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Point-of-sale (POS) terminal vendor Ingenico forged an exclusive partnership with Cabify, a Latin American app similar to Uber that operates in 33 cities across 12 countries, including two in Europe.
The partnership will make Ingenico ePayments, the firm’s integrated payments and digital commerce segment, the processor for “full service and gateway” credit-card payments in Cabify’s app, which are the primary option. Ingenico hopes to add other currency and payment options over time as part of a move to create a “seamless and secure environment” for customers.
The move has the potential to grow Cabify’s business, which ultimately benefits Ingenico. Mobile conversion rates tend to be low, thanks to friction associated with small screens and slower connections. Ingencio believes that its portfolio of offerings could make it easier for Cabify users to pay and ultimately increase conversion rates. That could grow volume for Cabify, and therefore ultimately benefit Ingenico by allowing them to gain a corresponding amount in transaction fees.
Those gains could help lift the firm in two parts of Ingenico's business that are likely particularly important right now.
ePayments: Ingenico’s ePayments segment is beginning to revitalize after some hurdles as a result of volume decreases from a major client earlier this year. In Q1 2016, the segment shrank by 1%, but in Q3, it grew by 22%, both on a constant currency basis. The Cabify partnership, which could scale quickly thanks to the ride-hailing service's large size, could help further accelerate ePayments.
Latin America: Revenue in Ingenico’s Latin America segment, which comprises roughly 8% of the firm’s business, went down by 24% in Q3 2016. That decline was largely driven by macroeconomic issues in Brazil, but the decrease made Latin America the company’s second-poorest performing segment in the quarter. Investing in high-growth companies in the region could help Ingenico expand its reach in Latin America and perhaps help mitigate losses down the line.
When mobile-point-of-sale (mPOS) devices first entered the market, they were extremely disruptive, because they provided an attractive, accessible, and affordable ways for merchants of all types to begin accepting card payments easily.
Now that consumers expect cards to be accepted everywhere they shop, demand for the devices is as high as ever.
That has pushed mPOS firms to recalibrate their strategies. They're increasingly targeting small retailers, moving beyond the individual sellers that spurred their initial growth. They're also turning to value-added services, like working capital programs, business management tools and software, data services, or e-commerce integration, to make money. And they're turning to value-added services, like working capital programs and business-management tools that carry additional fees that can build new revenue streams for these providers.
The shift to chip-enabled payment cards in the US has been a big driver of business for mPOS firms, because their devices are far less expensive than those offered their legacy competitors. That’s leading new types of sellers to mPOS firms — but it’s coming at a loss, because card readers are a great acquisition channel, but a poor profit generator. Software and services are stepping in to fill the gap.
Jaime Toplin, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile point-of-sale that forecasts growth of the mPOS market through 2021 and examines the trends that are pushing merchants to adopt the technology. It looks at how mPOS providers are competing for cost-conscious sellers and details the strategies they're pursuing to capitalize on demand for their solutions. And it explores how legacy POS firms are responding and providing mobile solutions of their own.
Here are some key takeaways from the report:
Retailers are the key group driving the growth of the mPOS ecosystem. They do more business than micromerchants, invest in more services, and are likely to be more loyal clients, making them the most lucrative and reliable option for mPOS firms.
Hardware upgrades will be a core driver of mPOS usage. Upgrading to EMV is expensive, and as a result, many merchants have opted to avoid making the switch. But as chip cards become more common, the fraud benefits that EMV provides are starting to appeal to merchants. This is driving retailers to mPOS firms, as the solutions they provide are fairly easy to implement, and largely affordable.
But value-added services will be the biggest contributors to mPOS firms' success. These tools tie merchants closely to the product and keep them loyal, while generating additional sources of revenue for mPOS providers.
In full, the report:
Forecasts the number of mPOS devices in circulation in the US through 2021 and assesses drivers behind that growth.
Explains the sub-sectors of the mPOS ecosystem and determines why retailers are the biggest drivers of growth.
Assesses the impact of the US EMV shift as a major catalyst for mPOS usage in the US.
Provides details different channels that mPOS firms are using for growth.
Evaluates the ways customer acquisition segments of business differ from profit-generating measures.
And much more.
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