VERIFONE: VERIFONE S OMNI 390 TRANSACTION SYSTEM FEATURES EASY-... Page 1 of 1
`
`VERIFONE: VER|FONE'S OMNI 390 TRANSACTION SYSTEM FEATURES EASY-TC
`
`Apr 20, 1993
`Date:
`997
`Words:
`Publication: PR Newswire
`
`today announced the OMI(TM) 390 transaction system f(
`(NASDAQ—NMS: VFIC)
`*— VeriFone Inc.
`REDWOOD CITY, Calif., April 20 /PRNewswire/
`The system features a high—resolution, multi—line display; an automated teller machine (ATM)—style, menu—driven interface; and color—
`"As transaction automation systems become increasingly sophisticated and powerful, it is essential that they remain easy to operate,"
`A New Standard for Ease of Use
`The product's high—resolution screen can display up to 1
`Like an ATM,
`the menu—driven OMNI 390 steps the user through each operation.
`Operator efficiency is further enhanced by the system's eight color— coded function keys.
`These keys can be configured to perform the
`The OMNI 390's high—resolution screen can display graphics,
`including company logos, and character—based languages such as Chinese, T}
`Split—Dialing Accelerates Settlement Times, Lowers Transaction Fees
`Until recently, merchants who wanted to use a single system and processor for multiple card types needed to pay the processor additior
`Easy to Develop Software and Customize Applications
`The OMNI 390 runs in the TXO(TM) operating environment, which lets programmers create and modify applications using the industry—stan(
`With VeriFone's ZONTALK(TM) 2000 application management software, application programs and files can be downloaded over telephone line
`Compatibility Preserves Investment in Peripherals
`including roll and slip printers for receipts and reports, PIN (persor
`The OMNI 390 is fully compatible with all VeriFone peripherals,
`Connected to a VeriFone printer,
`the OMNI 390 lets merchants print reports at the end of a shift or the end of a business day. This I
`With 128 kilobytes of random access memory (RAM),
`the OMNI 390 can store complex applications and the high volume of detailed transact
`The OMNI 390 system's dual—track magnetic stripe card reader reads ABA Tracks 1 and 2 or Tracks 2 and 3.
`It can read both tracks ofe
`Price and Availability
`The OMNI 390 system is available now. U.S. reseller prices range from $321 to $402, depending on quantity and memory options. Retail
`The Company
`is a leading global provider of Transaction Automation solutions used to deliver payment process
`VeriFone Inc., based in Redwood City,
`NOTE: VeriFone is a registered trademark of VeriFone Inc. OMI, TXO and ZONTALK are trademarks of VeriFone Inc.
`—0—
`4/20/93
`/CONTACT: David Barnes of Verifone, 415—696—8823; or Beth Pampaloni of Wilson McHenry, 415—592—7600, for Verfone/
`(VFIC)
`
`CO: Verifone Inc. ST: California IN: CPR SU: PDT
`
`LH-SG -- SJ002 -- 8046 04/20/93 12:01 EDT
`
`COPYRIGHT 1993 PR Newswire Association LLC
`Copyright 1993 Gale, Cengage Learning. All rights reserved.
`
`http://wwwthefreelibrary.com/_/print/PrintAItic1e.aspx?id=1 3 140485
`
`4/2 1/2014
`
`Petitioner First Data - Exhibit 1012 - Page 1
`
`

`
`VERIFONE PAYMENT SOLUTIONS PLAY KEY ROLE IN MASTERCARD'S FIRST... Page 1 of 3
`
`VERIFONE PAYMENT SOLUTIONS PLAY KEY
`
`ROLE IN MASTERCARD'S FIRST STORED
`
`VALUE PILOT PROGRAM
`
`Date:
`Words:
`
`May 1, 1996
`987
`
`Publication: PR Newswire
`
`Electronic Payments Leader Teams with MasterCard and Westpac Banking
`
`Corporation in Australian Launch
`
`CANBERRA, Australia, May 1 /PRNewswire/ —— VeriFone, Inc. (NYSE: VFI), today
`announced its participation in MasterCard |nternationa|'s first stored value pilot program
`offering the MasterCard Cash smart card. A leading provider of secure payment solutions
`with nearly five million shipments worldwide —— including over 120,000 chip card accepting
`devices —— VeriFone will also team with Sydney, Austra|ia—based Westpac Banking
`Corporation. The bank has a large installed base of VeriFone electronic payment systems.
