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Apple (AAPL) Mobile Payment Launch Could be Game Changer, Says Deutsche Bank (V) (MA) (GPN) (PAY) (VNTV)

August 28, 2014 8:54 AM EDT
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In a research note Thursday, Deutsche Bank analyst Bryan Keane discussed Apple's (Nasdaq: AAPL) expected entry into mobile payments, calling it a "game changer. " Companies mentioned in the report include Visa (NYSE: V), MasterCard, Inc. (NYSE: MA), Global Payments, Inc. (NYSE: GPN), Vantiv (NYSE: VNTV), Amazon.com (NASDAQ: AMZN), and VeriFone Systems (NYSE: PAY).

"We believe mobile payments is finally going to get a jolt in the arm with the long awaited arrival of Apple. Our channel checks and research suggest Apple will launch a new mobile payments platform (for both online and in physical retail stores) around the release of iPhone6, leveraging the ~800m+ iTunes accounts. We expect Apple to support payment functionality based on 1) In-app payments, 2) NFC (we think NFC will be in iPhone 6) 3) BLE using iBeacons, 4) QR codes through the Passbook app, and 5) WiFi connectivity to help facilitate location based targeting and payments. We expect the payment information to be stored in the Secure Element on the phone (no HCE) which along with biometric authentication would likely benefit Apple in the form of lower Card Holder Present (similar to CP rates) interchange fees. Unlike many other failed attempts at mobile payments at the physical store, we would expect both consumer and merchant buy-in if Apple proceeds as we expect," said Keane.

"We believe Card networks are best positioned to win as Apple will leverage credit/ debit cards and may not pursue direct connectivity to bank accounts given hurdles in customer adoption, poor customer experience, and fraud/credit risk. We do not expect Apple to take on the merchant risk; hence, we expect the company to continue to work with the acquirers, but Apple could play more of a role in the front end of the payment that could squeeze future acquiring value added services. The verdict on the payment terminal vendors (Verifone/Ingenico) remain unclear depending on the payment technology selected," he added.

For an analyst ratings summary and ratings history on VeriFone click here. For more ratings news on VeriFone click here.

Shares of VeriFone closed at $35.07 yesterday.



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