NYSE: PAY).
New Directions for the new millenium
In October 2004, Israeli-based Lipman Electronics had acquired United Kingdom-based Dione plc, to go alongside its "NURIT" brand. On November 1, 2006 VeriFone completed its acquisition of Lipman, and added both Dione and NURIT solutions to its portfolio for an undisclosed sum.
The company was formerly known as VeriFone Holdings, Inc. and changed its name to VeriFone Systems, Inc. in 2010. VeriFone today is based in San Jose, California, and has marketing and sales offices across the world. High Economic growth abroad, coupled with infrastructure development, support from governments seeking to increase value-added tax (“VAT”) and Sales Tax collections, and the expanding presence of IP and Wireless communication networks has resulted in revenue from abroad exceeding revenue generated from domestic sales. Specifically, its' North America market share has fallen from 57.4% of total revenues in 2006, to only 39% or $359.14 million in total revenues for fiscal 2008. On the other hand, International operations went from comprising only 42.5% of total revenues in 2006 to 61% or $564.46 million of total revenues in 2008.
VeriFone, Inc. is an international producer and designer of electronic payment solutions. The company divides its business into two segments: Systems Solutions and Services. Systems Solutions consists of operations related to the sale of electronic payment products that enable electronic transactions. The Services segment includes warranty and support services. In fiscal year 2008, Verifone's Systems Solutions segment generated 87.5% of total revenues, which amounted to $807.46 million, while its Services segment contributed 12.5%, or $114.46 million in revenue. Its principal product lines have included point-of-sale, merchant-operated, consumer-facing and self-service payment systems for multiple industries, notably financial, retail, hospitality, petroleum, government and healthcare markets. It provides countertop electronic payment systems that accept card payment options, such as NFC, Mobile payment, chip and PIN, and Contactless payment, as well as support Credit and Debit cards, EBT cards, EMV, and other PIN-based transactions; an array of software applications and application libraries; and portable solutions that support 3G, GPRS, Bluetooth, and WiFi technologies. The company also offers multimedia consumer facing POS devices; unattended and self-service payment solutions designed to enable payment transactions in self-service environments; and integrated electronic payment systems that combine electronic payment processing, fuel dispensing, and ECR functions, as well as payment systems for integration. In addition, it provides mobile payment solutions for various segments of the mobile point of sale environment; contactless peripherals; network access solutions; security solutions; payment-as-a-service and other managed services, terminal management, payment-enabled media, and payment system security solutions; and server-based payment processing software and middleware. Further, the company offers equipment repair or maintenance, gateway processing, remote terminal management, software post-contract support, customized application development, helpdesk, customer service, warehousing, and encryption or tokenization services.
Countertop and PIN Pads
The company’s countertop solutions accept various card payment options, including Near field communication(NFC), mobile wallets, chip and PIN, QR code and contact-less payments. Its VX Evolution generation of countertop devices supports a range of applications, such as pre-paid products, including gift cards and loyalty programs. The VX Evolution devices also integrate the company’s NFC software technology to manage multiple NFC-based mobile wallets, applications, and programs. It also offers various other VX model countertop devices, including a hybrid device that reads both magnetic strip and chip card transactions using a single card reader, offering options for a range of connectivity choices, and battery operated and color displays. The company also supplies PIN pads that support credit and debit card, EBT, EMV, and other PIN-based transactions, and include multiple connectivity options, including a 3G option and NFC capability. Its countertop solutions also support a range of applications that are either built into electronic payment systems or connect to electronic cash registers (ECRs) and POS systems. In addition, it offers a range of certified software applications and application libraries that enable its countertop systems and PIN pads to interface with major ECR and POS systems.
VeriFone has sold numerous point-of-sale credit card reading products, including the ZON Jr (1984), Tranz 330 and ZON Jr XL(1987), Omni 460 (1991) and Omni 3200 (1999) which were the most successful transaction terminals of their times. The company's most popular current products include the Omni 3700 Family, featuring the Omni 3750 and Omni 3740. In 2004, VeriFone introduced its newest line of products, Vx Solutions (also called VerixV). These include the Vx510, Vx520 and Vx570, which are countertop terminals offering dial-up or Ethernet access, and the Vx610 and Vx670 which are portable, include batteries, and an integrated wireless communications module. The Vx610 is offered in GPRS, CDMA, and WiFi wireless configurations, and is considered a 'countertop mobile' product. The Vx670 is a true portable or 'handover' version available with GPRS, WiFi, and as of November 2007, Bluetooth-integrated communications modules. The Vx670, in particular, is a deterrent against the theft of credit information because the customer is not required to relinquish possession of his or her credit card; instead transacting directly with the Vx670 in a 'pay at table' sense. The Vx510 is repackaged as Omni 3730, capitalizing the huge sales of the Omni 3700 series. A derivative of Omni3730 is the Omni 3750LE, which has reduced features, but lower price. The VX Evolution devices integrate the company’s NFC software technology to manage multiple NFC-based mobile wallets, applications, and programs.
