Not long after launching a mobile payments service a la Square, Verifone is largely backing out.
The electronic payments company said it wasn't worth it to sign up small businesses directly to use Sail, its payment program that offered businesses a small piece of hardware that, combined with a smartphone, processes credit cards. It isn't entirely getting out of the business but will sell the Sail service through banks and other third parties rather than directly.
Verifone's CEO said that he believes the only way companies in this business can survive is by selling other kinds of services as well.
That can't hurt. But what's more likely is that Verifone was late to enter a crowded market that is already dominated by Square. Square built its entire business around its mobile payment product and service and so focused on the sales process required to reach out to target businesses. It's regarded as having built a creative and incredibly useful service for businesses.
Verifone, however, is an old school payments company that offered a me-too service. And it likely had to implement new sales processes to get this kind of service out to a unique segment of users. It's more likely that Verifone didn't execute on that very well and thus didn't see the kinds of margins it hoped for.
That's not to say that adding additional services isn't a good idea for the likes of Square. The threat of the mobile wallet eventually taking off is real and significant. At some point, there could be no need for a Square reader.
But the mobile wallet ecosystem has so many battling tribes at the moment, I suspect it'll be a while until other mobile wallets make a real dent in Square's market. And in the meantime Square isn't ignoring that market. It has launched a Square Wallet that for now lets people buy and send gift cards, use rewards programs, and even pay without swiping a card.
Intuit, PayPal, and Bank of America also have similar offerings to Square, so Verifone's exit doesn't leave behind a monopoly. And there's still the chance for others to enter the market. But Square has the mindshare -- for now.