What VeriFone’s Announcement Means to the mPOS Market

by Mercator Advisory Group 0

After 18 months, VeriFone announced Thursday during its quarterly analyst call it will no longer invest in Sail, a mobile POS technology aimed and small and medium sized businesses. Ultimately, VeriFone said it does not believe the strategy behind Sail and other mPOS solutions has much potential for profit. From chief executive Doug Bergeron’s statement:

“Customer acquisition costs, either through search engines or TV advertising cannot and will never justify the razor thin margins produced by merchants with infrequent volumes and extremely high attrition.”

MPOS devices are geared towards merchants with small and inconsistent transaction volumes. The only way for solution providers to handle this is to work with large quantities of merchants. This not only increases the total processing volume, but also creates a level of consistency; while one merchant may go weeks without accepting a transaction, the flow across 50,000 merchants will be fairly regular.

However, gaining a significant number of merchants is becoming difficult given the rapid influx of products to the mPOS space. There are simply too many mouths to feed. It was inevitable that the solutions with the least traction would begin to leave the market. In VeriFone’s case, it is switching its focus to another area of its business. VeriFone is the first to do this, but it will not be the last.

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