Yesterday, card processing giant Visa Inc. (V) announced a strategic alliance with Intel Corporation (INTC), a multinational semiconductor chip maker, in order to improve the mobile banking experience in the developed and developing economies.
Accordingly, Visa has teamed up with Intel to blend its proficiencies in payment processing and account holder authentication along with its global network reach with the latter’s high-grade innovative technologies that offer the world’s best computing devices.
Moreover, of late, mobile banking has come up with a profound scope of providing the consumers with a convenient, user-friendly, value-for money, transparent and secure mode of making transactions, which include person-to-person payments, bill payments, adding cell phone minutes and other banking services.
Nevertheless, to make mobile commerce widely acceptable and accessible, Visa has assured that the latest payment processing source will be supported by a high-grade technology and security measures. Hence, Intel’s silicon innovation and chip-based security will enable Visa process its payments in a safe and secured manner.
Therefore, the companies are mutually operating to increase their efficiencies through Visa’s payWave and Intel’s Atom-based smartphones and tablets, which will enable the consumers to have access to an authentic transaction and hardware-based display protection.
The collaboration will also result in enhanced security and faster checkout, with the convenience of a simple wave of the mobile phone in front of a payment terminal. Additionally, Intel’s smartphones will also be equipped with near field communication (:NFC) technology, offering Visa’s mobile transaction a safe, easy and fast pathway.
Enhancing security is important for Visa’s card transactions, given the competitive pressure against arch rivals, particularly MasterCard Inc. (MA), along with the market demand in the rapidly growing electronic payment industry. The company has achieved the position to consistently maintain the availability of its core global processing systems as well.
Concurrently, the Financial Times also reported that Visa has allied with the UK’s telecom operator – Vodafone Group plc (VOD) to initiate its mobile wallet service across the 30 countries where Vodafone operates its pre-paid accounts. We believe such efforts of reaching out to the consumers through its alliance with the smartphone makers to global eCommerce networks should give the required boost to Visa’s business mix.
Meanwhile, other card giants such as MasterCard, Discover Financial Services (DFS) and American Express Co. (AXP) 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.
Estimate Trend Revision
Over the last 30 days, 18 out of 25 analysts covering the stock have raised their estimates for the second quarter of fiscal 2012, while a couple of downward revisions were witnessed. Currently, the Zacks Consensus Estimate for the second quarter is operating earnings of $1.50 per share, which would jump by about 22% from the year-ago quarter.
The higher number of upward estimate revisions for the second quarter indicates a positive trend in the performance of the stock in the near term. This reflects Visa’s robust growth fundamentals that could be moderated by the regulatory snags.
With respect to earnings surprises, the stock has been steady over the last four quarters, with all four positive surprises. The average remained positive at 2.35%.
Visa carries a Zacks Rank #2, implying a short-term Buy rating, although a Neutral stance remains over the long term.
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