VeriFone has to concentrate on delivering EMV technology to several different customer groups while also making sure its product offerings stay manageable, CEO Paul Galant says.
Seventy percent of the terminals VeriFone shipped in the past year to larger merchants are already EMV ready, so the company must focus on restaurants, hotels and other small to midsize businesses, Galant says.
"These are areas where you are used to giving someone your card and they take it away to do the transaction," Galant says. "That's not going to happen anymore with chip-and-PIN EMV because the consumer has to put the card into a reader."
Galant estimates that the hospitality market has a need for 3 million EMV terminals. "We will get more than our fair share of that," he says.
Galant spoke at the annual JPMorgan technology conference in Boston on May 20, providing an update on how he is reshaping the terminal manufacturer since becoming CEO in October, about five months after longtime CEO Doug Bergeron left the company.
Since joining VeriFone, Galant has been outspoken about the vendor's troubled financial condition and reputation. One of the company's biggest problems was the scattershot way it added new products and services, he says.
At one point, VeriFone had 13 operating systems, 7,000 product capabilities and 1,000 different product families, Galant says. "No global technology company can survive with that as an anchor around its neck, constantly trying to keep all of that upgraded," he says.
For years, VeriFone would give sales people a quota and just tell them to go sell terminals, Galant says. When those sales people got requests for capabilities the VeriFone terminals did not offer, they would go to the R&D staff and request new technology.
"Whoever yelled the loudest, or whoever was closest to the CEO, got his terminal solution," Galant says. "And that's how you end up with thousands of products."
Now, the company has narrowed terminal production down to the "best in class" and the technology department works with the global needs of VeriFone in mind, not just what one sales person wants, Galant says.
VeriFone has an opportunity to be a significant player in the mobile point of sale space as well, Galant says. "Every 'dongle' out there has the potential to be an 'EMV dongle,'" he adds.
In the wake of the holiday-season Target breach, VeriFone is also promoting its VeriShield point-to-point encryption offering, Galant says.
Too many companies operate encryption or tokenization methods that do not cover data from the terminal to the acquirer, he says. "It really needs to be a case in which at no point can anyone steal anything that is useful."
In moving forward, the company has to find its place in important emerging markets. Galant says he wishes he had a "time machine" so he could go back and change past decisions that left VeriFone out of China.
"We have a weakness in not being in China, and I am not sleeping well at night about that," Galant says. "But it's not too late, and it is a developing market."
In the same vein, VeriFone views Russia as an important market in which it does strong business.
"We are committed to Russia, but we are nervous about what will happen going forward," Galant says, referring to the current unrest that has resulted in the country developing to its own national payments system.
"If we get knocked out of that market, others will be as well," Galant says.
Visa and MasterCard have both indicated a reluctance to abide by new Russian rules calling for payments companies to pay hefty fees to operate inside the country.