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VeriFone Systems Is Making All The Right Moves, Are You Watching?

June 18, 2014 | About:
Suravi Thacker

Suravi Thacker

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Technology has changed the payment system drastically, wherein payments are no more made in cash. Emergence of electronic payment providers have made shoppers’ lives easier. Also, it has made online shopping a popular tool for customers.

However, industry players such as VeriFone Systems (PAY), NCR Corporation (NCR) and eBay (EBAY) are not yet satisfied with this dynamic shift, leading to the growth of mobile commerce. This has made payment system even more interesting as it revolves around the world of smart phones. It enables people to make payment through their phones or tablets by connecting a card reader that can swipe a customer's credit card.

Emerging Ideas

This idea was initiated by private industry player Square, which entered into a deal with Starbucks (SBUX) for mobile payment. Through this deal, customers at Starbucks’ stores are able to pay for their lattes through their mobile phones. This led VeriFone to launch a new mobile payment processing system for small and medium sized businesses, called SAIL.

Though VeriFone’s new payment processing system is very similar to what Square has been offering, it will have some added advantages. It offers customer loyalty programs and uses social media to have a better foothold within a market. The application helps develop a long relationship with the customer by providing loyalty discounts to the regular ones.

Even eBay launched a mobile payment system called PayPal Here, which is also aimed at small businesses. The new payment system is available in Home Depot’s stores. It makes it very easy to pay at the stores by just calling out a pin code and the customer’s mobile phone number to the cashier.

On the other hand, NCR Corporation has not been very active on this front. This lack of drive into mobile payment systems is probably the reason why NCR is lagging behind its competitors when it comes to revenue growth in the last 5 years.

Well stacked against peers

VeriFone Systems has had the highest appreciation (12.1%) in its quarterly revenue in the last 1 year, way above its industry peers. This is mainly because of its continuous efforts to outperform others. In fact, this is also reflected in its stock price movement during the same period.

VeriFone’s share price has appreciated by a whopping 133% in the last one year. On the other hand, NCR and eBay registered declines of 2.4% and 4.4%, respectively. Moreover, VeriFone has great future prospect, another strong indicator of its potential.

Deals should continue to benefit

Verifone had rolled out its method of payment in taxicabs through smart phones, striking a deal with Columbia’s Taxicab Commission to boost the product's exposure. This provided benefits to the company in terms of higher revenue. The company has also entered into a partnership with National Australia Bank to provide credit card acceptance solutions for the bank’s business customers. Hence, the merchant customers of National Australia Bank will be able to use smart phones or tablets to accept payment from their customers.

Also, VeriFone will be installing its mobile payment systems in the checkout lanes of the retailer Finish Line. The electronic payment provider will be installing mobile card acceptance systems, which will make customers’ shopping experience even better.

Conclusion

VeriFone has a number of deals that should help in strengthening its business in the long run. It is the best when it comes to performance and has outpaced its peers in terms of revenue growth and share price increase. Further, with the evolving mobile payment system, this company has a bright future which investors can cash on.


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