`The pilot includes other large banks and technology providers. In addition, more than 150
`retailers have already signed up to take part in the program, which is expected to involve
`more than 200 locations in the Belconnen area surrounding Canberra, Australia.
`
`Up to 10,000 customers of the pilot's participating banks are expected to upgrade their
`MasterCard credit and debit/ATM cards with MasterCard Cash. This feature allows
`
`cardholders to make |ow—cost transactions using stored value rather than currency. The
`trial will showcase VeriFone's MasterCard Cash—certified merchant payment system which
`incorporates an OMN|(TM) 395 transaction system, SC(TM) 450 Smart Card
`Reader/Writer and Printer 900. Using VeriFone's OMNI 395, Westpac's customers can
`easily transfer funds from linked savings or checking accounts into an "electronic purse."
`Cardholders can use the MasterCard Cash feature for smaller purchases such as fast
`food, petroleum, movie tickets, groceries and newspapers. They will also have the option
`of using the credit and debit functions on their cards for larger transactions.
`
`"Consumers around the world have long expressed interest in having the added
`convenience and security of stored value, especially to replace cash for smaller
`purchases," said Michael J. Shade, vice president, Chip Card Programs, for VeriFone.
`"The Canberra pilot will be a major catalyst to increase global awareness of a viable new
`payment option that MasterCard Cash provides."
`
`Convenient, Secure Transactions
`
`Retail participants in the Canberra pilot will offer their customers the ability to load stored
`value onto their MasterCard Cash—enhanced cards —— in addition to credit and debit
`
`http://wwwfrhefreelibrary.com/_/print/PrintArtic1e.aspx?id=1 82403 7 1
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`4/2 1/2014
`
`Petitioner First Data - Exhibit 1012 - Page 2
`
`

`
`VERIFONE PAYMENT SOLUTIONS PLAY KEY ROLE IN MASTERCARD'S FIRST... Page 2 of 3
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`functions —— using VeriFone's OMNI 395. Together, the smart card and OMNI 395 payment
`system authorize and complete each purchase transaction. Consumers insert their smart
`cards into the SC 450 —— a P|Npad and chip card acceptance device —— attached to the
`OMNI 395. The transaction system authenticates the card, checks the remaining balance
`and deducts the purchase amount. The Printer 900 processes a two—part receipt for the
`consumer and merchant.
`
`Using smart cards offers additional benefits, including:
`
`* Re—|oadab|e function —— Consumers can easily replenish cash value using VeriFone's
`OMNI 395 without having to visit a bank or to write a check.
`
`* Secure, Off—|ine Purchase —— Because the smart card securely stores value in the chip
`and is capable of "negotiating" a purchase transaction with the payment system, there is
`no need to perform a dial—up verification. This speeds transaction time, lowers payment
`processing costs and reduces fraud.
`
`* Cost—effective settlement —— With the ability to conduct off—|ine purchase transactions, the
`merchant can batch all of the day's transactions for end—of—day settlement. The merchant's
`account is quickly credited, and the bank realizes reduced payment processing costs.
`
`* Recent MasterCard research indicates that 55 percent of Australians surveyed would be
`willing to switch financial institutions that offer MasterCard Cash as a payment option.
`
`The study also found that when consumers were given a choice between having a stored
`value feature linked to an existing ATM/debit or credit account, and a stand—alone card, 76
`percent chose the linked payment option. According to MasterCard, Australia was chosen
`as the stored value pilot site because of its sophisticated payment infrastructure,
`expressed interest from major national banks, consumer acceptance of new payment
`technology and frequent use of credit and debit cards.
`
`VeriFone's participation in the MasterCard stored value pilot complements its long-
`standing relationship with the bank card association. In August 1995, the two companies
`announced a formal alliance which established several objectives, including: development
`of marketing strategies to drive cardholder acceptance through specific promotional
`programs; a joint market venture to research and develop diverse consumer markets; and
`delivery of high—speed, reliable, secure payment processing. The Australia pilot is one of
`many joint programs resulting from this alliance, in addition to extensive research and
`development of new technologies involving smart cards, remote banking and Internet
`commerce.
