The paucity of cash in the aftermath of demonetisation has led to a surge in demand for digital payments and the infrastructure needed to support these payments. In particular, the need for point of sale machines used for debit and credit card payments has risen exponentially.
U.S. headquartered PoS manufacturer Verifone Systems Inc. is among the key beneficiaries of this surge in demand. The company has seen orders for its card payment machines jump five times in the last one month after demonetisation was announced by the Indian government on November 8, said a spokesperson in response to an email query from BloombergQuint.
As the currency notes of Rs 500 and Rs 1,000 were withdrawn, banks and merchants rushed to try and get hold of card-accepting machines to soften the blow of a cash-crunch in the economy. However, a bulk of such machines are sourced from two global manufacturers - Verifone and Ingenico Group SA.
Verifone confirmed that they have seen a rapid inflow of new orders since November 8. An email query sent to Ingenico last week remained unanswered.
The recent announcement has certainly triggered a high demand for PoS machines in India and accelerated the country’s move towards a cashless society. Since the demonetization announcement a month back, Verifone has witnessed a five-fold increase in its devices and is working with its partners and customers to help address this immediate need in India.Vinayak Prasad, Executive Director - South Asia, Verifone
Verifone, along with France-based PoS maker Ingenico, are among the two major companies which provide a bulk of the point-of-sale terminals in India. Last year, a competition commission of India ascertained that Verifone commands a 57 percent market share in the PoS terminal market. The company sold 5.8 lakh payment terminals between 2009-2012 as compared to Ingenico’s sales of just 50,000 terminals, Director General of CCI added. The ruling was related to an ongoing matter between Atos Worldline India Pvt. Ltd and Verifone India Sales Pvt Ltd.
Verifone’s hold over the bank PoS market is even stronger.
Accordingly, the market share of the Opposite Party No. 1 in terms of sale of PoS Terminals to banks is estimated around 70 percent vis-à-vis 30 percent of Ingenico. Further, it is revealed from the DG report that in terms of size, resources and economic power the Opposite Party No. 1 is in an advantageous position compared to Ingenico, its nearest competitor.Competition Commission Of India Order, 2015
The government of India asked banks to ensure that an additional 10 lakh terminals are deployed after demonetisation which has led to a scramble among banks to procure PoS machines quickly. The largest public sector bank, State Bank of India, has also placed orders for two lakh terminals but remains unsure of the delivery timelines, according to Rajneesh Kumar, managing director at SBI.
“The banking sector in total has placed orders for six lakh terminals out of which we are ordering two lakh PoS machines after the government’s directive... We are unsure of the delivery timelines but vendors are likely to deliver these machines on time,” Kumar told BloombergQuint last week.
Verifone, too, added that it is working to find ways to help the country during this period of transition.
“As a global leader in payments and commerce solutions with a strong commitment to India, Verifone is working to support the urgent demand for PoS machines with its customers and partners in this period of transition,” Prasad said in the email response.