Hewlett-Packard hopes to persuade businesses to pay each other over the Internet after its $1.18 billion acquisition of Verifone, the swipe card terminal vendor.
The stock-based buy was an unusual step for HP, which often forms partnerships with IT companies but rarely swallows them. It also shows that the company, a notoriously shrewd player, is convinced Internet commerce will become a lucrative market.
Rick Belluzzo, executive vice president of HP's computer organisation, said the relationship between the companies was different to other partnerships. "We did this because of what the market potential is, and the timing is dictated by the speed with which we wanted things done."
Belluzzo, who will be responsible for Verifone, said HP plans to integrate its Internet and Intranet security products with Verifone?s software for downloading electronic ?cash? to smartcards. It will also benefit from its new unit's experience in volume electronic transactions. "Payment is everything in electronic commerce," Belluzzo said.
Analysts said the takeover makes HP one of the leading companies in Internet commerce because Verifone's point of sale technology is set to become the market standard. "They work with everybody," one said. Another said HP?s motive was to get online payment solutions to market quickly.
Verifone will become an independent HP subsidiary under president and CEO Hatim Tyabji, but will work closely with HP?s enterprise systems business unit as the companies hope to crack the business-to-business payment market. Tyabji, who will report to Belluzzo, said: "We?ve already made credit and debit card transactions fast, secure and easy. Now we plan to make secure Internet transactions a reality."
Belluzzo did not rule out redundancies or further acquisitions in electronic commerce but the companies will continue working on solutions that adhere to Visa and Mastercard?s Secure Electronic Transaction (SET) protocol for Internet credit card payments.
Verifone reported $472 million turnover in 1996, when it claimed it handled electronic transactions worth $520 million out of a worldwide total of $800 million. Citibank began testing Verifone?s smartcard technology last week.
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