Silicon Valley And Legacy Payment Companies Are Locked In A Battle To Control The Store Register

Silicon Valley is gunning for the market controlled by traditional payment terminals, the clunky countertop systems still in use at retailers everywhere.

Startups and tech companies like Amazon and PayPal are creating a new crop of solutions, including mobile payment hardware, credit card readers that attach to smartphones and tablets, as well as merchant-side payment apps.

In a second quarter 2014 payments market 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 business for "countertop checkout terminals," and assess the threat from mobile and software-based solutions.

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Here are some of the key takeaways:

• Low or negative countertop terminal shipments growth in Europe and the U.S. are an early sign of payments industry disruption from mobile-based solutions.
• The two dominant countertop terminal vendors, Ingenico and VeriFone, face increasingly intense competition in Asia-Pacific. The region will account for over half of terminal shipments by 2015, and the big players could see their market power wane.
• The greatest disintermediation threat to the overall terminal business, including mobile terminals, is not from mobile terminals themselves, but from apps. Software-based tools like OpenTable that now allow users to conduct physical world transactions entirely within their phones, without the need for scanning at a terminal.
• We forecast global terminal shipments will still grow 73% in three years, increasing to 35 million in 2015, up from 20 million in 2012. The report includes detailed growth charts and growth rates.
• But growth varies sharply between geographic regions. The U.S. market will only grow 3% in the same period (2012-2015), Europe 9%.

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.
• Takes a granular look at the markets that will drive growth.

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