ViVOtech Sells Hardware Unit To Concentrate on NFC Software

ViVOtech Inc., a pioneer in contactless payments and near-field communication (NFC) technology, disclosed Monday that it sold its card-reader business to ID Tech, a manufacturer of smart card readers and point-of-sale hardware and identity-verification products. The subject of reports last week that it was laying off people and possibly going out of business, Santa Clara, Calif.-based ViVOtech said it would concentrate on its payments-related software business.

Terms of the deal were not disclosed. Executives for ViVOtech and Cypress, Calif.-based ID Tech, a division of International Technologies Systems Corp., did not respond to inquiries from Digital Transactions News.

“ViVOtech believes that as a flourishing large-scale international player with complementary products and skill sets, ID Tech provides the ideal home for ViVOpay’s people, products and customers,” ViVOtech said on its Web site in reference to its payments unit. “ID Tech is committed to providing a smooth transition for ViVOpay’s existing customers and supplier relationships.”

In a brief announcement posted on its home page Aug. 7, ID Tech said the assets it acquired from ViVOtech include “ViVOpay’s industry-leading contactless/NFC readers for point of sale, self-service kiosk, and vending applications that compliment [sic] ID Tech’s extensive product offerings. The incorporation of these products and technologies further enhances ID Tech’s market-leading solutions for the payment industry. ID Tech is actively working to ensure the continued support of ViVOpay products and customers, effective immediately.”

Founded in 2002, ViVOtech made a name for itself through its tireless efforts to develop the U.S. market for POS technology based on contactless systems, including NFC, a short-distance, interactive radio technology for communicating data between the payment terminal and a chip card or a smart phone with an NFC chip. The company did make some headway. Former head of global sales Todd Ablowitz, now a mobile-payments consultant based in the Denver area, notes that ViVOtech made many of the contactless readers for VeriFone Systems Inc.’s POS terminals a few years ago, and its readers are attached to Ingenico S.A. terminals in The Home Depot Inc. stores.

But the U.S. contactless and NFC-based mobile-payments markets were slow to develop, and the POS terminal industry changed, Ablowitz notes. Last year, ViVOtech tried but failed to buy the U.S. business of Hypercom Corp., a unit that came up for sale after leading terminal maker VeriFone bought Hypercom mainly for its strong European operation. Concerned about too much market concentration, the U.S. Department of Justice would approve the sale only on the condition that VeriFone spin off Hypercom’s U.S. assets. The winning buyer was a tech-oriented private-equity firm, Gores Group LLC, which renamed the Hypercom operation Equinox Payments LLC.

“To compete in hardware you’re competing in a marketplace that is VeriFone, Ingenico, and a U.S.-only Equinox,” says Ablowitz. “That marketplace forces ViVOtech to be in competition with their former partners at exactly the wrong time, from a competitive standpoint.”

ViVOtech’s hardware business was much bigger than its software unit when Ablowitz worked there from late 2005 to late 2008, but he says the latter has grown and has strong intellectual property. “They’ve made quite significant strides in their software business that may not all be visible,” says Ablowitz, president of Double Diamond Group.

In its Web posting, ViVOtech said it had been trying to divest the ViVOpay reader operation for six months in order to concentrate on what it calls its ViVOnfc Software operation. “The first step in this strategy has been completed,” ViVOtech said. “Now that the sale of the reader business is complete, we are focusing 100% of our energy on the continued support of our customers, contracts and partners, and on growth of this business.”