The story
Verifone was founded by William "Bill" Melton and incorporated in Hawaii in 1981, naming itself for its first telephone-based transaction processing product. The brand name combined "Veri-" from verification, and "fone", a shortening of telephone.
Since the late 1980s, Verifone has held more than 60 percent of the U.S. market, and during the 1990s the company captured more than half of the international market for such systems. In 1996, the company placed its five millionth system. Domestic and international sales of POS systems continue to form the majority of Verifone's annual sales, which hit $387 million in 1995 and were expected to top $500 million in subsequent years.
The sudden growth of the Internet, and especially the World Wide Web, in the mid-1990s created a demand for secure online financial transaction applications. Verifone has designed applications conforming to the Secure Electronic Transaction (SET) standards developed by Visa Inc. and MasterCard. With the $28 million 1995 acquisition of Enterprise Integration Technologies, the company that developed the Secure HyperText Transfer Protocol (S-HTTP), and a $4 million equity investment in CyberCash, Inc., led by Verifone founder William Melton, and with 1996 partnership agreements with web browser leaders Netscape, Oracle Corporation, and Microsoft, Verifone has rolled out a suite of software products targeted at consumers, merchants, and financial institutions allowing secure purchases and other transactions online. Purchases over the Internet, which still produced as little as $10 million in 1995, were expected to reach into the billions by the turn of the century. Verifone has also been working to marry the smart card to the Internet; in 1996, the company introduced the Personal ATM (P-ATM), a small smart card reader designed to be attached to the consumer's home computer, which will enable the consumer not only to make purchases over the Internet, but also to "recharge" the value on the card. Verifone has also partnered with Key Tronic to incorporate a P-ATM interface directly into that company's computer keyboards.
1980s: Introduction and rapid growth
By the beginning of the 1980s, the major credit card companies began seeking methods to reduce processing costs and losses due to fraud. In 1981, Visa and MasterCard began offering merchants discounts on their transactions if they agreed to use newly developed automated transaction technology for all credit card purchases greater than $50. This move opened the way for the creation of an industry devoted to producing POS authorization systems. Early systems typically had starting prices of $900.
Verifone introduced its first POS product in 1982. By lowering manufacturing and operating costs through outsourcing production, Verifone brought its first system to the market at $500. Working with Visa, Verifone captured a large share of the POS market. In 1984, the company introduced ZON credit card authorization system was priced at $125. It took advantage of improvements in processor speeds and the lowering cost of both processors and memory. The following year, Verifone moved its headquarters to Redwood City, outside of San Francisco. The company's revenues grew to $15.3 million, earning a net profit of $864,000.
The company doubled revenues, to about $30 million, in 1986. By January 1988, Verifone controlled more than 53 percent of the POS systems market. Revenues had reached $73.4 million, with net earnings of more than $6 million. The following year, the company increased its dominance in the industry with the purchase of the transaction automation business of Icot Corp., then second in the market with a 20.5 percent share. The acquisition boosted Verifone's revenues to $125 million. By then, Verifone had entered the international market, starting with Australia in 1988 and placing its millionth ZON system in Finland in 1989.
1990s: Expansion into new markets
Verifone went public in March 1990, raising more than $54 million. As the credit card industry matured, Verifone pushed to install its systems into new markets, such as restaurants, movie theaters, and taxis, as well as developing software capacity to bring its systems into the health care and health insurance markets and to government functions. International sales also began to build, as use of credit cards became increasingly accepted in foreign markets. VeriFone was also building its global operation, opening facilities in Bangalore, Singapore, England, Dallas, and Ft. Lauderdale, in addition to its Hawaii and California facilities. Rolling out its Gemstone line of transaction systems, which added inventory control, pricing, and other capabilities, Verifone was aided by announcements from Visa and MasterCard that the companies would no longer provide printed warning bulletins, while requiring merchants to seek authorization for all credit card transactions by 1994.
Revenues jumped from $155 million in 1990 to $226 million in 1992. Verifone had just placed its two millionth system a year ago. By 1993, Verifone systems were in place in more than 70 countries, including its three millionth system, in Brazil, representing the company's expansion in the Latin American market. International sales, which had contributed less than ten percent of revenues before 1990, now accounted for more than 30 percent of the company's nearly $259 million in annual revenues.