Multimedia Customer Facing
The company’s range of multimedia consumer facing POS devices are designed to allow merchants, primarily in the multi-lane retail environment, to engage in direct customer interaction through customized multimedia content, in-store promotions, digital offers, and other value-added services using a POS device. Its multimedia consumer facing solutions are offered under its MX solutions brand. These products include color graphic displays, interfaces, ECR compatibility, key pads, signature capture functionality, and other features that serve customers in a multi-lane retail environment. The company’s MX solutions also feature a modular hardware architecture that allows merchants to introduce capabilities, such as contactless or NFC. Its MX solutions include a range of products that support these same features in self-service market segments, such as taxis, parking lots/garages, ticketing machines, vending machines, gas pumps, self-checkouts, and quick service restaurants.
In 2005 VeriFone released its first full color EFT-POS terminal, the MX870. The MX870 is capable of full screen video and is used to build applications by VeriFone customers. The MX870 is the first in the MX800 series of Visual Payment Terminals. All of these terminals run Embedded Linux and use FST FancyPants and the Opera (browser) for their GUI platform.
The company’s portable payment devices consist of small, portable, handheld devices that enable merchants to accept electronic payments in customer locations wherever connectivity is available. Its portable devices are designed for restaurants, hospitality, delivery, transportation, and other businesses that benefit from the pay-anywhere, pay-anytime convenience offered by a portable payment solution that also has capabilities to allow merchants to offer coupons, loyalty, and other programs to enrich the consumer experience. The company’s portable solutions support 3G, GPRS, Bluetooth, and Wi-Fi technologies based on its VX Evolution and Optimum platforms for ‘always on’ connectivity. Its VX Evolution portable devices offer a color display, as well as a touch screen option. It has utilized its wireless system expertise to enter into new markets for electronic payment solutions, such as the pay-at-the-table market solutions for full-service restaurants and systems for transportation and delivery segments where merchants and consumers are demanding secure payment systems to reduce fraud and Identity theft.
The company’s PAYware® Mobile solutions offer mobile payment capabilities for all segments of the mobile POS environment, from large retailers to small merchants. Its portfolio of PAYware Mobile solutions includes devices that attach to, and interface with, iOS, Android or Windows-based smartphones and tablets, enabling these devices to be used as a secure payment device by merchants to accept payments wherever and whenever they do business with mobile connectivity. The company’s range of PAYware Mobile solutions is intended to address merchant needs in various types of retail environments. Its portfolio includes devices that accept various payment types, including EMV chip and PIN, NFC/contactless and magnetic stripe payment types. The company’s devices are Pci compliant and employ fully encrypted card readers so that sensitive cardholder data do not enter the device. The company provides options designed to enrich the overall consumer experience, including an integrated PIN pad for faster transaction processing, integrated laser barcode imager, and functionality that facilitates sales services, such as ‘on the spot’ verification of merchandise availability or pricing.
The company’s family of products for petroleum companies consists of integrated electronic payment systems that combine electronic payment processing, fuel dispensing, and ECR functions, as well as secure payment systems that integrate with major petroleum pump controllers. These products are designed to meet the needs of petroleum company operations. These products allow the company’s petroleum customers to manage fuel dispensing and control, and enable ‘pay at the pump’ functionality, cashiering, store management, inventory management, and accounting for goods and services at the POS. The company has expanded this suite of products with its Secure PumpPAY range of payment devices and related software that integrate into petroleum dispensers and deliver secure payment capabilities. It also has introduced its PAYmedia service that utilizes the large color screen of Secure PumpPAY units and its VNET media platform to enable digital content, including paid advertising and couponing at the petroleum forecourt. Its media platform delivers short-form video and digital coupons at eye-level displays for fueling customers, thereby engaging the consumers and influencing their purchasing decisions.
Unattended and Self-Service
The company’s unattended and self-service payment solutions are designed to enable payment transactions in self-service environments and include its UX, TransitPAY, and MX solutions. Its UX solutions include a series of secure payment modules for vending machines and other self-service, high-transaction-volume environments, such as on-street parking meters, petroleum pumps, and ticketing machines. The UX modules are offered as OEM solutions that are customizable and integrate with existing self-service environments, and designed for both indoor and outdoor use in harsh environments. These solutions include versions to accept a range of payment options, including mobile wallets, magnetic stripe, EMV chipcard or NFC or other contactless payment schemes. TransitPAY is the company’s unattended payment solution that enables implementation of an open fare-collection system for riders to pay with a wave or tap of almost any contactless card or NFC-enabled phone, with connectivity to control turnstile gates where applicable. TransitPAY is designed for public transportation environments, including bus, train, and subway. The company’s MX 760 is an all-in-one OEM module with graphic display and audio features that integrates into a range of unattended environments. The MX 760 accepts both magnetic track and EMV chip cards using its hybrid card reader and encrypted pin pad and supports various value-added services.