`
`VeriFone, Inc.
`
`VeriFone, Inc. (http://wvvw.verifone.com) is a leading global provider of Transaction
`Automation solutions used to deliver electronic payment services to financial institutions,
`retail merchants and consumers, as well as government agencies, healthcare providers
`and benefits recipients. The company's more than 30 facilities —— including regional offices,
`development centers and manufacturing and distribution centers —— are located throughout
`North and South America, Europe, Asia, Africa and Australia. To date, VeriFone has
`shipped more than 4.9 million Transaction Automation systems, which have been installed
`
`http://wwwthefreelibrary.com/_/print/PrintArtic1e.aspx?id=1 82403 7 1
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`4/2 1/2014
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`Petitioner First Data - Exhibit 1012 - Page 3
`
`

`
`VERIFONE PAYMENT SOLUTIONS PLAY KEY ROLE IN MASTERCARD'S FIRST... Page 3 of 3
`
`in over 90 countries. The company's 1995 net revenues totaled $387.0 million.
`
`MasterCard International
`
`MasterCard International Incorporated is a global payments company that provides
`consumer credit, debit and other payment products in partnership with 22,000 member
`financial institutions worldwide. MasterCard's family of brands, MasterCard(R), Maestro(R)
`and Cirrus(R), represent approximately 452 million cards in circulation, and over 13 million
`acceptance locations, including 252,000 MasterCard/Cirrus ATMs worldwide.
`MasterCard's pioneering work in the areas of transaction processing and delivery systems
`continues to revolutionize the way consumers pay for goods and services. MasterCard can
`be reached through "Pointers," its Worldwide Web site, at http://wvvw.mastercard.com.
`
`NOTE: VeriFone is a registered trademark of VeriFone, Inc. OMNI and SC are trademarks
`of VeriFone, Inc. All other trademarks are the property of their respective holders.
`
`-0-
`
`5/1/96
`
`/CONTACT: Greg Herman, 415-598-4577, or Nancy Elder, 914-249-5439, or greg
`(underscore)h2@verifone.com, both of VeriFone; or Helen Stefan of Copithorne &
`Bellows, 415-284-5200, or helen(underscore)stefan@cbpr.com, for VeriFone/
`
`(VFI)
`
`CO: VeriFone Inc. ST: California IN: CPR SU: PDT
`
`EQ-MS -- SFW008 -- 5399 05/01/96 09:01 EDT
`
`COPYRIGHT 1996 PR Newswire Association LLC
`
`Copyright 1996 Gale, Cengage Learning. All rights reserved.
`
`http://wwwthefreelibrary.com/_/print/PrintArtic1e.aspx?id=1 82403 7 1
`
`4/2 1/2014
`
`Petitioner First Data - Exhibit 1012 - Page 4
`
`

`
`POS Tenninal Vendors Ride The Chip Card Wave
`
`Publication info: Debit Card News (Feb 28, 1997): N/A.
`ProQuest document link
`
`Abstract (English): Though relatively little smart card activity is taking place in North America, an expected
`
`explosion in chip card rollouts still is helping to fuel a hot point—of—sa|e terminal market. Terminal vendors
`
`shipped 1,254,410 devices in 1996, up 22% from 1,027,102 devices in 1995.
`
`While many of the terminals are being deployed to support electronic benefits transfer and debit and credit
`
`programs, devices with smart card readers also are getting situated in anticipation of a chip card boom. "There
`
`is a definite demand for terminals that have smart card capabilities, and most manufacturers are embedding
`
`that application in their product lines,'' says Dan Cunningham, senior vice president at Phoenix Planning
`
`&Eva|uation, a Mary|and—based consulting firm.
`
`Full text: Though relatively little smart card activity is taking place in North America, an expected explosion in
`
`chip card rollouts still is helping to fuel a hot point—of—sa|e terminal market. Terminal vendors shipped 1,254,410
`
`devices in 1996, up 22% from 1,027,102 devices in 1995.
