) is launching a new mobile point-of-sale (mPOS) system in its U.S.
based stores. The mPOS system will use an iPhone 5S and
) shell, which is capable of accepting EMV (Europay, Mastercard and
Visa) enabled cards.
The news drove VeriFone shares up by 8.78% ($2.82) to close at
$34.94 on May 12.
Apple launched its EasyPay mPOS technology in stores way back in
2009. It comprised of an iPod Touch and a shell made by Infinite
Peripherals that included a card swiper and a barcode scanner.
In the new mPOS system, the iPod will be replaced by iPhone 5S.
Apart from being a POS terminal, the device can also be used to
call or receive phone calls within the store. Additionally, near
field communication (NFC) technology will be available on the
Apple's selection of a VeriFone shell reflects the company's
increasing focus on securing user transactions. The EMV enabled
cards are much more secured than the magnetic striped credit cards,
as users are required to key-in their personal identification
numbers (PINs) to authenticate a transaction.
As data breaches continue to negatively impact consumer confidence,
Apple's decision to use an EMV-based device is a welcome move. The
enhanced security feature is expected to boost customer footfall at
Apple's retail outlets.
By Oct 2015, both
) are expected to amend their liability regulation, which will
force most U.S. merchants and banks to use EMV based cards and
devices. Moreover, we believe that Apple's usage of the technology
will speed up EMV adoption among enterprises particularly large
retailers in the U.S.
Increasing adoption will be beneficial to VeriFone over the long
term. Despite a sluggish adoption rate, the company already ships
25% of overall EMV enabled devices in the U.S. VeriFone estimates
that approximately 3 million EMV terminals will be added to the
U.S. market on top of the current installed base over the next
several years. This will significantly expand the company's total
addressable market going forward.
Moreover, higher demand for VeriFone's encryption solution will
also drive top-line growth. VeriFone's strong product pipeline,
growing payments-as-a-service business offerings and new digital
marketing solutions are expected to drive top-line growth through
Currently, VeriFone sports a Zacks Rank #2 (Buy), while Apple has a
Zacks Rank #3 (Hold).
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