VeriFone’s Point Group Wins Contract (MCD) (PAY)

Point Group, a wholly owned subsidiary of VeriFone Systems, Inc. (PAY) recently announced that it has won a payment-as-a-service contract from S Group in Finland.

Point Group, one of Northern Europe’s largest providers of payment and gateway services and solutions for retailers, has been a part of VeriFone since its takeover in January this year.

As per the contract, Point Group will supply a complete range of payment services to S Group in 1,600 locations across Finland. These payment services include software, estate management, maintenance, integration, security and gateway services.

The agreement also includes new payment systems that account for about 15% of the total contract value.

Based in Finland, retail group S Group comprises SOK Corporation, along with its subsidiaries and 21 regional and 8 local cooperatives.

Employing more than 40,000 people, S Group caters to grocery and consumer goods, petro service station and fuel, travel industry and hospitality business, automotive and accessories trade and the agricultural trade.

The services provided by Point will include a wide array of stand-alone, portable and unattended payment systems in food market checkout lanes, restaurants, retail gasoline outlets and pumps, and other locations.

Point Group expects to start deploying the new payment services in 2012 but the major portion of the implementation is slated for 2013 and will likely be completed in 2014.

VeriFone intends to extend the Point platform throughout the region and beyond, in a bid to create the world's largest infrastructure for rapid deployment of alternative payments.

We believe that this acquisition is a positive for the company, since it expands the product portfolio as well as accelerates the revenue mix toward higher margin services revenues. VeriFone has begun the process of rolling out Point’s payment as-a-service offering beyond Point's traditional markets.

Earlier, VeriFone announced that Point Group is also providing key payment services for the GoMcDo online mobile ordering system, utilized by McDonald’s (MCD) in France.

Using this application, consumers can place their order and enter payment information or access stored payment information from the application. Customers can also access specified McDonald’s location and complete their transaction at an unattended device where they receive a ticket for fast-track food pickup.

We continue to have a Neutral recommendation on VeriFone. However, the stock currently carries a Zacks #4 Rank, which translates into a short-term rating of Sell.