`
`While many of the terminals are being deployed to support electronic benefits transfer and debit and credit
`
`programs, devices with smart card readers also are getting situated in anticipation of a chip card boom. "There
`
`is a definite demand for terminals that have smart card capabilities, and most manufacturers are embedding
`
`that application in their product lines,'' says Dan Cunningham, senior vice president at Phoenix Planning
`
`&Eva|uation, a Mary|and—based consulting firm.
`
`Indeed, the POS devices with chip card readers are helping to increase deliveries. Redwood City, Ca|if.—based
`
`VeriFone Inc. remains North America's largest manufacturer, shipping 600,000 devices last year, up 14% from
`
`525,000 in 1995. VeriFone has a 48% share of the market.
`
`Also increasing its activity is Phoenix—based Hypercom |nc., which shipped an estimated 361,800 terminals in
`
`1996, up 34% from an estimated 270,000 a year earlier. Hypercom has a 29% market share.
`
`Hypercom's expansion is being driven in part by its T7PSC device, which supports credit, debit and smart card
`
`transactions. Albert lrato, Hypercom president, says the company's five—year warranties on terminals and easy-
`
`to— operate devices contributed to the sales increase.
`
`Though its North American activity is brisk, Hypercom's largest deliveries are outside the U.S. International
`
`sales accounted for 55% of the company's gross revenues last year, with the strongest business in South
`
`America and the Asia/Pacific region. Hypercom recently was awarded a contract to deliver 10,000 POS
`
`terminals to the Bank of China in Beijing to support the rollout of credit and debit programs in that country.
`Domestic Growth
`
`While VeriFone also is active internationally, shipping 300,000 terminals outside the U.S. last year, its U.S.
`
`business is leading its expansion. VeriFone's two most popular POS terminals last year were its |ow—end Tranz
`
`330 product and the Omni 395, which features an enhanced four—|ine graphic display.
`
`However, VeriFone executives expect the Omni 470 terminal, which has an integrated printer and personal
`
`identification number pad, to propel deliveries in 1997. The model was released late last year, and about 10,000
`
`units have been shipped, says Alistair Duncan, VeriFone group product manager for terminal products.
`
`Another leading vendor positioning for worldwide expansion is Toronto—based International Verifact |nc., which
`
`shipped 144,000 terminals in North America last year, down from 149,500 in 1995. In December, IVI and Paris-
`
`based Groupe lngenico, one of the world's largest smart card product vendors, formed an alliance to market
`
`each other's products.
`
`International Verifact will distribute lngenico devices in its core Canadian, U.S. and Latin American markets,
`
`while lngenico will market IVI terminals to the rest of the world. lngenico also purchased a 16.5% share in IVI for
`
`Petitioner First Data — Exhibit 1012 — Page 5
`
`

`
`$7.5 million (U.S.), and |ngenico's smart card technology will be incorporated into future IVI products.
`
`"|ngenico's smart card technology will fill out our product line, and the company creates a distribution outlet for
`
`us outside North America," says Barry Thomson, IVI president. "Smart cards will take hold outside the U.S.
`
`before they do inside. Our initiative is to have smart card—capab|e terminals in place in the Canadian market,
`
`then Latin America, then the U.S."
`Crowded Field
`
`Yet, while IVI, VeriFone and Hypercom control the bulk of the market, smaller players are making inroads.
`
`Roswell, Ga.—based Checkmate Electronics Inc., for instance, best known for its check—reading devices, shipped
`
`60,000 POS terminals in 1996, up from just 25,000 in 1995.
`
`In the past year, Checkmate delivered devices to such major retailers as Wal—Mart Stores Inc., the largest U.S.
`
`discount chain; Walgreen Co., the nation's largest drug store chain; Winn—Dixie and Von's supermarkets; and
`
`Burlington Coat Factory. Checkmate also will supply terminals to the Southern Alliance of States and Northeast
`
`Coalition of States electronic benefits transfer programs.
`
`Checkmate's most popular models are the CM 2010 integrated check and card—reading device, and the CM
`
`2001, which supports credit, debit and EBT. The terminals also can be upgraded to accept smart cards.