The company’s contactless peripherals enable upgrades of existing payment systems for contactless payment acceptance. These contactless modules, including the QX 1000 and the QX 700, support various contactless payment schemes. The QX 1000 is a countertop contactless module that enables merchants to upgrade existing payments systems to enable acceptance of contactless payments without having to replace their existing POS terminal estate. The company’s QX 1000 is designed to provide ‘Plug and Play’ integration with other electronic payment devices and is designed for implementation at retail locations, including quick service restaurants, retail stores, parking garages, movie theaters, and sports arenas. Applications supported on the QX 1000 include EMV and Visa payWave MSD and MasterCard PayPass, American Express ExpressPay, Discover Network Zip, and MIFARE. The QX 700 is a contactless module designed to enable contactless payments for vending machines and other self-service, high-transaction volume environments, such as on-street parking meters, petroleum pumps, and ticketing machines. The QX 700 could be integrated into existing indoor and outdoor unattended systems through a field upgrade, and is capable of supporting various card types, including public transportation, stored value, and other value-added applications.
Network Access Solutions
The company’s network access solutions are designed and customized to support the requirements of the electronic payments industry by providing the networking hardware technology and communications infrastructure necessary to achieve connectivity within the POS environment. Its integrated enterprise networks are designed to protect investments in current legacy networks and work on a range of standard network technologies and protocols. The company’s Intelligent Network Access Controller (IntelliNAC) is an intelligent networking device that provides a range of digital and analog interfaces, line and data concentration, protocol conversion, and transaction routing. IntelliNAC is offered with IntelliView, an enterprise-level solution that provides the networking tools needed to manage POS solutions, such as remote downloads, and centralizes network management for reporting and monitoring.
The company’s service offerings include its payment-as-a-service solution and other managed services solutions, terminal management solutions, payment-enabled media, and payment system security solutions. It also offers a host of support services, including software development, installation and deployment, warranty, post-sale support, repairs, and training.
Payment-as-a-Service - The company’s Point payment-as-a-service payment system management solution is hosted and managed by the company and offered as a subscription-based model that includes hardware and software, as well as security, payment and value-added services for a fixed rate per device. The solution supports processing of payment types across all channels of a merchant’s business, including credit and debit card payments, online payments, mobile platforms, loyalty cards, gift cards and membership cards, with integrated payments management and reporting. The hosted service includes 24x7 support, encrypted transactions, integration for new methods of payment, ongoing EMV maintenance, merchant support, and PCI compliance. The payment-as-a-service Web-based portal serves as a single point of entry for merchants and partners to access, configure, and manage their payment services, as well as to deploy loyalty programs and enable new payment types. The company’s payment-as-a-service solution is designed to simplify EMV adoption and enable rapid integration of mobile wallets and emerging payment technologies. The payment-as-a-service model is implemented primarily in Europe, the Middle East, and Africa (EMEA), as well as in Asia, Australia, New Zealand, and other Asia Pacific Rim countries.
Managed Services - In addition to the company’s payment-as-a-service solution, it offers a range of other managed services to provide its customers a managed solution that accommodates their business needs and plans. The company’s managed services include Web-based transaction processing that is consolidated across payment types, from traditional retail to E-Commerce, Cloud-based remote loading of supported devices with the up-to-date base files and firmware, software and applications, and estate management, including remote key loading, capabilities to remotely activate NFC/contactless and EMV, and consolidated reporting and analytics. PAYware Connect, the company’s cloud-based hosted payment solution, consolidates all payment transactions through its payment gateway and enables merchants to process from any Internet-connected PC through a single portal. PAYware Connect uses the company’s proprietary VeriShield Total Protect for transaction encryption and tokenization and is certified by all of the major payment processing networks. Its VX Direct managed solution combines its VX device with the latest payment applications, automatic updates, security protection with VeriShield Total Protect, and estate management capabilities through VeriFone HQ or VeriCentre. These managed solutions are offered worldwide to retailers, acquirers, and merchants in the restaurant and hospitality markets. The company’s limo, livery, and taxi fleet management solution provides tools for fleets installed with its POS devices, including real-time vehicle and trip/fare activity monitoring, computerized dispatch, vehicle tracking, and faster card processing.
In 2009, VeriFone partnered with Hypercom and Ingenico to found the Secure POS Vendor Alliance, a non-profit organization whose goal is to increase awareness of and improve payment industry security. 
In 2010 VeriFone announced the VX Evolution product line, designed to PCI PED 2.0 specs and providing native support for VeriShield Total Protect, VeriFone's encryption and tokenization solution. The VX Evolution line is an extension of VeriFone's countertop and PIN pad products and included a number of upgrades from earlier models, such as full color display, ARM 11 processors and a fully programmable PIN pad.
