Retail stores have spent years fighting competition from the Internet, and Verifone plans to prove that it's a fight the brick-and-mortar side can win.

The Web's emphasis on self-service is also its biggest flaw, said Vin D'Agostino, Verifone's senior vice president of global commerce enablement.

"Stores are three dimensional, and they're socialÂ…there are other people actually there," D'Agostino said. "You read a lot of articles about traffic at retailers falling, but we think we can help."

Verifone plans up to three new suites of point of sale terminals, with an emphasis on providing services that will improve the interaction between the customer and the cashier.

"We think we can help physical retailers compete more effectively online by creating an experience in the store that's as good as what consumers can get online," D'Agostino said. "We are rethinking the terminal. It's still secure and accepts payments, but it will be more like a powerful endpoint."

To accomplish this, Verifone must fundamentally change how it designs hardware. Its current terminals are "totally walled off," D'Agostino said, but in the future Verifone will open its tools up to external developers.

A number of other companies are already seeing success in using open development systems. American Express has using a network of innovation hubs, PayPal has improved its developer relations through moves such as its purchase of Braintree, and other vendors provide open tools to let independent developers build apps for new platforms, such as smartwatches.

At Verifone, open development will eventually lead to an app store model, in which developers can share technology and product ideas over Verifone's network, which covers 150 countries.  

Expanding the utility of payment terminals as a way to deliver marketing is also large part of Verifone's strategy. In the past year, Verifone has deployed technology in gas stations and taxi cabs that communicate directly with consumers while they are paying. For gas stations, that opens the possibility of using ad revenue to offset the cost of the EMV migration.

The company will expand that mix of marketing and payments in the year ahead, and will add beacons to bring more detail to in-store marketing for a wider range of merchants. Beacons use Bluetooth signals to detect when and where shoppers are throughout a store; using this data, merchants can provide the same kind of targeted marketing consumers see on e-commerce sites.

"The merchant can have an app that can be the basis of engaging in a dialogue while the consumer is in the store," D'Agostino said. "The merchant can tell you what is in the store. It's a powerful tool that a brick and mortar retailer can use to create a customer experience."

Terminal manufacturers like Verifone face a rapidly changing competitive landscape, said Rick Oglesby, a senior analyst and consultant for Double Diamond Payments Research.

"They now find themselves competing with tablet computers, which are multi-purpose devices as opposed to the traditional terminal, which is a single-purpose device," Oglesby said.

Tablets appeal to merchants and acquirers because they can facilitate a variety of services beyond payment processing, Oglesby said.

"However, the single-purpose devices are appealing because they can do payment processing more efficiently and more securely than most tablet add-ons," Oglesby said. "So we're starting to see the tablet and terminal hybrid, which offers the best of both worlds, and we'll also see a lot more semi-integrated payment solutions that will sit alongside legacy POS systems and lift data to the cloud to enable value-added services."

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