Market Overview

PayPal Winning Mobile Payments, But Visa And MasterCard Still Make Good Bets

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Mobile payment technology is beginning to integrate society, with more and more companies offering that option at the register and some names, like Starbucks Corporation (NASDAQ: SBUX), deriving a significant proportion of their transactions through mobile.

While the mobile payment space is populated by some serious hitters, a few companies remain in the spotlight.

Front and center, Deutsche Bank sees Paypal Holdings Inc (NASDAQ: PYPL) as the "winner," in a recent mobile payment research piece.

"As the industry continues working on taking the friction out of mobile payments, the focus is turning toward adding and extracting value around the payment," Deutsche Bank analysts explained.

PayPal's ‘Winning'; Visa And MasterCard Still Foundations

"We believe PayPal has emerged as a winner in mobile payments and both V (Visa Inc (NYSE: V)) and MA (Mastercard Inc (NYSE: MA)) will remain the key rails to benefit from the secular trend of moving transactions to digital," said Deutsche Bank.

Related Link: Can Starbucks Teach Facebook And Apple A Thing Or 2 About Mobile Payments?

Elaborating on PayPal's position as "winner" within the space, Deutsche Bank commented, "We believe PYPL holds a significant first-mover advantage over existing/future mobile and online payment plays, given its scale of ~180 million users, 10+ million merchants, and over 2/3rds of the top-100 e-retailers (nearly 30 percent of its $282 billion in payment volume for 2015 came from mobile."

"PYPL remains the most widely used digital wallet and is used 5x more than competing checkout options," the firm noted.

While the clear favorite for Deutsche Bank is PayPal, the firm adamantly praised Visa and MasterCard. "Although we believe PayPal is the dominate player for online mobile payments, Visa Checkout and MasterPass have been working hard to emulate PayPal's success and have made significant progress," Deutsche Bank explained.

"The one advantage Visa and MasterCard do have, and it's a significant one, is the power of interchange along with size and scale. Visa for example has roughly 2.5 billion cardholders (soon to be 3 billion including V Europe) to put things into perspective. The Visa Checkout and MasterPass solutions provide solid value proposition to the merchants (increased cart conversion) and the consumer (convenience)."

Rating And Price

Deutsche Bank currently has a Buy rating on all three names, with a price target of $87 on Visa, a $100 price target for MasterCard and a $44 price target for PayPal.

At time of writing, Visa was down 1.28 percent at $76.83, MasterCard was down 0.79 percent at $94.30 and PayPal was down 0.31 percent at $38.67.

Latest Ratings for MA

DateFirmActionFromTo
Nov 2019MaintainsOverweight
Oct 2019MaintainsOverweight
Sep 2019MaintainsOverweight

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Posted-In: Deutsche Bank MasterPass mobileAnalyst Color Price Target Reiteration Analyst Ratings Tech

 

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