SAN JOSE, Calif. -- VeriFone Systems Inc. said that it has accelerated its efforts to deliver end-to-end encryption solutions with the acquisition of encryption leader Semtek. VeriFone previously invested in Semtek's equity funding. Semtek shareholders received VeriFone common shares that valued the acquired company at $18 million.
The acquisition, effective immediately, enables VeriFone to integrate the development, sales, implementation and support of end-to-end encryption solutions into the existing VeriFone organization to better fulfill customer needs, increase revenue [image-nocss] and enhance support. Additionally, VeriFone is offering royalty-free software licenses to device manufacturers and payment processors to further spur market adoption.
"With increasing market demand for our VeriShield Protect end-to-end encryption solution, acquiring Semtek's core encryption technology ensures we can more effectively ramp up to meet customer demands and foster industry-wide acceptance of this critically important component to securing payment transactions," said VeriFone executive vice president Bud Waller.
VeriFone's initial investment in Semtek was announced in October 2007. In April 2008, VeriFone introduced VeriShield Protect, the first commercial offering of end-to-end encryption for payments, which incorporated Semtek technology.
VeriShield Protect has since been implemented across VeriFone's product line. The patented technology encrypts card holder information at the exact instant of acceptance, inside a secure, trusted device, and keeps that data encrypted throughout an enterprise, to ensure protection of information even in the event of a security breach.
Semtek will be absorbed into VeriFone's Integrated Systems organization.
Earlier this month, VeriFone announced that it has acquired the assets of WAY Systems Inc, a pioneer in mobile POS solutions and gateway services for mobile merchants.
The purchase price consisted of an upfront payment of $6 million dollars and an earn-out payable in one year of up to an additional $3 million dollars should certain performance targets be met.
Over the past five years, WAY has built up a customer base of more than 25,000 mobile merchants who use the company's compact mobile POS technology and gateway services. VeriFone will immediately take over support of these merchants within its expanding PAYware Connect Gateway infrastructure. Additionally, VeriFone will offer continuous non-stop support for all existing WAY mobile systems, bolstered by VeriFone's extensive mobile portfolio, including PAYware Mobile and VX Evolution secure payment systems.
WAY possesses substantial intellectual property and reseller relationships that will augment VeriFone's mobile payment solutions strategy. The company was granted numerous patents for a range of intellectual property, including the connection of a mag-stripe reader to a mobile phone, PDA or smartphone.
"We are delighted to add the WAY Systems customers and employees to the VeriFone family," said Jeff Dumbrell, VeriFone executive vice president. "The intellectual property we are acquiring will significantly contribute to our vision of empowering wide-scale adoption of mobile payments."
WAY Systems, New York, was founded in 2002 with initial seed capital from Bill Melton, the founder of VeriFone. From 2004 through 2009, WAY received an additional $50 million in equity investments from Bessemer Venture Partners and Austin Ventures as well as debt financing from Lighthouse Capital Partners.
San Jose, Calif.-based VeriFone is the global leader in secure electronic payment solutions. VeriFone provides expertise, solutions and services that add value to the point of sale with merchant-operated, consumer-facing and self-service payment systems for the financial, retail, hospitality, petroleum, government and healthcare vertical markets.
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