Clearly, after many years of the same old same old, Tim Cook and the team at Apple Inc. (NASDAQ: AAPL) were not only needing to generate new buzz, they had too. While most of the iPhone 6 upgrades were already out and reported, and the Apple Watch should prove to be an interesting “wearable,” and Apple’s move into the payments sector could prove to be their next big step forward.
While eBay Inc. (NASDAQ: EBAY) was the obvious loser out of the chute with its PayPal competition, there is certainly a host of immediate winners and other companies that could benefit down the road. A new report from RBC handicaps just who look to be the biggest winners as Apple takes another step forward into a new arena. The RBC team feels overall that the announcement appears less troublesome for the existing payment infrastructure and more of an advancement for a seamless mobile payment experience. Time will certainly tell.
Credit card companies that can be immediately loaded in are obviously the first big winners. American Express Co. (NYSE: AXP), MasterCard Inc. (NYSE: MA) and Visa Inc. (NYSE: V) can be loaded into passbook. The RBC analysts feel that this announcement will prove neutral to slightly positive, given the potential to accelerate the shift to electronic payments and the use of tokens as a means of payment security in Apple Pay. MasterCard and Visa are rated Outperform at RBC.
The major card issuer banks are not specifically mentioned in the RBC report, but obviously will be large participants. In addition to American Express, they include Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), Capital One Financial Corp. (NYSE: COF), JPMorgan Chase &Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC).
Point-of-sales hardware manufacturers could see some benefit from Apple Pay. While there will not be a dramatic change in the immediate landscape, the RBC team feels that companies like VeriFone Systems Inc. (NYSE: PAY) could see a compressed cycle upgrade for new near-field communication (NFC) enabled devices. VeriFone is rated Sector Perform at RBC.
Payment processors are seen as holding their ground, but the RBC team does not see any immediate upside for the group as a result of Apple Pay’s roll-out. Global Payments Inc. (NYSE: GPN) and Vantiv Inc. (NYSE: VNTV) are seen as having as receiving a neutral impact from the Apple initiative, but the RBC analysts do feel that down the road the sector could shift. Both stocks are rated Outperform at RBC.
Although the initial roll-out is small in the overall big picture of e-commerce, clearly the writing is on the wall for the global electronic payments sector. Apple wants in, security has become more critical and, most of all, there is a tremendous amount of money to be made. If anybody can race to change a sector and make money, one would think it would be Apple.
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