Key Trends and Forces
Summary of Trends
The industry’s growth continues to be driven by the long-term shift towards electronic payment transactions and away from cash and checks, in addition to an improvement in security standards that require more advanced electronic payment systems. International and national security issues have become the main drivers of Verifone's business model as customers seek means to meet ever-escalating governmental requirements related to the prevention of identity theft as well as operating regulation safeguards issued by the credit and debit card associations. These trends have been accelerated by the usage of credit and debit card based payments, especially PIN-based debit. Another key driver is the growth in single application credit card products that enable merchants to provide payment solutions in non-traditional settings such as pay-at-the-table in restaurants.
Exposure to and Rapid Penetration of Electronic Payments in Emerging Markets
Rapid economic growth and subsequent infrastructure development—expanding presence of IP and wireless communication networks in Eastern Europe, Latin America, and East Asia have led to significant increases in demand for Verifone's electronic payment products. Verifone has strategically gained exposure to these growing markets and its 2008 revenue breakdown is a good indication of this. In particular, during the fiscal year ended October 31, 2008, 65.2% of Verifone's net revenues were generated outside of the United States. Verifone expects the percentage of net revenues generated outside of the United States to continue to increase in the coming years.
The firm's System Solutions segment's net revenues increased $15.2 million, or 1.9% during the fiscal year ended October 31, 2008 as compared to the fiscal year ended October 31, 2007 primarily due to a $56.3 million increase in International System Solutions net revenues. This increase was offset by a decline in North America system solutions revenue of $41.2 million. The increase in International System Solutions net revenues was largely attributable to growth in the Latin American market, primarily Brazil as several of Verifone's largest Brazilian customers made public offerings that generated money to purchase electronic payment products, as well as higher demand for prepaid top-ups, medical and health care System Solutions. Furthermore, European net revenues for System Solutions increased by $19.4 million due to improved supply chain and sales execution in Russia and Ukraine. The decrease in North America System Solutions net revenues was primarily attributable to weakening demand for the firm's "Petroleum Solutions" and a reduction in demand from United States financial businesses.
Verifone's increased revenue from abroad has not increased its profit margins. On the contrary, International gross profit percentage declined due to the combination of increased price competition in emerging markets countries, including Russia, China, Turkey and Brazil. In addition, certain customers purchased non-PCI compliant inventory at significant discounts. In addition, revenues in Latin America, which have historically carried gross margins below international averages, increased proportionally in the fiscal year ended October 31, 2008 as international sales of Verifone's System Solutions products have tended to carry lower average selling prices and therefore have lower gross margins than its sales in North America.
Increasing IP Connectivity
Large telecommunication carriers have expanded their communication networks and lowered fees, which lets merchants use IP-based networks more cost effectively. This increased IP connectivity has led to faster processing speeds and lower costs, which in turn has opened new markets for electronic payment systems, including many that have been primarily cash-only industries, such as quick service restaurants (“QSRs”). Additional wireless electronic payment solutions are being developed to increase transaction processing speed and mobility at the point of sale, and offer significant security benefits that enabling consumers to avoid relinquishing their payment cards. For example, a portable device can be presented to consumers to pay-at-the-table in full-service restaurants or to pay in other environments, such as outdoor arenas, pizza delivery, farmers’ markets, and taxi cabs. The increase in IP Connectivity in several fast-growing emerging economies, in particular Brazil, Turkey, China, Brazil and Israel has fueled much of the $56.3 million increase in Verifone's International System Solutions net revenues for 2008. However, the pervasive global bear market in 2009 has negated any positive impact on Verifone's revenues from Increasing IP connectivity in all market sectors, as well as domestic and international markets.
Growth of Wireless Communications
The development and increased use of wireless communication infrastructures are increasing demand for compact, easy-to-use, and reliable wireless payment solutions. The wireless communications industry has grown substantially in the United States and globally over the past twenty years. The increased speed of wireless communications, and ever-expanding coverage maps of standardized wireless data technologies such as General Packet Radio Service (“GPRS”), and Code division multiple access (“CDMA”) makes wireless telecommunications an attractive alternative to traditional telecommunications. The $61.5 million increase in revenue from North American System Solutions products was primarily attributable to an increase in demand for Wireless products due to customers’ interest in differentiating the service they provide to merchants, and higher sales in Canada, where merchants are preparing for a transition to a new payment card technology offered by Interac.
Increased focus on Security Issues
Industry security standards are constantly evolving, driving re-certification and replacement of electronic payment systems, particularly in Europe and the United States. In order to offer electronic payment systems that connect to payment networks, electronic payment system providers certify their products and services with card associations, financial institutions, and payment processors and comply with government and telecommunications company regulations. Not surprisingly, security has become a driving factor in its business as customers endeavor to meet ever escalating governmental requirements related to the prevention of identity theft as well as operating regulation safeguards issued by the credit and debit card associations, members of which include Visa , MasterCard , American Express, Discover Financial Services, and JCB. In response to increasing industry demands for high security products in the fiscal year ended October 31, 2007, Verifone incurred an obsolescence charge of $16.6 million primarily due to the implementation of new PCI security standards.
