VeriFone Wins DCTC Contract
by Zacks Equity ResearchJuly 12, 2012 | Comments : 0 Recommended this article: (0)
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Recently, VeriFone System, Inc. ( PAY - Analyst Report ) announced that the company has been awarded a five-year contract by the District of Columbia Taxicab Commission (DCTC). The contract value ranges from $35 million – $45 million after factoring in potential advertising revenue.
VeriFone won the contract in a competitive bidding process, and thereby became the exclusive vendor for installation and support of the DCTC’s Taxicab Smart Meter System project.
Using the Taxicab Smart Meter System, the passengers can use new payment options along with getting an opportunity to view digital content during trips. The System also improves manageability and accountability of the entire taxi fleet.
VeriFone provides an integrated suite of hardware, software and services to the taxi industry. The in-taxi equipment provided by VeriFone includes secure card payment acceptance devices, GPS navigation, broadband wireless communications, and fleet management control units. All payment transactions originated in the taxi are sent wirelessly through VeriFone’s secure payment gateway, leading VeriFone to earn a service fee.
In addition, the taxi systems utilize VeriFone Digital Network or VNET. Using VNET, VeriFone increases the revenue it derives from each taxi with paid digital advertising that also provides passengers with local news, weather, traffic and public service messages. VeriFone's taxi payment solutions are currently deployed in multiple U.S. cities, including New York City, Philadelphia, Boston, Chicago, Las Vegas, Miami, Baltimore, and Fort Lauderdale.
As per the contract, VeriFone will now develop, install and support payment systems integrated with driver and passenger information tablet displays for all of the District’s 6,500 taxis.
The company is also responsible for providing electronic trip reporting, credit card payment processing, display of news and other programming, as well as safety alert activation features for both passengers and drivers.
In addition, the contract includes a Back Office Management Information System that will provide the DCTC with automated trip reporting and GPS location services.
Extracting content from the VeriFone Digital Network (VNET), the 10-inch tablet passenger information modules (PIMs) will include news, weather, local and national content provided by NBC4 and NBC Universal. The PIM also includes videos, interactive banners, clickable “tabs” and crawlers, interactive maps and micro sites for advertisers and partners.
The inclusion of 6,500 cabs in Washington D.C., will expand VeriFone’s taxi media footprint by 23% to over 35,000 in the U.S. itself.
The news of the contract win boosted the stock price by 10.93% in regular trading to close at $35.41.
In the long run, we continue to maintain a Neutral recommendation on VeriFone. However, we have a Zacks #4 Rank on the stock, which translates into a short-term rating of Sell.
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