KEY POINTS 

  • Overall, the global market for traditional countertop payment terminals is healthy. We forecast global payment terminal shipments will grow 73% in three years, increasing to 35 million in 2015, up from 20 million in 2012. 
  • But growth varies sharply between geographic regions. The U.S. and Europe are stagnant, and all the dynamism is in emerging markets. There will be triple-digit growth in Asia-Pacific and Latin America from 2012 through 2015. The U.S. market will only grow 3% in the same period, Europe 9% . 
  • The market for payment terminals is dominated by two companies. Ingenico and VeriFone have lost market share in recent years, but they have also been able to simultaneously increase the distance between themselves and their next closest competitor. They face intense competition in Asia-Pacific, which will account for over half of terminal shipments by 2015.
  • Low or negative terminal shipments growth in Europe and the U.S. is a sign of lackluster growth in bricks-and-mortar retail, and payments industry disruption. Retailers now have the option to adopt mobile point-of-sale systems that transform smartphones and tablets into credit and debit card readers. In the U.S., the migration to EMV chip cards will nudge more U.S. businesses toward mobile card readers. That's because more customers will have to begin entering PIN numbers to complete credit transactions, so many businesses, such as restaurants, will need hardware that can be brought to the customer.
  • In the longer term, beyond 2015, the greatest disintermediation threat to the terminal business is the convergence of bricks-and-mortar retail and mobile commerce. Apps like Uber and OpenTable allow users to conduct physical world transactions entirely within their phones, without the need for scanning at a terminal. 

INTRODUCTION

Changes in the market for payment terminals signal deeper shifts in consumer behavior and payments technology.

Declining or stagnating shipments of these legacy devices in the U.S. could mean that mobile card readers are replacing clunky legacy terminals in small- and medium-sized retail environments.

Accelerated terminal shipments in emerging markets might indicate that those markets are about to see a reduction in the use of cash. 

In fact, over the last half-dozen years, both the above trends have influenced the payment terminal market. 

Note: for the purposes of this report, we define payment terminals as non-mobile payments hardware with integrated card readers, i.e. countertop payment systems. When we [...]