Verifone is one of the top three providers of electronic payment systems and services in the world. The markets for this company's products are highly competitive, and have been subject to price pressures. In the last two years, competition from manufacturers, distributors, and providers of similar products have caused price reductions, reduced margins, and a loss of market share. For example, one of Verifone's former customers--First Data Corporation has developed its own series of proprietary electronic payment systems for the U.S. market. Moreover, Verifone competes with suppliers of cash registers that provide built in electronic payment capabilities and producers of software that support electronic payment over the internet, as well as other manufacturers or distributors of electronic payment systems. Finally, Verifone competes with smaller companies that have been able to develop strong local or regional customer bases. The firm's main competitors are:
VeriFone acquired Hypercom in an all-stock transaction deal in 2011.
The company is run by a board of directors made up of mostly company outsiders, as is customary for publicly traded companies. Members of the board of directors as of June 2014 are: Robert W. Alspaugh(Director), Karen Austin(Director), Paul Galant(Director; Chief Executive Officer), Alex W. (Pete) Hart(Chairman of the Board of Directors), Robert B. Henske(Director), Wenda Harris Millard(Director), Eitan Raff(Director), Jonathan I. Schwart(Director), Jane J. Thompson(Director).
Under the Corporate Governance Guidelines of the company, the Board is free to select its Chairman and company's CEO in the manner it considers to be in its best interests at any given point in time. Since 2008 the positions of Chairman of the Board and CEO have been held by separate persons. The Board believes that this structure is appropriate for them because it allows CEO to focus his time and energy on leading its key business and strategic initiatives while the Board focuses on oversight of management, overall enterprise risk management and corporate governance. The Board and its committees meet throughout the year on a set schedule, usually at least once a quarter, and also hold special meetings from time to time. Agendas and topics for Board and committee meetings are developed through discussions between management and members of the Board and its committees. Information and data that are important to the issues to be considered are distributed in advance of each meeting. Board meetings and background materials focus on key strategic, operational, financial, enterprise risk, governance and compliance matters.
Board’s Role in Risk Oversight
The Board executes its risk management responsibility directly and through its committees. As set forth in its charter and annual work plan, Audit Committee has primary responsibility for overseeing their enterprise risk management process. The Audit Committee receives updates and discusses individual and overall risk areas during its meetings, including financial risk assessments, operations risk management policies, major financial risk exposures, exposures related to compliance with legal and regulatory requirements, and management’s actions to monitor and control such exposures. The Vice President of Internal Audit reviews with the Audit Committee company's annual operational risk assessment results and at least once each quarter the results of internal audits, including the adequacy of internal controls over financial reporting. The Vice President of Internal Audit and Chief Information Officer report to the Audit Committee on information systems controls and security.
Throughout each fiscal year, the Audit Committee invites appropriate members of management to its meetings to provide enterprise-level reports relevant to the Audit Committee’s oversight role, including adequacy and effectiveness of management reporting and controls systems used to monitor adherence to policies and approved guidelines, information systems and security over systems and data, treasury, insurance structure and coverage, tax structure and planning, worldwide disaster recovery planning and the overall effectiveness of company's operations risk management policies. The Audit Committee is generally scheduled to meet at least twice a quarter, and generally covers one or more areas relevant to its risk oversight role in at least one of these meetings.
The Compensation Committee oversees risks associated with company's compensation policies and practices with respect to executive compensation and executive recruitment and retention, as well as compensation generally. In establishing and reviewing the executive compensation program, Compensation Committee consults with independent compensation experts and seeks to structure the program so as to not encourage unnecessary or excessive risk taking. Company's compensation program utilizes a mix of base salary and short-term and long-term incentive awards designed to align the executive compensation with success, particularly with respect to financial performance and stockholder value. The Compensation Committee sets the amount of company's executives’ base salaries at the beginning of each fiscal year. A substantial portion of bonus amounts are tied to overall corporate performance and stockholder value. Compensation provided to the executive officers also includes a substantial portion in the form of long-term equity awards that help align executives’ interests with those of its stockholders over a longer term.
The Corporate Governance and Nominating committee oversees risks related to company's overall corporate governance, including development of corporate governance principles applicable to company, evaluation of federal securities laws and regulations with respect to its insider trading policy, development of standards to be applied in making determinations as to the absence of material relationships between company and a director and formal periodic evaluations of the Board and management.
Adoption of Majority Voting Provision
In considering best practices of corporate governance among peer companies and governance practices recommended by shareholder advisory organizations and supported by company's stockholders, company amended its Bylaws and the Corporate Governance Guidelines in fiscal year 2013 to adopt a majority voting provision which became effective immediately following the close of it 2013 Annual Meeting of Stockholders. Such provision provides that, in an uncontested election of directors, each director shall be elected by the vote of the majority of the votes cast (meaning the number of shares voted “for” a nominee must exceed the number of shares voted “against” such nominee), and in a contested election, each director shall be elected by a plurality of the votes cast.
