VeriFone Launches a Tablet POS Platform for ISOs It Sees Getting Squeezed by Tech Vendors

By John Stewart

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Independent sales organizations are starting to feel squeezed by technology companies selling tablet-based point-of-sale solutions to merchants, according to terminal kingpin VeriFone Systems Inc. So VeriFone on Wednesday rolled out a tablet-based platform for its resellers that they can price and market to their merchants.

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The product, called GlobalBay Merchant, is based on mobile in-store technology VeriFone acquired late in 2011 when it bought Global Bay Media Technologies. So far, more than a dozen VeriFone ISOs representing about 500,000 merchants have signed on to sell the platform, VeriFone says.

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The San Jose, Calif.-based company adds it is in talks with other ISOs, acquirers, and processors serving collectively about 4 million merchants. “We have received positive feedback from every [channel] partner,” Shan Ethridge, vice president and general manager for VeriFone’s channel business, tells Digital Transactions News.

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One of the largest of the partners that have signed up is EVO Payments International LLC, a Long Island, N.Y.-based ISO that alone accounts for about 300,000 of the merchants represented so far. (On Tuesday, EVO announced it had acquired from IP Commerce Inc. a perpetual license for software that expands its ability to support developers. As part of the deal, what EVO calls the “core” payments personnel at IP Commerce are joining EVO. IP Commerce gave indications earlier this year it was pulling back from payments when it ceased operating its front-end processing service.)

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The new VeriFone product comes as processors like PayPal Inc. and technology firms like Square Inc. are pushing tablets as replacements for traditional electronic cash registers. It includes the GlobalBay Merchant app along with help-desk support from VeriFone. It links to VeriFone’s PAYware gateway and works with VeriFone card readers, PIN pads, and EMV chip readers. So far, the app is available only in the U.S. and works only with Apple Inc.’s iOS operating system, but the company says it is developing support for “additional geographies and operating systems.”

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Ethridge will not discuss pricing to ISOs in detail beyond saying it is “flexible,” allowing resellers to levy per-click or flat monthly fees or a traditional discount rate.”We will keep [pricing details] close to the vest ,” Ethridge says, until VeriFone has signed on more resellers.

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Ethridge says VeriFone began working on the new application about a year ago when it noticed what it says was a tendency among point-of-sale tablet vendors to bring in their own integrated processors, making it difficult if not impossible for ISOs to work with them. “We’ve watched what these disruptors have introduced,” says Ethridge. “A lot [of them] compete with the resellers. We felt we could do something that would suit the reseller channel better.”

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Rick Oglesby, a senior analyst at Aite Group LLC, a Boston-based consultancy, says VeriFone’s timing may be right. The tablet POS trend, he says, is “a challenge that has gotten big enough that the average acquirer needs to answer it. They need to look to someone who can bring the product.”

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In at least some cases, Oglesby says, providers will sell the tablet service with an integrated processing relationship. If a merchant wants to stick with an existing processor or go with a new one of its choice, the cost will be higher because of the need for a custom integration. That can lock out ISOs, Oglesby says.

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Some tablet technology providers, however, insist they have made it a point to accommodate merchants’ choice in processing. “Some [ShopKeep] partners are bundling payment processing and POS, some are providing the technology with a choice of processor, and some are providing the processing solution with a choice of technology,” Todd Lasher, general manager and head of strategic partnerships and alliances at ShopKeep POS, a New York City-based tablet POS vendor, says in an e-mail message. “ShopKeep works with our partners to enable all three paths, so that the merchant ultimately chooses what's best for his or her business.”

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Adil Moussa, who follows small-business acquiring as principal of Omaha, Neb.-based Adil Consulting, agrees the new VeriFone platform is “a good solution that merchants actually want and that breaks with the new model of displacing merchants' relationships through specialized software and hardware.”

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But he warns that the program’s market advantage for ISOs may be short-lived. “I think the advantage will be to the first movers,” he says in an e-mail message. “As these solutions proliferate, the advantage will disappear because some ISOs will be offering these solutions for free in order to compete for accounts as some ISOs are doing today with POS terminals.”