Digital Transactions - November 2012 - (Page 30)
November 2012 digitaltransactions
Equinox Looks for a Summer Solstice
Can the old Hypercom Corp.’s reborn U.S. operation make a go of it with a new name, new owner, and new products in a fast-changing POS terminal market? And not just Equinox, but all of the terminal makers face new challenges. Silicon Valley companies such as Square Inc. and PayPal Inc. are going after in-store payments, and they don’t have the ties to terminal makers that merchant acquirers and POS equipment distributors do. Meanwhile, smart phones and iPads are morphing into the payment terminals of choice for many small merchants. And merchants, acquirers, card issuers, and industry vendors are all trying to make sense of the payment card networks’ plans to chuck the magnetic-stripe card in favor of EMV chip cards. EMV could give a nice sales lift to the terminal makers, but the changeover is likely to take years. Hazel is sure that Equinox is up to the challenges, and he rebuffs any notion that his company doesn’t have the scale to meet them. “There’s a lot of mythology about scale,” he says. “We’re not aware of any vendor, either domestic or global, that has any material advantage over us.” In 2010, its last full year as an independent company, Hypercom reported that only 13.5% of its $468.4 million in revenues came from the U.S. Hazel says Equinox’s annualized revenues are running well ahead of the $63.2 million Hypercom’s 2010 percentage implied. He adds that, unlike the old Hypercom, “we’re healthily profitable.”
fter 15 months in the Makeover Department, the U.S. operation of the former Hypercom Corp., now known as Equinox Payments LLC, is ready for a coming-out party. While it has made the routine appearances that would be expected of a point-of-sale terminal maker, such as exhibiting at merchantacquiring industry trade shows, Scottsdale, Ariz.-based Equinox otherwise has drawn little attention to itself since the U.S. Department of Justice in August 2011 approved the $485 million sale of Hypercom to its archrival, VeriFone Systems Inc. The DoJ signed off only on the condition that VeriFone, which wanted struggling Hypercom mainly for its strong European operation, divest Hypercom’s U.S. assets lest the leading POS terminal maker get too big a share of the American market. The DoJ rebuffed VeriFone’s plan to sell the assets to France-based Ingenico S.A., the No. 2 U.S. player, saying that the $54 million proposal would leave the country with only two major payment-terminal suppliers. ViVOtech Inc., a specialist in contactless terminals that is now going out of business, expressed interest in
the Hypercom operation but never consummated a deal. Those developments paved the way for a unit of Los Angeles-based private-equity firm The Gores Group LLC to pick up the assets for an undisclosed price. Since then, Gores has rebranded the U.S. operation as Equinox Payments and brought in new leadership. In June, Gores named Patrick K. Hazel, the former president and chief executive of Semtek Corp., a security-technology company acquired by VeriFone in 2010, as Equinox’s new chairman and chief executive. Over the past few months, Hazel has overseen the development of new products and the total reconfiguration of Equinox’s supply chain.
Out of the Shadows
The big question is whether Equinox, even after receiving tender loving investment care from Gores, can thrive in a fast-changing POS terminal market dominated by VeriFone and Ingenico, and which also includes a growing number of private-label terminals from processors. In 2009, Hypercom had only 18% of the U.S. market, compared with 48% for VeriFone and 26% for Ingenico, according to a DoJ court filing.
• digitaltransactions • November 2012
Table of Contents for the Digital Edition of Digital Transactions - November 2012
Digital Transactions - November 2012
The Gimlet Eye
Trends & Tactics
The 10 Most Pressing Issues in E-Payments
Digital Transactions - November 2012