A contested election is defined as an election for which company's Corporate Secretary determines that the number of director nominees exceeds the number of directors to be elected as of the date that is ten days preceding the date their first mail notice of meeting for such meeting to stockholders. Under the amended Corporate Governance Guidelines, any nominee in an uncontested election who receives a greater number of “against” votes than “for” votes shall promptly tender his or her resignation following certification of the vote. The 12 Corporate Governance and Nominating Committee shall consider the resignation offer and shall recommend to the Board the action to be taken. In considering whether to recommend accepting or rejecting the tendered resignation, the Corporate Governance and Nominating Committee will consider all factors that it deems relevant including, but not limited to, any reasons stated by stockholders for their “withheld” votes for election of the director, the length of service and qualifications of the director, their Corporate Governance Guidelines and the director’s overall contributions as a member of Board. The Board will consider these and any other factors it deems relevant, as well as the Corporate Governance and Nominating Committee’s recommendation, when deciding whether to accept or reject the tendered resignation. Any director whose resignation is under consideration shall not participate in the Corporate Governance and Nominating Committee deliberation and recommendation regarding whether to accept the resignation. The Board shall take action within 90 days following certification of the vote, unless a longer period of time is necessary in order to comply with any applicable NYSE or SEC rule or regulation, in which event the Board shall take action as promptly as is practicable while satisfying such requirements.
- "Verifone Holdings (WIKI ANALYSIS)". wikiinvest. 2014-10-03. Retrieved 2014-10-05.
- "VeriFone Systems Total Assets (Quarterly)" (XBRL). YCHARTS. 2012-04-01. Retrieved 2014-10-05.
- "VeriFone Systems Shareholders Equity (Quarterly)". wikiinvest. 2013-01-03. Retrieved 2014-10-05.
- "2013 Form 10-K, VERIFONE SYSTEMS INC.". United States Securities and Exchange Commission. October 31, 2013. Retrieved 2014-10-05.
- "VeriFone Systems Inc. (PAY) ranked TOP in NASDAQ research report". ZACKS.
- "Markets Open Higher; VeriFone Profit Tops Street View". NASDAQ.
- "VeriFone profit tops estimates, to cut 500 jobs".
- "Markets Gain On Jobs Data; VeriFone Earnings Beat Estimates".
- "Verifone Systems (NYSE: PAY) Investor Relations".
- "Verifone And MasterCard Bring Card-Linked Offers To Las Vegas For Money 2020" (Press release). Retailers. 2014-11-03. Retrieved 2014-11-07.
- "Verifone Reinforces Mission With New Brand Voice And Identity" (Press release). retailsolutionsonline.com. 2014-11-03. Retrieved 2014-11-05.
- "Verifone Debuts New Brand Voice, Identity, Logo" (Press release). CSPnet.com. 2014-11-05. Retrieved 2014-11-07.
- "VeriFone's path leads to a pot of gold" (Press release). InvestorsObserver. 2014-09-15. Retrieved 2014-10-01.
- "VeriFone Systems (PAY) Stock Jumps on Partnership With Vantiv(VNTV)" (Press release). TheStreet. 2014-10-27. Retrieved 2014-11-01.
- Tricia Duryee (2011-11-30). "VeriFone’s CEO Explains Why It Spent $1 Billion on Acquisitions for a New Payments Strategy" (Press release). AllThingsD. Retrieved 2014-10-05.
- "Card Networks Gain As Apple Pay Boosts Visa, MasterCard, VeriFone" (Press release). BIDNESS ETC. 2014-09-11. Retrieved 2014-10-01.
- "VeriFone Mobile Money and Airtel Africa Group Announce Master Agreement for the roll out of Merchant Enablement across Africa" (Press release). PR Newswire. 2014-08-20. Retrieved 2014-10-01.
- "VeriFone buys Global Bay to win mobile retail market" (Press release). GIGAOM. 2011-11-01. Retrieved 2014-11-23.
- "VeriFone closes acquisition of Enterprise Integration Technologies" (Press release). THE FREE LIBRARY. 1995-11-08. Retrieved 2014-11-08.
- "MasterCard Acquirer Provides Mobile POS Capabilities throughout Peru with VeriFone" (Press release). BUSINESSWIRE. 2014-10-01. Retrieved 2014-10-01.
- "History of Credit Card Processing" (Press release). awepay. 2014-11-12. Retrieved 2014-11-22.
- "VeriFone acquires the assets of ICOT Corp" (Press release). CBR. 1989-06-01.
- "Taxis Call A Truce In NYC, Sort Of". PYMNTS.com. 2006-09-15.
- "Verifone and MasterCard Pilot Taxi Offers". PYMNTS.com. 2014-11-04.
