VeriFone Holdings Inc.’s efforts to drive payment card acceptance in taxis and at the gas pump appear to be paying off, VeriFone CEO Douglas G. Bergeron told analysts during a conference call yesterday discussing the point-of-sale terminal makers fourth quarter earnings. The San Jose, Calif.-based company reported net income of $3.7 million for the quarter ended Oct. 31, a reversal from the $366.6 million loss the company reported for the same period last year. VeriFone's fourth-quarter revenue totaled $217.8 million, down 11% from $244.7 million during the same period last year. Total annual revenue for fiscal 2009 was $844.7 million, up 8.4% from $921.9 million the previous year. Within North America, the company’s products are deployed in 13,700 cabs, twice the total from a year ago, Bergeron said, noting revenue from devices designed for taxis accounted for 5% of VeriFone’s fourth-quarter revenue. Bergeron said he expects to add 10% to 15% more POS terminals in cabs over the next year accompanied by 20% to 25% growth in annual cab transactions. VeriFone is expanding its sales staff and is turning its attention to national sales of terminals designed for cabs, he says, noting between 30% and 35% of taxi fares are paid electronically. “The consumer studies we’ve seen suggest that once a rider uses a credit card twice, he’s very unlikely ever to go back to cash,” Bergeron told analysts. VeriFone also hopes to capitalize on the video-monitor systems included with the terminals many of the taxis use by selling advertising for display on them. “There are 300,000 taxi fares a day in New York City, (each) averaging 14 minutes,” Bergeron said, making VeriFone’s POS taxi systems “most-precious media venues.” VeriFone’s efforts to update payment card readers at U.S. gasoline pumps also are driving sales growth. Sales to petroleum customers grew 10% compared with the third quarter, which saw 12% growth over second-quarter sales, Bergeron said. Helping drive that growth is Visa Inc.’s July 1 deadline for all payment software connected to its network to comply with the Payment Card Industry Security Standards Council PA-DSS standard, and interest among fuel retailers continues to grow, Bergeron said. VeriFone also picked up some customers because of a competing product had ceased production and VeriFone’s loyalty program tied to fuel and general merchandise sales. VeriFone’s overall security push, exemplified by its VeriShield Protect system for encrypting transaction data, also should secure more customers, Bergeron said. Chase Paymentech LLC, a Dallas-based processor, Atlanta-based processor RBS WorldPay support VeriShield protect and two unnamed processors also will accept VeriShield Protect-encrypted transactions, he said. Additionally, VeriFone is encrypting more than 5 million transactions per week at two national chain retailers, with “at least five other national chains in final testing and positioned to go live within a couple of months following a busy holiday shopping season,” Bergeron said. VeriFone’s dispute with Heartland Payment Systems Inc., a Princeton, N.J.-based payment processor, is having little effect on VeriFone, he said. While in development of a new Heartland payment terminal, the two companies saw the product going in different directions and ended up suing each other (CardLine, 10/22). VeriFone alleges that a new terminal that Heartland sought to develop with another manufacturer infringed on a VeriFone patent. In a separate suit, Heartland alleged VeriFone is engaging in unfair trade practices. In response to an analyst’s question, Bergeron said Heartland sales represented between 0.4% to 0.6% of VeriFone’s annual revenue. Some costs associated with providing direct support to Heartland merchants using VeriFone equipment exist, but they have been “small,” Bergeron said.
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