VeriFone Rebounds as NYC Denies Report of Square Cab Deal
Shares of VeriFone Systems Inc. (PAY) pared losses after the New York City Taxi Commission refuted a report that rival payments company Square Inc. was near a deal to put its credit-card reader in more city cabs.
VeriFone lost less than 1 percent to close at $30.58, reversing an earlier retreat of as much as 8.5 percent after the New York Post reported that the city was close to completing a deal to outfit 1,000 taxis with Square’s readers, citing researcher PrivCo.
“There is no truth whatsoever to PrivCo’s reported statements regarding a deal in the works between Square and the TLC,” Allan Fromberg, a spokesman for New York City’s Taxi and Limousine Commission, said in an e-mailed statement.
VeriFone, the largest maker of credit-card terminals, competes with Square in the fast-growing market for payments made via smartphones and tablets. Both companies have accessories and software that let merchants -- including cab drivers -- accept credit and debit card payments. VeriFone makes readers that are used to process transactions in about half of New York City’s cabs, Fromberg said.
“VeriFone serves about 35,000 taxis in the U.S. and, to be clear, the article says Square will roll out 1,000 taxis and is worth about $15 million in revenue,” John Williams, an analyst at UBS Securities LLC, wrote in a research report today. A share loss of that size “is manageable given VeriFone’s $20 million quarterly taxi revenue run rate.”
Victoria Brown, a spokeswoman for San Jose, California- based VeriFone, declined to comment. Aaron Zamost, a spokesman for San Francisco-based Square, said in an e-mailed statement that PrivCo’s statements on a Square deal “have no basis in fact.”
Creative Mobile Technologies LLC and VeriFone have city contracts to install readers in cabs, and they evenly split the market, Fromberg said. Those contracts expire in February, and regulations will be issued by the end of the year with requirements companies must meet to be considered for the contract in the future, he said.
Square has a pilot program with the city to outfit 12 taxis with Apple Inc.’s iPads and technology that enables the devices to read cards, Fromberg said. There is no pending contract for this, he said. The taxi commission has issued a request for proposals for an application that would let riders pay using a smartphone, Fromberg said.
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