The varying pace of migration to the EMV chip-card specification around the world has had a significant impact on the sales of EFT/POS terminals in Western Europe, Latin America and Asia Pacific, according to a market analysis by Frost & Sullivan, which suggests a boost in pace is needed elsewhere.
While the migration to EMV has been quite fast in Western Europe, Latin America and the Asia Pacific, the Frost & Sullivan study, 'World EFT POS Terminal Market', says that terminal manufacturers will find it difficult to find a more compelling business case (perhaps apart from fraud prevention) to sustain market share and profitability in North America. The analysis report revealed that revenues in the market totalled US$863.2 million in 2004, and expects the market value to reach US$1,567.3 million by 2011.
In many European countries (such as Italy, Germany and Spain) less than 5% of the entire installed terminal base is EMV-compliant, according to Frost & Sullivan Research Analyst, V. Aravindh. "With these regions charting out an EMV migration implementation plan by the next year-and-a-half, the EFT POS terminal market is expected to receive a significant boost in the future," Aravindh noted.
The company's analysis suggests that terminal manufacturers should now concentrate on countries such as China, India and Russia for long-term profitability, where there is increasing adoption of electronic payments due to infrastructure development, strong government support, and the expanding presence of wireless networks. But in order to drive uptake in North America (which has minimal fraud occurrences and a large legacy infrastructure for magnetic stripe technology) terminal manufacturers will need to offer a better value proposition.
Future growth areas
According to Aravindh, "While price is a key differentiation factor, manufacturers need to start considering other parameters, such as enhanced software application delivery and customer services, to boost revenues."
For example, online debit and personal identification number (PIN) pad sales are areas that are likely to offer manufacturers an opportunity to increase market share and spur terminal sales in North America. In addition, value-added services such as gift cards, loyalty programmes, e-commerce, advertising, couponing and electronic receipt capture (ERC) programmes, are also expected to augment revenues and improve profitability.
Likewise, the popularity of IP-enabled technology for payment terminals is also likely to offer a competitive advantage for manufacturers in terms of 'always-on' connectivity, high-speed communication in either wired or wireless networks, and lower cost of support.
And contactless payment is another rapidly emerging technology, which is likely to spur sales of POS terminals - particularly in the quick service restaurant (QSR) segment. Aravindh noted: "Contactless payment using RFID (radio frequency identification) can save up to 12 seconds per transaction, resulting in increased throughput. The QSR segment, having a terminal penetration of less than 15% in the USA, represents a big opportunity for terminal manufacturers in the coming years."
The full analysis is available as part of Frost & Sullivan's 9212 Subscription, and offers an analysis of drivers, restraints, trends, and revenue forecasts for the EFT POS terminal market. For a virtual brochure, send an e-mail to Tori Foster, giving your full name, company name, title, telephone number, e-mail address, city, state, and country.