Leading provider of electronic payment solutions, VeriFone Systems, Inc. (PAY) recently announced its latest solution to ease online transaction via smart devices. The company is now offering operating system (OS)-independent Mobile Point of Sale (mPOS) Payment Terminal — PAYware Mobile e355 — that will help retailers transact through smart devices that operate on different OS.
Given the increase in e-Commerce through various connected devices, it becomes necessary to adopt solutions that offer easy access to payment terminals. As a result, we believe that VeriFone’s latest launch will register significant market demand and therefore, remain accretive to its revenues.
Historically, mPOS terminals catered to a single OS since not many payment options where used to make payments. However, with the advent of mobile and online shopping, new payments systems and platforms have emerged that have necessitated more versatile POS systems. VeriFone‘s newsystem will basically help retailers stay at par with trends.
The PAYware Mobile e355 is a low-cost option offering efficient service and thus attracting merchants to make long-term investments in mPOS. In addition, it supports all the major OS options, including Google Inc.’s (GOOGL) Android, iOS and the Windows platform, and multiple types of mobile payments.
Currently, the annual growth rate in the mPOS Payment Terminal market is expected to be over 11% in 2015. Considering VeriFone’s newest offering, we believe the company can gain substantially from the current growth trendin themPOS business, which will add to its bottom line.
However, the electronic payment system and services market is highly competitive and fragmented. VeriFone faces significant competition from a number of local providers in the domestic, international as well as emerging markets such as China and India. Given the attractive prospects of the electronic payment system and services market, there are always new entrants striving to capitalize on the shifts in technology or product innovation which, we believe, increase the competition for VeriFone.
Its products may face competition from the increasing adoption of smartphones and tablets at POS terminals. Moreover, new non-card payment methods (over Internet and cloud instead of physical cards) are expected to gain significant traction over the long run and pose significant competition for the company, in our view.
Stocks to Consider
VeriFone has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Alliance Data Systems Corp. (ADS) and Xoom Corp. (XOOM). Both stocks have a Zacks Rank #2 (Buy).
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