MasterCard Rolls Out PayPass Wallet - Analyst Blog

Expanding its digital payments services, on Monday MasterCard Inc. ( MA ) 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 Visa Inc. ( V ) and American Express Co. ( AXP ).

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 globally.

While American Airlines and Barnes & Noble Inc. ( BKS ) 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 Intel Corp. ( INTC ), Sage Pay, SIA and Vantiv. We believe the collaborated initiative is expected to be a valued advancement in the rapidly growing eCommerce arena.

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 NFC-enabled smartphones.

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 Google Inc. ( GOOG ) and Sprint Nextel Corp. 's ( S ) digital wallet platform. MasterCard has also partnered with Isis, which was formed by a consortium including Verizon Communications Inc. ( VZ ), AT&T Inc. ( T ) 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 quarters.

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 long run.

AMER EXPRESS CO (AXP): Free Stock Analysis Report

BARNES & NOBLE (BKS): Free Stock Analysis Report

GOOGLE INC-CL A (GOOG): Free Stock Analysis Report

INTEL CORP (INTC): Free Stock Analysis Report

MASTERCARD INC (MA): Free Stock Analysis Report

SPRINT NEXTEL (S): Free Stock Analysis Report

AT&T INC (T): Free Stock Analysis Report

VISA INC-A (V): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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