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BlackBerry, Enstream Pen Mobile Payment Platform Deal

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The beleaguered Canadian smartphone manufacturer, BlackBerry Limited , recently struck a three-year deal with mobile payment company, EnStream LP, to deliver an advanced secure platform for monetary transactions that take place between banks and customers.

EnStream will receive infrastructural support from BlackBerry which will help these financial institutions (which includes Royal Bank of Canada, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce) and carriers to save card details of customers on smartphones which can use a near field communication (NFC) tag. Notably, EnStream is jointly owned by three major Canadian carriers, namely, TELUS Corporation (TU - Free Report) , BCE, Inc. (BCE - Free Report) and Rogers Communications Inc. (RCI - Free Report) .

Through a light tap between mobile devices and machines or credit card payment systems, NFC tags allow smartphones to access valuable information like credit card payment details.

Increased smartphone and tablet usage coupled with significant deployment of 4GLTE services have encouraged people to make online bill payments on their mobile handsets.

Gartner Research firm believes that mobile transactions will reach $173 billion in 2017 from $35 billion in 2012, exhibiting a compound annual growth rate of 31%. Thus, we believe that the demand for BlackBerry’s security platform will continue to rise going forward. Moreover, it will create a lucrative opportunity for Canadian handset makers who continue to lose smartphone market share.

In order to offset rising losses in its smartphone business, BlackBerry has decided to enter the lucrative machine-to-machine (M2M) wireless communications market. Management has undertaken “Project Ion” to help business enterprises provide a seamless connection between people, devices and machines for greater value addition. Project Ion will also focus on developing a secure public application platform based on the company’s proprietary QNX software and BlackBerry secure enterprise mobility management system.

Hence, we believe that such value-added services will not only add new revenue streams for the company but will also minimize losses while moving ahead.

BlackBerry currently has a Zacks Rank #3 (Hold).

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