When Square created the market for mobile point of sale devices, Verifone got defensive. Today, with the rollout of its Engage platform, Verifone is going on the offense.

Through Verifone Engage, which was announced Oct. 22, Verifone is offering a Linux-based product family targeting merchants, acquirers and service providers. Verifone has used the open Linux operating system to enable additions to its connected point of sale terminals in the past, and is advancing that concept to include an app store that will launch in 2016.

Verifone, like many other traditional payment companies, is embracing the reality that its clients want to do more than just accept cards and mobile wallets. Any piece of payment technology can become a platform upon which independent developers can build something greater.

"They don't necessarily have to be payment experts. We know payments well, but someone may want to run an app on Verifone that may not be related to payments but can help merchants," said Erik Vlugt, vice president of global products for Verifone.

Independent developers, ISOs, banks and other third parties can develop products for the Engage app store, which can then be accessed via Web-connected point of sale devices throughout Verifone's network of merchants, clients and other users. The pricing model for apps will vary, and Vlugt did not comment on any exclusivity policies connected to app development.

Other payment device enhancements through the Engage program include new interface designs, the ability to store and display media for marketing, upselling and advertising; and support for mag-stripe, EMV, Near Field Communication and Bluetooth Low Energy. This will combine with the open development tools and app store to enable the point of sale device to support mobile payments, marketing, shopping and ancillary merchant services.

The concept of an app marketplace isn't new; rival hardware sellers already have third-party apps running on their devices, but Verifone hopes its scale sets it apart.

"Not all of these devices are connected…but the Verifone app marketplace is by nature a global marketplace and we add immediate global scale," Vlugt said. "Anything developed for the app store would be available around the world."

The Engage product line is the next step in a long transformation for the terminal maker, but also one of the first that clients can see and hold in their hands. To get to this point, Verifone had to make sweeping changes to its leadership and corporate culture.

When Square first came on the scene, Verifone's response was to launch a marketing campaign that was reminiscent of a political attack ad. Square had a response to the issues Verifone raised, but the two companies were still speaking to very different audiences. Square's market was largely made up of the merchants that would never have considered going to Verifone for a payment terminal, regardless of the vendor's qualifications.

Even those companies that worked with Verifone were not satisfied. After longtime CEO Doug Bergeron left the company in 2013, chairman Richard McGinn became interim CEO and started meeting with clients to determine where Verifone went wrong.

"It has been an eye-opening process," McGinn said on a June 2013 conference call. "They have been brutally honest about our lack of partnership."

Verifone was not sufficiently investing in research and development, and had "a poor track record" of completing certification of some products in a timely fashion, McGinn said.

In September, Verifone hired Paul Galant as its new CEO, tasking the former Citigroup executive with guiding Verifone through the rapidly changing payments technology market.

The company has made several other moves to reinvent both itself and its products. It has been active in taxi payments, gas station hardware and mobile payments; in many of these projects, Verifone partnered with companies like First Data and Barclays to offer something beyond what the vendor created on its own.

"We have had this technical infrastructure but are now adding this commercial ecosystem to the model," Vlugt said.

The move to the open Linux platform would seem to further this strategy, but it also invites more complexity, according to Tim Sloane, vice president of payments innovation for Mercator Advisory Group.

"There are many variations of Linux. Apple iOS and Android are both Linux derivatives but as is perfectly clear an app written for one does not operate on the other," Sloane said. "So now Verifone has decided to compete with iOS and Android by introducing yet another Linux derivative that Verifone controls."

Building a commerce ecosystem that pulls developers away from the high-volume markets associated with iOS and Android over to Verifone won't be easy, Sloane said.

"As an example, Microsoft has decided to enable iOS and Android apps to run in Windows and offer developers tools to integrate those apps more closely to the additional capabilities in Windows," he said. "So the question is, 'What does Verifone have to win the operating system war that Microsoft doesn't [have]?'"

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