`
`The company is focusing on merchant markets not dominated by the largest vendors, such as the mu|ti—|ane
`
`retail segment, says Quresh Sachee, Checkmate senior vice president. Checkmate also is trying to generate
`
`business overseas and has opened a European office in London.
`
`Large Potential
`
`"The market potential is huge in Europe, and Asia still is embryonic," Sachee says. "We want to sell smart card
`
`devices in Europe and then integrate that technology into the terminals we distribute in the U.S."
`
`Another U.S. vendor mobilizing for expansion is Minneapo|is—based DataCard Corp., which shipped 39,360
`
`terminals in North America last year, up from 17,382 in 1995. DataCard's international deliveries increased to
`
`19,740 devices last year from 8,718.
`
`DataCard is expanding away from its core petroleum market and last year formed a sales team to focus on
`
`financial and retail segments. It is positioning the Jigsaw model, which was released last fall, as a key
`
`component for growth. The terminal is designed to support both magnetic—stripe and smart cards, and has a
`
`compact design and four—|ine display.
`
`"We're focusing on domestic opportunities," says John Mamalakis, DataCard senior vice president. "But we also
`
`have sales distributors in 90 different countries." DataCard's overseas focus is on Russia and Latin America, he
`notes.
`
`Also positioning for expansion is Toronto—based NBS Technologies, which shipped 35,000 devices in 1996, the
`
`same as in 1995, and one of North America's newest vendors, Wisconsin—based De La Rue Foitronic Inc. In its
`
`first year in the region, De La Rue shipped 6,000 devices.
`
`De La Rue already controls large portions of the European terminal market and devices are being used in the
`
`Visa Cash program in Atlanta and in the Mondex electronic purse program. "We want to leverage our
`
`experience and knowledge of smart cards in Europe," says Michael Malahy, De La Rue vice president.
`
`Location: United States; France; Canada; China
`
`Company / organization: Bank of China; Checkmate Electronics Inc.; DataCard Corp.; De La Rue Foitronic Inc.
`
`; Groupe Ingenico; Hypercom |nc.; NBS Technologies Inc.; Verifact |nc.; VeriFone Inc.
`
`Identifier (keyword): Trade, CMEL, VFIC
`
`Event classification: 604: Market share; 380: Strategic alliances; 460: Use of materials &supp|ies; 613: New
`
`orders received; 630: Shipments data
`
`Petitioner First Data — Exhibit 1012 — Page 6
`
`

`
`NAICS classification: 334119: Other Computer Peripheral Equipment Manufacturing; 52211: Commercial
`
`Banking
`
`Product classification: 3573283: Point—of—Sa|e Terminals; 6020000: Commercial Banks
`
`Publication title: Debit Card News
`
`Pagination: N/A
`
`Publication date: Feb 28, 1997
`
`Publisher: Thomson Financial Inc.
`
`Journal subject: Banking, finance and accounting industries, Business
`
`Journal code: OEUM
`
`Source type: Magazine/Journal
`
`Language of publication: English
`
`Document type: Magazine/Journal
`
`Source attribution: Gale PROMT, © Publisher specific
`
`Accession number: 47162366
`
`Document URL: http://search.proquest.com/professionaI/docview/679076538?accountid=153950
`
`Copyright: Copyright 1997 Gale, Cengage Learning. All rights reserved. COPYRIGHT 1997 Thomson Financial
`Inc.
`
`Date created: 2010-04-28
`
`First available: 2010-07-25
`
`Database: Gale Group PROMT®; 1972 to date (1972 — current)
`
`Why tenninal makers are smiling
`
`Author: Mitchell, Richard
`
`Publication info: Credit Card Management 9.1 (Apr 1996): 16.
`ProQuest document link
`
`Abstract (summary): A rising market for debit card—reading terminals lifted most manufacturers‘ boats in 1995.
`
`But in 1996, the smaller players face a tough challenge in taking market share from leaders VeriFone and
`
`Hypercom. While VeriFone remained North America's largest vendor, shipping 525,000 devices last year, its
`
`market share dropped from 51% to 46%. Hypercom cut into VeriFone's dominance, increasing shipments 35%
`
`and expanding its North American market share to 24% from 20%. VeriFone's strongest gains were overseas.
