VeriFone Systems Inc. is working on an add-on to Apple Inc.'s iPad tablet that slips on to the device and transforms it into a payment terminal that can scan barcodes.

The San Jose, Calif.-based company is building on its PayWare Mobile smartphone payment sleeve, and it plans to debut the technology this month at the National Retail Federation's Annual Convention and Expo in New York. The device works in concert with VeriFone's GlobalBay mobile retail software, which aids employees on the salesroom floor.

"Big merchants want to plug mobile payments into their full-fledged point of sale and inventory software, not just their payment processing, so GlobalBay extends out their investment," says Harlan Eplan, the director of business development for VeriFone's recently acquired Global Bay unit.

Eplan says what differentiates the VeriFone iPad payment system from other rival products is its ability to plug directly into the retailer's point of sale system, which manages inventory and tracks customers.

Indeed, the market is flooded with card readers that perform credit and debit transactions.

Square Inc. produces a similar product that already processes payments on an iPad.

Products such as Square's are ideal for smaller retailers, but they don't scale well for big-boxes and chain stores, some industry watchers say.

"Square can be sold online. It's an extraordinary simple solution," says Rick Oglesby, a senior analyst at Aite Group LLC. "But this [VeriFone] product is meant to be sold in person with a lot of care. It's a big software play. It's a customized play. It's not out-of-the-box in any way, shape or form."

Larger retailers are keenly interested in the payment benefits of portable card readers because they help bust up lines by allowing employees to sell products from storeroom floors.

The technology is still just being tested, but the model stems from the company's November acquisition of Global Bay Mobile Technologies, creator of software that lets employees check inventory and ship items that might not be in the store to customers (see story). GlobalBay already is deploying that software to about a dozen retailers across the country.

Companies such as WholeFoods and Barneys will be able to upgrade and buy the payment sleeve for the cost of the hardware, says Eplan.

VeriFone said Dec. 5 that it has been chosen by Guess Inc. to deploy the software in its stores. Today, the software is on iPads that sit on rolling pedestals in about dozen Guess stores. A wider rollout is planned for later in the year, VeriFone said.

VeriFone already has a strong history in mobile payments. Just last year, VeriFone announced an update to its smartphone payment sleeve that added acceptance for contactless cards and chip cards.

Meanwhile, GlobalBay is offering retailers a similar piece of payment hardware for Apple's smaller iPod Touch.

In December, VeriFone said Brighton Collectibles, a California accessories manufacturer with roughly 150 retail stores in the U.S., was buying more than 300 iPod Touch systems equipped with card readers for its stores (see story).

In the future, however, Eplan says GlobalBay and VeriFone will be more focused on providing managed services to retailers that chose not to use its hardware.

He added that while he couldn't name specific retailers, VeriFone is in talks with several major outfits about deploying the payment-enabled iPads. "There are more than a handful of people," Eplan said.

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