Innovative software paying off for newer entrants in POS solutions sector
The incumbents “are clearly in a difficult situation”, with an influx of new entrants and alternative solutions contributing to squeezed margins. This stems largely from the 2015 decision by PCI to approve Android as a secure operating system for POS terminals, opening up the market to more players.
The newer players include companies like Square and Clover. Offering software that simplifies merchants’ lives by consolidating processes, this creates recurring revenue on top of hardware sales. “These companies, when you look at their business model, it is what Ingenico and Verifone aspire to be.”
Although “there is no blanket answer” for how COVID-19 will affect the POS sphere, the specialist gave some breakdowns. For instance, “in the US, 50% or more, maybe even 60%, of Ingenico’s and Verifone’s revenue comes from tier 1 retail.” In this example, there isn’t expected to be much impact.
When asked about the expected decline in terminal shipments, accounting for EMV, the replacement cycle and coronavirus, the specialist believed that there could be at least a 20% drop. However, depending on when the coronavirus situation eases, “when [markets] do reopen, we should get back to the level of commerce that we saw before.”
The specialist was also asked how the market will develop over the next six months, as well as longer term. “I think for sure, within two years, the only terminals you’re going to see in the market are Android terminals.” Manufacturers will be more inclined to make these, as they’re more cost-effective to build.
To access all the human insights from Third Bridge Forum’s Interview, Global POS Solutions Update – Coronavirus Impact on Verifone, Ingenico & Others, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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