- "Data Breaches Drive Retailers To Update Payment Systems". LAW360. 2014-09-23.
- "VERIFONE AND GEMPLUS FORM JOINT VENTURE TO PROVIDE 'SMARTCASH' SOLUTIONS FOR AUTOMATING CASH TRANSACTIONS". THE FREE LIBRARY. 2006-06-29.
- "VERIFONE AND BROADVISION SIGN JOINT DEVELOPMENT AGREEMENT TO ENABLE TRANSACTION PROCESSING OVER ELECTRONIC COMMERCE NETWORKS". THE FREE LIBRARY. 2006-05-15.
- "HP Buys VeriFone for $1.15 Billion / Move secures foothold in electronic commerce market". SFGATE. 1997-04-24.
- VeriFone, Inc. "VeriFone Fact Sheet".
- "Why VeriFone Systems (PAY) Stock Is Rising In Pre-Market Trading Today". TheStreet. 2014-06-06.
- "PVH and VeriFone are big market movers". BloombergBusinessWeek. 2014-09-04.
- "PVH, VeriFone, Ciena, Matrix Service, and Methode Electronics are big market movers". Fox Business. 2014-09-04.
- Jim Bruene (2006-04-17). "Verifone Acquires Lipman—and the Future" (Press release). netbanker. Retrieved 2014-11-22.
- "VeriFone buys Lipman Electronic for $793M" (Press release). SILICON VALLEY BUSINESS JOURNAL. 2006-04-10. Retrieved 2014-11-22.
- VeriFone, Inc. (2006-11-01). "VeriFone Completes Acquisition of Lipman" (Press release). VeriFone. Retrieved 2008-02-04.
- VeriFone, Inc. "VeriFone Fact Sheet".
- "Leading NFC terminal maker Verifone encourages merchants to enable Apple Pay" (Press release). 9To5Mac. 2014-10-27.
- "Apple Pay Drives Verifone Sales" (Press release). PYMNTS.COM. 2014-09-12.
- "VeriFone Expands Way2ride Mobile App to Philadelphia Taxis" (Press release). Business Wire. 2014-06-17. Retrieved 2014-06-28.
- "VeriFone's Glimpse Into Apple's Future Payment System" (Press release). Seeking Alpha. 2014-06-09. Retrieved 2014-06-28.
- "Contactless Payments Market Expected to Reach $9.88 Billion by 2018 – New Report by MarketsandMarkets" (Press release). PRWEb. 2014-06-28. Retrieved 2014-06-28.
- "VeriFone Security Solution Wins The Banker Technology Project of the Year 2014 Award" (Press release). BUSINESSWIRE. 2014-09-24. Retrieved 2014-10-01.
- "VeriFone Expands Point-to-Point Encryption Services to UK" (Press release). BUSINESSWIRE. 2014-09-17. Retrieved 2014-10-01.
- "What’s Next for NFC" (Press release). NATIONAL RETAIL FEDERATION. 2014-10-01. Retrieved 2014-10-01.
- "Yapital integrated into VeriFone H5000" (Press release). Finextra. 2014-09-10. Retrieved 2014-10-01.
- "VeriFone Enables Delivery of Elavon Loyalty Solution at Point of Sale" (Press release). BUSINESSWIRE. 2014-09-30. Retrieved 2014-10-01.
- "VeriFone TRANZ 330 Credit Card Terminal" (Press release). 1ST NATIONAL PAYMENT SOLUTIONS.
- "VeriFone Systems (PAY) NFC Terminal May be Popular Choice for Small Businesses Moving to Apple Pay" (Press release). StreetInsider.com. 2014-10-31. Retrieved 2014-11-02.
- VeriFone, Inc. (2007-10-17). "VeriFone Announces Vx 670 Bluetooth Solution" (Press release). VeriFone. Retrieved 2008-02-04.
- "Verifone MX Terminals Receive Pan-European Certification". Business Wire. 2014-11-04. Retrieved 2014-11-07.
- "VeriFone Systems (PAY) Brings VX Evolution Terminals to Saudi Arabia". Street Insider. June 17, 2014. Retrieved June 28, 2014.
- "VeriFone and ITS Bring Latest Payment Solutions to Saudi Arabia". Business Wire. June 17, 2014. Retrieved June 28, 2014.
- "Givex Announces Integration with VeriFone PAYware Ocius" (Press release). Market Watch. 2014-06-11. Retrieved 2014-06-28.
- "VeriFone reports Peru mPOS deal" (Press release). Finextra. 2014-10-01. Retrieved 2014-10-02.
- "Sunoco, VeriFone Forge Deal to Install Integrated Dispenser Screens" (Press release). CSPnet.com. 2014-10-07. Retrieved 2014-10-22.
- "Sunoco and VeriFone Forge Agreement to Install Integrated Dispenser Video Screens at All Branded Locations" (Press release). MarkeWatch. 2014-10-07. Retrieved 2014-10-22.
