Barclays Launches Contactless Mobile Payments Service
Barclays (NYSE:BCS) expanded its contactless payment services further by launching its new mobile payments service in collaboration with Orange. [1] Barclays holds the opinion that contactless technology is the future of cashless payments, and has been investing substantially to improve its adoption. Barclays seems to have a head-start over its competitors including The Royal Bank of Scotland Group (NYSE:RBS), Bank of America (NYSE:BAC), UBS (NYSE:UBS) and JPMorgan Chase (NYSE:JPM) with regard to this increasingly popular mode of payment.
Our $18.30 price estimate for Barclays stock is roughly in line with market price.
The new offering adds more flexibility…
Barclays first introduced contactless cards through Barclaycard in 2007. Since then, it has been in the process of phasing-out all debit cards for contactless cards, and has provided more than 52,000 contactless terminals across the UK. Customers can use their cards to make purchases of up to £15 (about $24) without signing or having to enter a pin, making transactions quicker and reducing queuing times.
The contactless mobile payment service, named ‘Quick Tap’, is being made available to Orange customers who use a ‘Quick Tap’ enabled handset. To improve adoption, Barclaycard is providing Orange customers with £10 (about $16) cash balance in their account right at activation. For the first three months, these customers also get 10% cash back on all Quick Tap purchases.
… and will likely be seen in the US soon
Barclays has also announced its intention to expand its contactless services to the US after understanding “the right approaches, partnerships and technologies” for the US market. [2]
We believe that the increasing adoption of contactless technology in the UK and US provides a significant upside opportunity to Barclays’ value by increasing the size of Barclaycard assets over the years.
We currently estimate that the value of Barclaycard assets will increase by more than 50% over the next few years from its value of $46.8 billion in 2010. To understand how a faster increase in assets can help Barclays’ stock value, you can drag the trend line in the interactive chart above.
See our full analysis for Barclays stock here
Notes:- Orange and Barclaycard transform buying on Britain’s high-streets with the launch of the UK’s first contactless mobile payments service, Barclays Press Release, May 20 2011 [↩]
- Barclaycard builds its presence in the digital payments market, Barclays Press Releases, May 20 2011 [↩]