The market for traditional countertop payment terminals — from legacy companies like VeriFone and Ingencio — has supposedly been under serious threat from mobile card reader businesses like Square.
But a new report from BI Intelligence finds that these predictions are overblown.
Overall, the global market for traditional countertop payment terminals is healthy. We forecast payment terminal shipments will grow 73% in three years, increasing to 35 million in 2015.
The real storyline, though, is in the more granular look at the markets that will drive growth. The U.S. and Europe are stagnant, and all the dynamism is in emerging markets. This has big implications for the health of the top payment hardware companies because local competitors have big advantages in the fastest-growing markets.
In the report, BI Intelligence takes an in-depth look at the global payment terminal market. We examine which regions are driving growth and how market share is shaping up in different regions. We also take a look at the three ways mobile technology could eventually kill the legacy payment terminal and assess how big a threat mobile really poses.
Here are some of the key elements from the report:
- We forecast global payment terminal shipments will grow 73% in three years, increasing to 35 million in 2015, up from 20 million in 2012. That’s healthy growth in spite of the growing adoption of mobile card readers by many merchants.
- But growth varies sharply between geographic regions. The U.S. and Europe are stagnant, and all the dynamism is in emerging markets. Asia-Pacific and Latin America will see triple-digit growth in from 2012 through 2015. During the same period the U.S. market will only grow 3% and Europe 9%.
- Two companies have dominated the payment terminal market since the mid-90s. While Ingenico and VeriFone have lost market share in recent years, they have also been able to simultaneously increase the distance between themselves and their next closest competitor through acquisitions.
- Low or negative terminal shipments growth in Europe and the U.S. is a sign of lackluster growth in bricks-and-mortar retail, and payments industry disruption. Retailers now have the option to adopt mobile point-of-sale systems that transform smartphones and tablets into credit and debit card readers. This trend will continue, especially as the U.S. migrates to EMV chip cards.
In full, the report:
- Forecasts global terminal shipments with breakdowns of how growth will shape up in each region.
- Explains how two players emerged as a quasi-duopoly in the payment terminal business and why breaking up the two companies’ dominance won’t be as easy as some think.
- Gives a snapshot of the market share of the key players in each region and finds that Asia-Pacific is the region with most opportunity for growth as well as the stiffest competition.
- Examines why growth has stagnated in the U.S. and Europe and what this means for the top payments companies.
- Concludes that while mobile card readers have caused some disruption and mobile payments are likely to take off, it will be mobile commerce that could inevitably kill the legacy payment terminal.
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