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Analyst Blog

MasterCard Inc. (MA - Analyst Report) will soon introduce a contemporary mobile wallet service in Japan, which is based on near-field communication (NFC). The company will launch this service by integrating its next generation digital service – PayPass – with DNP’s mobile wallet and C-SAM’s secure turnkey mobile transaction software technology services.

The latest ultra-modern digital service platform will facilitate customers with quicker, secured and relaxed mode of payments for their purchases. It will also allow smart and simple checkout services. In August last year, MasterCard had launched a similar mobile wallet, in association with DNP and C-SAM, in Singapore.

Further, the NFC process enables bar codes scanning and contactless payments through mobile devices, while also making point of sale transactions easy and secure. The contactless payment business has immense scope for growth in the upcoming years. Moreover, the latest smartphones these days are mostly equipped with NFC technology, laying ample scope of growth for m-commerce business.

Additionally, the new mobile wallet in Japan will offer other value-added services like customized coupons and offers based on customer’s historical purchase preferences, alerts on discount offers and loyalty programs. These facilities further add to the consumers’ shopping experience. On the other hand, a secure and user-friendly contactless payments service also smoothens the operations of the merchants and retailers.

We believe the new technologies are also aiding MasterCard to channelize its resources in order to adapt to the changing market dynamics and better penetrate into the global markets. MasterCard benefits from strong secular demand growth, meaningful international exposure, high barriers, excellent pricing power and impressive operating leverage.

Such long-term organic growth strategies are also crucial and should prove beneficial for sustaining competitive pressures and boosts management’s optimism of delivering earnings growth of over 20% in the next two to three years.

Along with MasterCard, other strong performers such as XOOM Corp. (XOOM - Snapshot Report) and Official Payments Holdings Inc. carry a Zacks Rank #2 (Buy). Another outperformer in the electronic payments services sector – Total System Services Inc. (TSS - Analyst Report) – carries a Zacks Rank #1 (Strong Buy).

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