Bank of America Corporation
) is testing a new mobile payment technology in collaboration with
Boston-based Paydiant, a mobile wallet and mobile payment platform,
according to a Reuters report. BofA is currently using the new
technology in Charlotte on a trail basis at five merchant locations
for the next three months. Interestingly, only the employees of the
company are involved in the test run.
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The technology being tested utilizes Quick Response or QR codes. It
lets the customer pay at a store by scanning the image of QR codes,
which unlocks the customer's bank information, stored in BofA's
network, for completing the payment process. Moreover, the
technology does not require disclosure of client sensitive
information with the payment intermediaries like
Further, as the technology does not require any additional
sophisticated hardware or phones, it can easily be used by
) iPhone and
) Android devices.
This is not the first time that BofA is testing a new mobile
payment system. Earlier, the company was running a pilot project
for Near Field Communications (NFC) technology that uses a
short-range wireless technology to transfer money to the merchants.
NFC technology requires a chip to be installed in the mobile phone
that transmits a radio signal when it is waved or tapped at a
device at the merchant's place.
Banks and financial institutions generate significant revenue for
transferring money from the purchaser to the seller through debit
and credit cards. With new regulations putting caps on exchange
fees, the banks are trying to find new avenues to augment their
revenues. One of these alternatives is to turn mobile phones into
Also, as the smart phones are increasingly becoming affordable,
banks and technology companies are trying to find out more
sophisticated but easy means to transfer money from purchaser to
merchants. Many banks have started offering digital wallet
facilities to their customers. Apart from BofA,
JPMorgan Chase & Co.
Wells Fargo & Company
) are also trying relentlessly to meet the growing demand for
mobile wallets and improve their market share through it.
Currently, BofA retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Also, considering the fundamentals, we
maintain a long-term 'Neutral' recommendation on the stock.