Ingenico Group is leveraging its experience in EMV-chip terminal upgrades and new momentum from Apple Pay to better position itself for the U.S. conversion to smart-card technology.
The French terminal maker has seen a significant bump in requests for Near Field Communication configurations on EMV terminals to accept Apple's new mobile payment system, said Thierry Denis, president of Ingenico North America. The U.S. card networks are pushing most companies to be able to handle EMV-chip cards, which improve security over magnetic-stripe cards, by October 2015.
The heightened interest in NFC has helped Ingenico, considered the top terminal provider globally, improve its standing in the U.S., which is dominated by competitor VeriFone Systems Inc.
"We had a vision to double our market share in the U.S. by the end of 2015, but we are there already and our third-quarter statistics will bear that out," Denis said. "Progression in the U.S. is very quick for us now."
Ingenico's current U.S. market share stands at roughly 30%, or double what it was two years ago, but still about half that of VeriFone, said Gil Luria, analyst with Los Angeles-based Wedbush Securities.
"Ingenico has a great emerging-markets business, including in China, and that is where most of their growth is coming from," Luria said. "They are in good shape because the EMV cycle in the U.S. market just adds on top of that."
Even before Apple's Sept. 9 announcement of the iPhone 6 and Apple Watch's NFC payment capabilities, Ingenico was seeing strong progress in merchants' upgrades to EMV technology, Denis said.
After the card networks' 2015 deadline, fraud liability shifts to the entity not capable of handling EMV transactions. The deadline is not a mandate; those that miss the deadline will still be capable of accepting magnetic-stripe cards.
"Some who were not decided yet about how to approach EMV are now in a hurry and want NFC," Denis added. "But the portion of merchants not wanting EMV at all was really becoming very small."
Ingenico's efforts to sell EMV hardware enjoyed a shot in the arm when the U.S. payments industry came to an agreement on how to route EMV debit transactions in compliance with the Durbin amendment, which requires that merchants have a choice of routing options.
Merchants also won't have to change anything on their terminals to accept Apple Pay transactions, Denis said.
"Apple Pay's advantage is that it is using the traditional payments infrastructure, and we have confirmed that for our customers that they won't need anything else," Denis added. "We will have it ready, and all you have to do is turn it on."
U.S. Bancorp's payment processing unit, Elavon, announced this week it will deploy Ingenico EMV terminals to its merchant clients in the hospitality, health care and education sectors in addition to retail.
Ingenico also plans to use its Roam subsidiary to capture more mobile point of sale interest in the U.S. The company will also benefit from its upcoming acquisition of online payments provider GlobalCollect, Denis said. Ingenico began the process in July of acquiring Global Collect for $1.2 billion.
"We are very different now," Denis said. "We are gaining market share in very different segments."
Its rival VeriFone has been focused on providing terminal technology in the petroleum and taxi cab sectors. But the two companies remain similar in their product offerings, even if they target different segments, Luria said.
Competition between Ingenico and VeriFone will likely stabilize, with both dominating certain markets, because Equinox has faded out as a No. 3 competitor, Luria said.
Toronto-based NBS Payment Solutions acquired all of the assets of Equinox Payments earlier this year, but plans to continue to operate under the Equinox name.
"Pax Technology in China is probably considered the No. 3 terminal maker in the world, but it's a distant third, with Ingenico and VeriFone being much larger," Luria added.
Pax Technology and Spire Payments in the U.K. have made cases for themselves as the No. 3 terminal providers behind the major manufacturers.