- "Gilbarco and VeriFone Join Forces to Offer Payment Solutions and Services and Digital Media to Convenience and Fuel Retailers" (Press release). GILBARCO VEEDER-ROOT. 2014-08-13. Retrieved 2014-10-22.
- "VeriFone UX Solutions First Payment Systems Certified for Interac Flash® 1.5 Requirements" (Press release). mobilepaymentstoday.com. 2014-09-25. Retrieved 2014-10-01.
- "VeriFone's unattended payment devices certified for Interac contactless debit" (Press release). BUSINESSWIRE. 2014-09-25. Retrieved 2014-10-01.
- "Leading NFC terminal maker Verifone encourages merchants to enable Apple Pay" (Press release). 9TO5Mac. 2014-10-27. Retrieved 2014-10-28.
- "VeriFone Equips Bronx MTA with TransitPAY Bus Location Tracking System for Rider Information Feeds" (Press release). REUTERS. 2012-11-27. Retrieved 2014-11-22.
- "Polish Buses Offer On-Board Self-Ticketing with Verifone NFC Payment Devices" (Press release). THOMASNET.com. 2014-11-04. Retrieved 2014-11-07.
- "MasterCard, VeriFone and Zwipe unveil biometric contactless payment card" (Press release). EssentialRetail. 2014-10-20. Retrieved 2014-11-10.
- "Verifone Announces QX1000 Plug-and-Play Advanced Contactless Solution" (Press release). VeriFone Global Pres Releases. 2014-05-18. Retrieved 2014-11-20.
- "VeriFone’s IntelliNAC Moves New Transaction Volume for Phoenix Managed Networks" (Press release). Market Watch. 2014-10-09. Retrieved 2014-10-22.
- "VeriFone Introduces Next Generation Network Technology for ISOs" (Press release). BusinessWire. 2011-05-11. Retrieved 2014-10-22.
- "Turkish Airlines Boards Payment as a Service from Verifone". FinancialMirror. 2014-11-04.
- "Yapital, Verifone partner to enable m-payment". telecompaper. September 10, 2014.
- "VeriFone Systems Initiated With Outperform On 'EMV'". INVESTOR'S BUSINESS DAILY. 2014-10-07.
- "VeriFone’s New Strategy (And It’s Not About Payments)". PYMNTS.com. 2014-10-15.
- "VeriFone PAYware Ocius gets PCI SSC certification". Finextra. September 17, 2014.
- "VeriFone helps combine NYC taxi apps". mobilepaymentstoday.com. September 10, 2014.
- Jay Roach (June 15, 2009). New Non-Profit To Take On Retailers' Payment Security Woes. Retail Solutions Online.
- "The Economics of Paying at the Table". The VeriFone Blog. 2012-08-31. Retrieved 2014-10-01.
- "What's New in POS Hardware for 2014". HT. 2014-09-05. Retrieved 2014-10-03.
- Josh Beck (2014-10-07). "VeriFone Boosted by Security Breaches". BARRON'S. Retrieved 2014-10-22.
- "Vantiv and VeriFone Launch “Secure Your Future Today” Campaign". MarketWatch. 2014-10-27. Retrieved 2014-11-02.
- Olga Kharif (2014-04-10). "Why U.S. Retailers Are Still Vulnerable to Card Fraud". BloombergBusinessweek. Retrieved 2014-10-03.
- Jim Daly (2014-09-04). "The U.S. EMV Migration Produces a Windfall for POS Terminal Producer VeriFone". DIGITAL TRANSACTIONS. Retrieved 2014-10-22.
- "VeriFone and First Data Partner on Payment Security Efforts" (Press release). NACS. 2014-05-05. Retrieved 2014-11-20.
- "VeriFone And First Data Bring End-To-End Encryption And Tokenization To Gas Stations And Convenience Stores" (Press release). RETAILERS. 2014-04-29. Retrieved 2014-11-21.
- "VeriFone brings First Data TransArmor solution for U.S. multi-lane and petroleum merchants" (Press release). INFOTECH LEAD. 2014-04-29. Retrieved 2014-11-21.
- "VeriFone has $15.4 mln verdict tossed by federal appeals court" (Press release). REUTERS. 2014-10-17. Retrieved 2014-10-22.
- "Fed. Circ. Tosses $15M Patent Verdict Against VeriFone" (Press release). LAW360. 2014-10-17. Retrieved 2014-10-22.
- "Verifone Acquires Electronic Payments Company Hypercom For $485 Million" (Press release). TechCrunch. 2010-11-17. Retrieved 2014-11-21.
- "VeriFone Welcomes Karen Austin to Board of Directors" (Press release). Market Watch. 2014-06-17. Retrieved 2014-06-28.
- "Verifone’s CEO Focused on Streamlining Over Deal Making" (Press release). Bloomberg. 2014-11-04. Retrieved 2014-11-07.