- PAYware Mobile Enterprise is specified to work with iPad.
- Bluetooth known to be used.
- NFC rumored for specific reasons.
- Paul Galant's remarks.
Payment processing firm VeriFone (NYSE:PAY) is clearly associating itself with Apple (NASDAQ:AAPL). Its PAYware Mobile Enterprise is specified to work with the iPad. It has other mobile retail products with some similar capabilities. However, the only technology that is obviously utilized is Bluetooth, so some ongoing questions have not been definitively answered. Yet, at this time, it sounds as if Near Field Communication ("NFC") may be implemented.
While Apple is known to use Bluetooth low energy ("LE"), there has been extensive indication and speculation in recent months about its adoption of NFC technology (I, II). Relevantly, China UnionPay, the domestic bank card organization of China, is said to have an agreement with Apple. Further, other contention, based on a report that Teradyne (NYSE:TER) should be conducting tests, is that NFC chips produced by NXP Semiconductors (NASDAQ:NXPI) will be in the next iPhone:
NXP Semiconductors - which supplies chips for Apple's iPhone 5 and iPhone 5S - appears to have made a deal to have Teradyne prepare to test more of its chips, ISI stated. This suggests that NXP's chips will be incorporated into Apple's iPhone 6, ISI believes.
Returning to VeriFone, notice the image of the e255 in the middle image from its graphic?
The full line of devices works with the iPad, iPod touch, iPhone, and other smartphones and tablets.
VeriFone's GlobalBay Mobile Retail Solutions also can use an iPad. Varied descriptions say the products work with Bluetooth. Another possibility could involve contactless EMV, as NFC uses an EMV-based infrastructure.
EMV is a technology that enables a chip built into a charge card, popularly in combination with a PIN, for transactions. It is expected that cards throughout the US, where magnetic stripes are still used, are upgrading in a process that should accelerate through 2015. In this context, a credit card needs to be physically inserted into a reader, or point of sale ("POS") device.
In the prepared remarks section of Verifone's Q2 Conference Call Transcript, CEO Paul Galant specifies that retailers are using mobile solutions that are designed to accommodate Apple products -- that sound separate from the VX 690, which supports NFC. The emphasis is on EMV:
In the second quarter six retailers, including Nike (NYSE:NKE), Godiva, Abercrombie & Fitch (NYSE:ANF) and PetSmart (NASDAQ:PETM) agreed to implement EMV capable mobile solutions that integrate with some of the latest Apple devices.
Also in Q2, we launched the portable VX 690, the first of several new EMV capable devices to be built using our near design methodology that leverages an attractive consumer-based design and enables merchants to leverage NFC, low-energy Bluetooth, and many more additional mobile point-of-sale bandwidths.
Unless Apple products are to exclusively use Bluetooth, most of it sounds like a boon for NXP Semiconductors, a secure connections business credited with inventing NFC that is believed to service over 70% of the global banking card market. Additionally, Sterne Agee, having a Buy rating on its stock and a $74 price target, also observes in a June 5th note that:
Some of the regional banks, PNC (NYSE:PNC) and Huntington Bank (NASDAQ:HBAN), are now starting to roll out EMV-enabled cards. We believe key is for the major card issuers such as JPM Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) to start issuing EMV-enabled payment cards given the consumer transactional security offered by EMV. We would also note both Wal-Mart (NYSE:WMT) and Sam's Club this week announced they are rolling out EMV chip-enabled cards, with the cards available this summer.
Target Corporation (NYSE:TGT) has a new CIO, Bob DeRodes, who is implementing EMV at all of its stores, beginning in 2015. Further, its branded credit cards and REDcards will use chip and pin technology.
NXP not only makes the chips that go into cards, but is involved in the infrastructure that makes terminal systems function.
In VeriFone's Q1 2014 Transcript, Galant is recorded saying:
We estimate over the next several years approximately 3 million additional EMV terminals will be added to the U.S. market on top of the current installed base.
The company has sold one million EMV terminals in the past three years. Not surprisingly, NXP has recently guided for its Industrial and Infrastructure segment to have the fastest growth, revenue increasing in a mid-teens percentage, in the Second Quarter.
If Apple does implement NFC, it could be helpful to NXP. Broadcom (NASDAQ:BRCM) is amongst competitors also involved in the technology. NXP is known for using a Secure Element ("SE"), in combination with the radio chip, in order to protect sensitive data. If there is indication that Apple's new products use an SE, NXP is its likely partner.
Apple's relationship with VeriFone, a firm that uses Bluetooth LE to support mobile products, is clearly established. Charge cards are in the process of upgrading to EMV. It makes sense that VeriFone's products for Apple also support it. The technologies that enable Apple's future payment systems are not known, but if NFC is in fact part of it, things could be even better for NXP.