`
`The vendor had worldwide deliveries of 791,000, up 13% from 1994's 697,000. VeriFone's largest domestic
`
`growth segment in the 4th quarter was mu|ti—|ane, which includes supermarkets and drug stores.
`
`Petitioner First Data - Exhibit 1012 - Page 7
`
`

`
`Full text: Headnote
`
`A rising market for debit card—reading terminals lifted most manu facturers' boats in 1995. But in 1996, the
`
`smaller players face a tough challenge in taking market share from leaders VeriFone and Hypercom.
`
`When it comes to growth in the North American pointof—sa|e terminal market, the diagnosis is terminally healthy.
`
`Manufacturers shipped 1,129,395 devices in 1995, up 15% from a year earlier. And last year's strong sales are
`
`projected to be just the precursor to solid growth throughout the rest of the decade.
`
`The factors that spurred last year's terminal de|iveries—such as debit—payment launches in all retail segments
`
`and the expansion of shared—network POS debit programs into new regions—are expected to continue. But the
`
`need to support additional applications, such as electronic commerce on the Internet, will further power the
`
`market, vendors say.
`
`"There still is significant opportunity for growth," says George Devitt, director of marketing and business
`
`development for Redwood City, Ca|if.—based VeriFone Inc., the largest vendor of terminals for accepting credit
`
`and debit cards. "A large percentage of the terminal base is not debit ready."
`
`Coming on Strong
`
`However, unlike past years in which VeriFone almost sing|e—handed|y controlled the market, 1995 was notable
`
`for the breakthrough of Phoenix—based Hypercom Inc. While VeriFone remained North America's largest
`
`vendor, shipping 525,000 devices last year, up from 502,000 in 1994, its market share dropped from 51% to
`
`46%. Hypercom cut into VeriFone's dominance, increasing shipments 35% and expanding its North American
`market share to 24% from 20%.
`
`VeriFone's strongest gains were overseas. The vendor, whose shares are now traded on the New York Stock
`
`Exchange, had worldwide deliveries of 791,000, up 13% from 1994's 697,000. In the fourth quarter, VeriFone's
`
`overseas sales increased 46% from a year earlier, to $42.4 million, and comprised 38.8% of the company's net
`
`revenues. Nevertheless, even with a North American increase in terminal deliveries of just 5%, VeriFone had
`
`overall net revenues of $379.6 million last year, up 22.8% from 1994's $309.1 million. In the fourth quarter,
`
`overall U.S. revenues increased 15.6% over the year—ago period to $66.9 million. Growth Segments
`
`VeriFone's largest domestic growth segment in the fourth quarter was mu|ti—|ane, which includes supermarkets
`
`and drug stores. The subcategory grew 11.9% to $6.8 million. Emerging markets, including petroleum and
`
`convenience stores, increased 10.4% to $18.8 million.
`
`Within the emerging markets segment, petroleum and convenience—store revenues grew 21.8 % to $8.1 million.
`
`It was driven by sales of the Ruby SuperSystems products to major oil companies, independent service
`
`stations, and convenience—store chains.
`
`Revenues for the government and health—care segments, which includes devices supporting electronic benefits
`
`transfer programs, dipped to $4 million in the fourth quarter from $4.4 million a year earlier.
`
`VeriFone's best—se||ing device in 1995 was its |ow—end Tranz 330 product. However, executives project that the
`
`Omni 470 terminal, which sports an integrated printer and personal identification number pad—a required feature
`
`for on—line debit card acceptance—wi|| propel 1996 revenues by leading to increased deliveries to smaller
`
`merchants with limited counter space. The company also expects the up—and—coming e|ectronic—commerce
`
`market to enhance revenues. Indeed, VeriFone last year formed a Consumer Systems Division that focuses on
`
`developing transaction software and devices that could be embedded in consumer products ("Out of the Box,"
`
`November, 1995). Roger B. Bertman, VeriFone vice president, says that the potential market for debit and
`
`smart card readers that could be attached to personal computers is in the hundreds of millions.
