Researcher Predicts One Third Of U.S. POS Terminals To Accept Contactless Payment By 2016

Recent developments in contactless payment technology are generating renewed interest, and suggest that the long-delayed dream of comprehensive contactless payment systems may finally be approaching reality. The introduction of Google Wallet and the expectation that several new NFC-enabled smartphones will reach consumer markets soon have created a sense of optimism.

According to ABI Research, in 2010 only about 10 percent of total POS terminal shipments included some form of contactless technology. While the analyst firm does not agree with some of the wilder media predictions for contactless POS growth – for example that within 12 months, one third of all terminals in the U.S. will accept contactless payments – it does forecast that 85 percent of terminals shipped worldwide will be contactless-enabled in 2016, driven by increased proliferation of contactless cards and especially, rapid adoption of NFC-enabled cell phones.

Senior analyst Craig Foster said in a prepared statement, “Contactless has the potential to change the way we pay for goods completely, significantly reducing time spent queuing at the point of sale. It also represents an almost perfect fit for the vending industry, because:

• The increased speed and simplicity of check-out go hand-in-hand with the very essence of the vending machine – to provide goods quickly and conveniently;
• The fact that small-value transactions – typically under $25 in the US – do not need to be authenticated by signature or PIN entry is very appealing to vending machine operators.”

M2M practice director Sam Lucero added, “Contactless technology is also in the very early stages of adoption in ATMs: rather than inserting the card, a customer waves it in front of the machine and enters a PIN.”

Ingenico, VeriFone, and Hypercom are the three leading vendors of POS terminals and command most of the market. VeriFone recently completed the acquisition of Hypercom after satisfying the antitrust concerns of the US Department of Justice. Contactless terminals have formed an increasingly significant part of Ingenico’s portfolio in recent years, accounting for a claimed 21% of the company’s shipments in 2010.

ABI Research’s “Cellular-enabled POS Terminals, ATMs, and Vending Machines” study (http://www.abiresearch.com/research/1003592) examines the overall market opportunity for each segment, with a particular focus on value chains, competitive landscapes, market adoption drivers and inhibitors, and technology issues.

?\ p`?? P? oNormal>The company continues to streamline operations as it progresses toward the spin off. The summary below provides an update on the decisions made to date.

On Aug. 9, the company announced a signed agreement to sell its North American refrigerated dough (Store Brands) business to Ralcorp for $545 million. The sale is expected to close by the end of calendar year 2011. This business was classified as a discontinued operation in the fourth quarter of fiscal 2011.

The sale of the North American Fresh Bakery to Grupo Bimbo is expected to close before the end of September.

Sara Lee decided in August to divest the Spanish bakery and French refrigerated dough businesses. For both, a sales process is underway and numerous bids have been received. These businesses will be reclassified to discontinued operations in the first quarter of fiscal 2012. The Australian frozen desserts business remains under strategic review.

The North American Retail segment reported a 4 percent increase in adjusted net sales to $715 million, primarily driven by pricing actions. The segment reported strong new product performance with growth from Jimmy Dean Jimmy D's and Hearty Crumbles, and Hillshire Farm Low Sodium and Family Size. Ball Park maintained its share leadership behind the successful introduction of New York Deli Style Beef Franks. These launches were more than offset by the negative volume impact from early pricing actions taken to offset commodity cost increases and the rationalization of lower margin promotional programs. Mix was marginally positive. On a reported basis, net sales declined 2 percent largely due to last year’s 53rd week.