Expanding its digital payments services, on Monday
) announced the launch of PayPass Wallet Services. However, it will
be functional starting third quarter 2012.
PayPass Wallet is the latest next generation digital payment
service that will facilitate customers a quicker, secured and
relaxed mode of payments for their purchases. The payments can
either be made electronically in stores or through internet using
devices such as smartphones, computers, laptops and tablets.
These services will be processed through the company's global
banks, merchants and partners. Moreover, this service can be
accessed even by customers of different card processors such as
American Express Co.
Accordingly, MasterCard will provide compact digital wallet
services through its three-pronged module of PayPass Wallet
Services, i.e. PayPass Acceptance Network for online or contactless
payments, PayPass Wallet and PayPass API. Initially, MasterCard's
PayPass Wallet Services will be made available in the U.S., Canada,
U.K. and Australia. Subsequently, the services will be accessed
While American Airlines and
Barnes & Noble Inc.
) will be among the first merchant partners; Citibank, Fifth Third
Bank, Grupo Banco Popular and Grupo BBVA are a part of the several
financial institutions that are initializing the PayPass Wallet.
Additionally, MasterCard has successfully tapped many technology
partners such as
), Sage Pay, SIA and Vantiv. We believe the collaborated initiative
is expected to be a valued advancement in the rapidly growing
Furthermore, MasterCard's PayPass Wallet appears to be a viable
growth opportunity for MasterCard given the recent developments in
telecommunications. For instance, the latest technology that
functions on near field communication (NFC) process. The consumers
can now make secure payments and transfer funds through the
Going forward, the company should be able to enhance its product
portfolio that offers an efficient delivery of a unique deployment
of digital wallet services, thereby aligning itself with the
demands of the market.
However, PayPass Wallet is not the first such initiative taken
by MasterCard. Since last year, the company has been vigorously
exploring this growth arena by allying with
Sprint Nextel Corp.
) digital wallet platform. MasterCard has also partnered with Isis,
which was formed by a consortium including
Verizon Communications Inc.
) and T-Mobile USA.
This digital wallet is expected to be officially launched in the
summer of 2012. Such digital wallets are partnered with all the
major card processors in the industry.
We believe these efforts will not only open up ample organic
growth opportunities but it should also become a part of
MasterCard's long-term growth. Furthermore, this will also enhance
MasterCard's operating and competitive leverage in the upcoming
Other card giants are also seeking greener pastures through
newer initiatives, including the expansion into prepaid cards,
mobile banking and eCommerce, given the regulatory clouds hovering
over the credit and debit card businesses.
While MasterCard carries a Zacks Rank #2, implying a short-term
Buy rating, we maintain a Neutral stance on the company over the
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