Nomura Securities on PayPal PoS: Keeping It All In Perspective: Opportunity for PayPal, Yes. Threat to V/MA, Not so Much
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Rating Summary:
24 Buy, 28 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities on PayPal PoS: Keeping It All In Perspective: Opportunity for PayPal, Yes. Threat to V/MA, Not so Much.
Analyst=, Bill Carcache, said, "Investors across the payments and Internet space are becoming more focused on PayPal (Nasdaq: EBAY) at the point of sale (PoS), as PayPal plans to expand its PoS offering to 20 total U.S. retailers by the end of 2012. In the following report, we analyze the PoS opportunity for PayPal as well as the 5 reasons we believe PayPal PoS is not a threat to Visa (NYSE: V) or MasterCard (NYSE: MA)."
Top Five Reasons PayPal is Not a Threat to V/MA: 1) V/MA are Entrenched in Consumer Behavior at the POS; 2) PayPal’s Offline Offering Creates Friction at the Point of Sale; 3) PayPal’s Economics Limit Merchant Incentives and Consumer Rewards; 4) PayPal’s Offline Fraud Experience is Untested; and 5) V/MA Aren’t Really Being Disintermediated Given PayPal’s Funding Mix.
"Even Optimistic Scenario Suggests Little Impact on V/MA Valuation - We estimate that if PayPal captures 50 bps of spend at the top 20 U.S. retailers, the EPS impact to both Visa and MasterCard will be less than $0.01 per share. Assuming a 19.4x 2012 P/E multiple for V and 18.4x multiple for MA, this represents less than 0.1% of current valuations."
"V.me Poses New Threat to PayPal’s Ecommerce Business - When Visa launches its V.me digital wallet later this year, we expect it to do so with a substantial number of issuers and merchants already teed up to participate (e.g., Visa’s Cyber Source gateway has over 400,000 eCommerce merchants that can be configured relatively seamlessly to accept V.me). We think V.me’s aliasing capabilities and network-agnostic platform represent a direct threat to PayPal’s eCommerce business."
Analyst=, Bill Carcache, said, "Investors across the payments and Internet space are becoming more focused on PayPal (Nasdaq: EBAY) at the point of sale (PoS), as PayPal plans to expand its PoS offering to 20 total U.S. retailers by the end of 2012. In the following report, we analyze the PoS opportunity for PayPal as well as the 5 reasons we believe PayPal PoS is not a threat to Visa (NYSE: V) or MasterCard (NYSE: MA)."
Top Five Reasons PayPal is Not a Threat to V/MA: 1) V/MA are Entrenched in Consumer Behavior at the POS; 2) PayPal’s Offline Offering Creates Friction at the Point of Sale; 3) PayPal’s Economics Limit Merchant Incentives and Consumer Rewards; 4) PayPal’s Offline Fraud Experience is Untested; and 5) V/MA Aren’t Really Being Disintermediated Given PayPal’s Funding Mix.
"Even Optimistic Scenario Suggests Little Impact on V/MA Valuation - We estimate that if PayPal captures 50 bps of spend at the top 20 U.S. retailers, the EPS impact to both Visa and MasterCard will be less than $0.01 per share. Assuming a 19.4x 2012 P/E multiple for V and 18.4x multiple for MA, this represents less than 0.1% of current valuations."
"V.me Poses New Threat to PayPal’s Ecommerce Business - When Visa launches its V.me digital wallet later this year, we expect it to do so with a substantial number of issuers and merchants already teed up to participate (e.g., Visa’s Cyber Source gateway has over 400,000 eCommerce merchants that can be configured relatively seamlessly to accept V.me). We think V.me’s aliasing capabilities and network-agnostic platform represent a direct threat to PayPal’s eCommerce business."
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