Evan Schuman's StorefrontBacktalk

Vivotech is in trouble. The contactless PIN pad maker, which counts Home Depot and McDonald’s among its customers, announced on July 27 that it is trying to sell its hardware business and restructuring. This came amid reports earlier the same day that the company was shutting down. Either way, Vivotech is the latest casualty of the failure of both contactless cards and mobile payments to get traction with consumers.

It’s also another blow to the credibility of Google Wallet and ISIS (both signed up Vivotech as a POS partner) as well as PayPal’s in-store payment system (Vivotech put a “Pay with PayPal” button on all those Home Depot PIN pads).

The company responded to the shutdown reports last Friday with a statement saying that “business fundamentals are strong and orders and contracts are building” for both its hardware and software, but that its six-month effort to sell the hardware line hadn’t paid off.

“Vivotech has not ceased operations but is in the process of restructuring operations and has reduced its team to a smaller group with the goals of maintaining customer relationships and core contract work,” the statement said. NFC World and TechCrunch reported earlier the same day that the company had told employees it was shutting down.

That’s the very strange, soap-opera-like business of PIN pads these days: Business is strong and growing, and that’s a business Vivotech wants to get out of.

In practice, Vivotech may have been caught in a contactless Catch-22. As recently as last year, Vivotech said it had 70 percent of the contactless PIN pad market. Part of the reason was the lack of demand for contactless PIN pads, which was the result of a lack of interest in contactless by consumers (and not much enthusiasm for it on the part of retailers, either).

That made Vivotech a big fish in a small, but potentially growing pond—a good position for a 90-employee Silicon Valley startup that by last year had raised $75 million from investors and was considering going public.

It was a good plan—as long as Verifone, Ingenico and Hypercom didn’t take contactless seriously and left Vivotech to soak up most of the contactless growth.

Then came Google Wallet and an explosion of expectations for contactless. Verifone jumped in, Ingenico jumped in and Vivotech needed a new plan—which looked like it might involve instant growth by buying the U.S. assets of Hypercom (Hypercom wanted to sell its U.S. assets to Ingenico and the rest of the world to Verifone, but the U.S. Justice Department said no to that idea). Instead, private equity firm Gores Group outbid Vivotech last year and changed Hypercom’s name to Equinox.

And then neither Google Wallet nor ISIS (which still hasn’t announced an official start date for its mobile-payments trial this summer in Salt Lake City and Austin) generated big growth in contactless. Vivotech is now a smaller than average fish in a much more crowded contactless pond. It’s not hard to see why it wants out.

There’s no doubt that eventually someone—most likely former Vivotech target Equinox—will buy Vivotech’s PIN pad business. That will reduce the PIN pad vendor options for chains. But until either contactless or NFC-based mobile payments show some life, there’s no reason to look for innovation in POS hardware.

Unless, of course, Apple throws all those predictions out the window this fall. Stay tuned.