While Worldline’s reputation is that of a point-of-sale device company, its battle to ward off the fintech incursion has led it to invest in a firm that supports payments without dedicated hardware.
The Paris-based Worldline has closed on the acquisition of a 55% stake in SoftPos.eu, a three-year old Warsaw-based fintech that enables Android devices to act as payment terminals. It was one of two investments Worldline made in the past couple of weeks, the other being an approximate $100 million purchase of Italy-based Banco Desio’s merchant acquiring business. That deal is expected to boost Worldline’s merchant scale in the European Union, and forge a development partnership to build new payment technology for merchants.
The SoftPos.eu deal has enabled Worldline’s launch of Tap on Mobile, part of a burgeoning trend in the payments industry to allow smartphones to accept payments without a Bluetooth reader, dongle or other attachment. The price of the SoftPos.eu stake was not disclosed.
“It’s easy to access payments on mobile,” said Niklaus Santschi, head of merchant services at Worldline. “With that you open a channel to not only the payment acceptance but for value-added services.”
Tap to Pay may have seemed a natural use of smartphones’ Near Field Communication hardware, but it’s only now gaining steam. Apple in February launched Tap to Pay for its own products, enabling iPhones and other Apple devices to accept payments without an attachment, although Apple requires payment processing partners such as in Ady and Stripe to settle transactions. JPMorgan Chase in January acquired a 49% stake in Viva Wallet, a European technology company that provides tap on phone technology for Android devices, suggesting demand among banks for such systems.
“I fully expect ‘tap to pay’ type functionality to be a standard part of all acquirers’ offerings in the not-too-distant future,” said Zil Bareisis, head of Celent’s retail banking practice. “Just like mobile point of sale devices, it’s another convenient way to offer payment acceptance, especially for small merchants, but also for specific use cases at larger stores.”
Worldline’s Tap on Mobile allows merchants to accept payments on a smartphone, tablet or other web-connected device through either a tap or PIN entry on screen, Santschi said, adding this system could open the door to adding other merchant services accessible through smartphone apps.
Smartphone payment acceptance in theory could render payment terminals obsolete because there would be no need for dedicated devices to accept credit cards. Tap to Pay is a step in an ongoing migration away from terminals towards digital payments that has led companies like Worldline, NCR and Diebold Nixdorf to diversify into more general payment technology that relies on software.
Ingenico and Worldline merged in early 2020, an $8.6 billion deal that was designed to address the growing scale of US merchant acquirers such as FIS and Fiserv; and the growth of payment technology companies like Stripe, Square and PayPal, which offer digital onboarding for small businesses to accept payments, along with merchant credit products aimed at consumers.
As early as the press conference to announce the Ingenico/Worldline merger, analysts peppered executives from the two companies about their plans to deemphasize point-of-sale terminals as a primary revenue source.
Worldline’s Tap on Mobile could help the firm act as a payment facilitator, or a vendor that supports multiple payment types and other merchant services. In the earlier interviewPeter Stewart, president of North America for Ingenico, now a unit of Worldline, said the introduction of tap to pay in the payments industry would benefit Worldline and Ingenico’s diversification more than it would threaten the combined company.
The SoftPos.eu stake will help Worldline through its transition to a variety of payment options that de-emphasize cash and a static point of sale, although without entirely replacing older forms of checkout, Santschi said.
“This opens a new way of working as well, with merchant staff moving around the store and consumers being able to pay at the moment,” he said.
Ingenico and Worldline are also working to upgrade mobile payments on other fronts. Ingenico’s Axium product line includes a point-of-sale card reader, but the company is migrating the underlying technology to the cloud, which would reduce reliance on hardware.
Worldline and Ingenico’s addition of Tap on Mobile will be gradual, according to Santschi, who added Worldline will invest in SoftPos.eu as it expands Tap on Mobile internationally.
“The company is pretty small at the moment so we don’t want to overwhelm them,” Santschi said. “We’ve set a go-to-market plan for the coming years and will fuel [SoftPos.eu] with more people. But we intend to use them as our standard.”
Worldline’s SoftPos.eu stake could add to the pressure on other payment companies to offer interoperability with tap to pay.
The technology is likely to gain popularity with small merchants in particular because it allows them to avoid hardware costs, so any payments player that wants to serve small merchants needs to enable tap to pay, said Daniel Keyes, a senior analyst for merchant services at Javelin Strategy & Research.
“Payment companies need to ensure they can take part in these transactions so that they enable merchants to accept payments in any way that works for them,” Keyes said. “Firms can be involved via acquisitions, in-house development, or third-party partnerships, but what matters most is that they enable tap to pay transactions so they aren’t passed over for competitors that do.”
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