`
`"There is a huge, new market for payment solutions on the Internet, and to utilize the Internet for business—to—
`
`business and consumerto—business applications," Bertman says. "We will start to see demand for the terminals
`in 1997."
`
`Yet, as VeriFone positions itself for new opportunities, it also is looking to regain the market share it lost last
`
`year to Hypercom, the second—largest North American vendor. Phoenix—based Hypercom shipped more than
`
`Petitioner First Data — Exhibit 1012 — Page 8
`
`

`
`270,000 terminals in North America, up 35% from 1994.
`
`The Terminal Market's
`steady Growth
`
`
`
`NIIFIII American deliveries
`
`1995
`
`1994
`
`1993
`
`1.12 million
`
`985,000
`
`821,000
`
`Source: Debit Card News
`
`m
`
`Hypercom executives attribute the company's growth to offering POS devices that carry five—year warranties,
`
`and products that can be easily upgraded for on—line debit and transactions involving smart cards—cards that use
`
`a powerful microprocessor chip instead of a traditional magnetic stripe to store data. Hypercom's major seller
`
`last year was its T7P unit, which features an integrated printer.
`
`Following Its Own Drummer
`
`Petitioner First Data — Exhibit 1012 — Page 9
`
`

`
`The company also is following a strategy that bases new products on current market demand, not necessarily
`
`on products for which demand might develop later. While companies such as VeriFone and Toronto—based
`
`International Verifact Inc. are marketing portable card—accepting devices for restaurants, analysts say demand is
`
`light.
`
`"We don't try to do everything our competition does," says Albert lrato, Hypercom president. "For instance, we
`
`haven't rolled out a portable restaurant product because we don't want to spend the time and energy on a
`
`device that doesn't have good market acceptance."
`
`Hypercom's expansion strategy already is paying strong dividends, according to lrato. Not only are shipments
`
`are the rise, but the number of resellers stocking Hypercom products is expanding. lrato says Hypercom's
`
`distribution base increased 90% in the last two years. Indeed, Coral Springs, F|a.—based Novatek Corp. recently
`
`began carrying Hypercom products along with VeriFone devices. "Many customers think Hypercom terminals
`
`are simpler to use, easier to program, and they like the five—year warranty," says E. Barry Huffstetler, Novatek
`
`president. "Hypercom is gaining momentum." VeriFone devices come with a 13-month warranty.
`
`Meanwhile, lrato also expects e|ectronic—commerce applications eventually to expand the terminal market. "That
`
`is something we're looking at very carefully, but we don't see a significant revenue stream there for two to three
`
`years," lrato says.
`
`Expanding Horizons
`
`Though Hypercom and VeriFone dominate the North American terminal market, they are not the only vendors
`
`that increased deliveries last year. International Verifact shipped 149,500 terminals, up 40% from 1994. While
`
`the majority of |V|'s business is generated in Canada, shipments to the U.S. are projected to increase.
`
`In fact, more than 30% of |V|'s revenues were generated outside Canada last year, up from 20% in 1994. Barry
`
`Thomson, IVI president, expects the vendor's Canadian business to generate less than 50% of total revenues in
`
`1997. IVI established a U.S. foothold in late 1994 when it purchased Boulder, Co|o.—based Soricon Corp., a
`
`manufacturer of check—reading devices.
`
`The acquisition gave IVI a U.S.based sales organization, and the ability to market check readers along with
`
`POS devices as a total package. IVI has named Chris Schellhorn as vice president and general manager of its
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`U.S. subsidiary.
`
`Another Canadian vendor expanding its North American business is Toronto—based NBS Technologies Inc.,
`
`which shipped 76,000 terminals in 1995, up from 71,000 a year earlier. NBS controls about 7% of the North
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`American market. NBS adopted a recapitalization plan last winter to pay down $150 million in debt, and
`
`appointed Ken Kivenko president and chief executive officer in August, replacing Tim Casgrain. The vendor
`
`recently was awarded a contract of over $1 million to supply POS systems and software for a debit and credit
`
`system to be launched by UAP Inc., an auto—supp|y chain with more than 4,000 stores in Canada.