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Banks began rolling out debit cards in the mid-1990s. In response, Verifone produced terminals designed with keypads for PIN numbers. But as the domestic credit and debit card markets neared saturation, Verifone changed its primary focus to producing software applications, offering vertically integrated systems, including applications for standard computer operating systems. It also built a new plant near Shanghai in China in 1994 to increase production capacity.
Verifone moved to take the lead in the coming smart card revolution, teaming up with Gemplus International, a France-based maker of the cards, and MasterCard International to form the joint venture SmartCash. To place the company close to technological developments in France and the rest of Europe, Verifone opened its Paris research and development center in 1994. The company launched its smart card in May 1995. The company introduced its Personal ATM, a palm-sized smart card reader capable of reading a variety of smart card formats, in September 1996, with the product expected to ship in 1997. Among the first customers already signed to support the P-ATM were American Express, MasterCard International, GTE, Mondex International, Visa International, Wells Fargo Bank, and Sweden's Sparbanken Bank. Contracts for each called for the purchase of a minimum of 100,000 units; the total market potential for the device was estimated at more than 100 million households. In addition, Verifone began developing smart card readers to supplement and eventually replace its five million credit and debit card authorization systems.
In 1995, Verifone began the first of its aggressive steps to enter an entirely new area, that of Internet-based transactions. In May 1995, the company partnered with Broadvision Inc., a developer of Internet, interactive television, computer network, and other software, to couple Verifone's Virtual Terminal software—a computer-based version of its standard transaction terminal—with BroadVision's offerings, thereby extending Verifone's products beyond the retail counter for the first time. In August 1995, however, Verifone took an even bigger step into the Internet transaction arena, with its $28 million acquisition of Enterprise Integration Technologies, developer of the S-HTTP industry standard for safeguarding transactions over the World Wide Web. Verifone followed that acquisition with a $4 million investment in William Melton's latest venture, CyberCash Inc., also working to develop Internet transaction systems.
By 1996, Verifone was ready with its Payment Transaction Application Layer (PTAL) lineup of products, including the Virtual terminal interface for merchants conducting sales with consumers; Internet Gateway or vGATE, to conduct transactions between merchants and financial institutions; and the Pay Window interface for consumers making purchases on the Internet. After securing agreements from Netscape, Oracle, and Microsoft to include Verifone software in their web browsers, Verifone and Microsoft announced in August 1996 that Verifone's virtual point of sale (vPOS) would be included in the Microsoft Merchant System to be released by the end of the year. Verifone's announcement of the P-ATM, able to be attached as a computer peripheral, wedded the company's smart card and Internet transaction efforts.
Hewlett-Packard acquired Verifone in a $1.18bn stock-swap deal in April 1997. Four years later Verifone was sold to Gores Technology Group in May 2001. In 2002 Verifone was recapitalized by GTCR Golder Rauner, LLC. In 2005, Verifone was listed as a public company on New York Stock Exchange (NYSE: PAY).
2000s: Acquisitions
In October 2004, Israeli-based Lipman Electronics had acquired United Kingdom-based Dione plc, to go alongside its "NURIT" brand. On November 1, 2006 Verifone completed its acquisition of Lipman, and added both Dione and NURIT products to its portfolio for an undisclosed sum.
In September 2006 Verifone acquired some divisions of Irish terminal and payment services company Trintech Group plc – headquartered in Dublin with offices in Montevideo, Neu-Isenburg and London amongst other locations – in a 12.1M USD (€9.4M) cash transaction.
The company was formerly known as VeriFone Holdings, Inc. and changed its name to VeriFone Systems, Inc. in 2010. In 2014 the company rebranded itself as Verifone with a lowercase 'f'. Verifone in 2014 was based in San Jose, California, and has marketing and sales offices across the world. High economic growth abroad, coupled with infrastructure development, support from governments seeking to increase value-added tax (“VAT”) and Sales Tax collections, and the expanding presence of IP and Wireless communication networks resulted in revenue from abroad exceeding revenue generated from domestic sales. Specifically, its North America market share fell from 57.4% of total revenues in 2006, to only 39% or $359.14 million in total revenues for fiscal 2008. On the other hand, International operations went from comprising only 42.5% of total revenues in 2006 to 61% or $564.46 million of total revenues in 2008.
In April 2018, Verifone was acquired by Francisco Partners for US$3.4 billion.
From Wikipedia’s article on Verifone, shared under CC BY-SA 4.0.7