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VeriFone to Clash With Square on Micro-Merchant Market

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(Corrects penultimate paragraph to say PayPal has 106 million accounts).

May 7 (Bloomberg) -- VeriFone Systems Inc., the largest maker of credit-card terminals, will offer an attachment that lets mobile devices accept credit and debit cards, making a deeper push into a market pioneered by Square Inc. and EBay Inc.’s PayPal.

Like Square, the current leader in the small-business payment processing market, VeriFone will offer a matchbox-sized attachment for mobile devices made by Apple Inc. or those that feature Google Inc.’s Android software to merchants for free. VeriFone’s version will allow partners such as banks to customize the service to transmit coupons and loyalty points to consumers, said Greg Cohen, a senior vice president at San Jose, California-based VeriFone.

The strategy could help VeriFone grab as much as 30 percent of the micro-merchant processing market, set to reach $1 billion in 2016 and up from $30 million last year, Rick Oglesby, a senior analyst at researcher Aite Group LLC, said in a phone interview.

“It’s a new way of looking at commerce for VeriFone,” Cohen said in a phone interview. “We’re not only providing the hardware but also the payment processing and ability to do social media.”

Square processes transactions at an annualized rate of $5 billion, Chief Operating Officer Keith Rabois said in an interview last month. PayPal serves 106 million active accounts in 190 markets and 25 currencies, according to its website.

VeriFone’s attachment integrates with stores’ existing cash registers, loyalty and inventory systems. The device and the related software, known as the SAIL application, was the first product created by VeriFone’s new SMB Commerce division. The unit includes staff from VeriFone’s acquisition of bills-payment provider ChargeSmart and focuses on smaller merchants.

To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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