North America pushes up Ingenico's success

BII

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Europe-based point-of-sale (POS) terminal provider Ingenico announced strong Q1 2016 growth in its earnings call last week.

The firm’s 15% revenue increase was driven largely by strong business in its Europe and Africa segment, the firm’s largest market, as well as rapid growth in North America.

Ingenico’s North American business, which comprised just 13% of the firm's Q1 revenue, grew as fast as Europe, the firm's largest segment. The vendor’s 17% constant currency North American growth was bolstered by 27% growth in the US specifically, which was driven by three key factors:

• EMV and small businesses. Most national chains in the US have already upgraded to chip card terminals following the liability shift in October 2015, but many small- and medium-sized merchants are just now upgrading. Ingenico is profiting from this switch as it wins over key small retailers.  
• Mobile point-of-sale (mPOS). mPOS merchants are upgrading to EMV and NFC-compatible devices, giving Ingenico an opportunity to promote its line of products that support these technologies. Ingenico also recently announced developer kits to simplify EMV payment integration into apps associated with mPOS devices, which could continue to bolster these gains.
• Extending market share. Ingenico is looking to continue to gain market share in the US by moving into key verticals where there aren’t yet clear market leaders, like healthcare and hospitality.

Despite minor hiccups, the firm plans to accelerate its e-Payments growth in the coming quarters, which could contribute to its bottom line. Ingenico’s e-Payments segment declined by 1% in Q1 2016, largely due to decreases in transaction volume from one of the firm’s major clients. But a focus on strategic customers and a new bank partnership is expected to return the segment to double-digit growth in the second half of the year, according to Ingenico.

Ingenico’s focus is reflective of ongoing trends in the POS terminal market. POS terminal vendors and processors alike are focusing on emerging verticals as well as segments that remain fragmented, like the US EMV migration, small businesses, and digital payments. Both emerging and fragmented markets are attractive to payments companies, because, in both cases, no firm has a stranglehold, which gives competing firms an opportunity to grab a major share through strategic initiatives. 

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