`
`Meanwhile, management changes also occurred at Minnetonka, Minn.—based DataCard Corp., which added
`
`staff to help move the company into new markets. DataCard, which shipped an estimated 76,000 terminals in
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`1995, named John Mamalakis vice president and general manager of its transaction systems business unit;
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`Tom Kettell was appointed vice president of marketing; and Bernie Frey was named eastern regional sales
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`manager.
`
`DataCard is trying to expand from its core petroleum segment into the retail and financial markets. Between
`
`them, Mamalakis, Kettell and Frey have worked at McDonnell Douglas Payment Systems, BT North America,
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`MasterCard International, and in the bank card departments of major financial institutions. Petroleum devices
`account for about one—third of DataCard's business.
`
`Hard to Make Headway
`
`Still, while the largest terminal manufacturers were active last year, a smaller vendor had one of the most
`
`impressive performances. Roswell, Ga.—based Checkmate Electronics Inc., the leading vendor of check
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`readers, shipped 25,000 debit devices last year, up from 5,000 in 1994.
`
`Petitioner First Data — Exhibit 1012 — Page 10
`
`

`
`Checkmate is delivering terminals to Wal—Mart Stores Inc., WinnDixie supermarkets and Walgreen drug stores.
`
`Checkmate executives attribute their success to offering devices with a power supply that also supports other
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`peripherals attached to electronic cash registers, such as signature—capture devices and check readers.
`
`Checkmate expects to ship between 45,000 and 55,000 devices in 1996.
`
`Yet, while the smaller vendors are reshaping their operations to penetrate more segments, they still face a
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`formidable challenge in taking market share from the industry leaders. "The opportunity to make headway will
`
`be difficult because VeriFone and Hypercom are protecting their turf," says Mac Jordan, a financial services
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`consultant and partner in the Atlanta office of KPMG Peat Manivick. "Depending on how fast the smart card
`
`world evolves in the U.S., there may—or may not—be an opportunity for (other) vendors."
`
`Subject: Sales; Point of sale systems; Market strategy; Market shares; Debit cards; Computer terminals
`
`Location: US
`
`Company / organization: Name: VeriFone Inc; Ticker: VFIC; DUNS: 01—446—6825;
`
`Name: Hypercom Inc; DUNS: 18—179—2714;
`
`Classification: 9190: US 8650: Electrical, electronics, instrumentation industries 7000: Marketing
`
`Publication title: Credit Card Management
`
`Volume: 9
`
`Issue: 1
`
`Pagination: 16
`
`Petitioner First Data — Exhibit 1012 — Page 11
`
`

`
`Number of pages: 3
`
`Publication year: 1996
`
`Publication date: Apr 1996
`
`Publisher: Thomson Media
`
`Place of publication: New York
`
`Country of publication: United States
`
`Publication subject: Business And Economics——Banking And Finance
`
`ISSN: 08969329
`
`Source type: Trade Journals
`
`Language of publication: English
`
`Document type: PERIODICAL
`
`Accession number: 01196262, 00284429
`
`ProQuest document ID: 201154883
`
`Document URL: http://search.proquest.com/professional/docview/201154883?accountid=153950
`
`Copyright: Copyright Faulkner &Gray, Inc. Apr 1996
`
`First available: 2010-06-06
`
`Database: ABI/|NFORM® Professional Advanced (1971 — current)
`
`Card Briefs: 50,000 Verifone Tenninals For 33,000 Post Offices
`
`Publication info: American Banker (pre—1997 Fulltext) [New York, N.Y] 08 Mar 1995: 14.
`ProQuest document link
`
`Abstract (summary): Verifone Inc. will be providing the Postal Service with point of sale terminals under terms
`
`of the processing contract won jointly by NationsBank Corp. and Nabanco.
`
`The Verifone systems specified in the winning bid include Tranz 380 terminals, Printer 250 roll receipt printers,
`
`and the PIN Pad 100 family of hand—he|d security devices.
`
`Full text: Verifone Inc. will be providing the Postal Service with point of sale terminals under terms of the
`
`processing contract won jointly by NationsBank Corp. and Nabanco.
`
`The contract calls for the installation of 50,000 terminals capable of accepting both credit and debit cards in
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`33,000 post offices nationwide.
`
`The Verifone systems specified in the win