2014 was a huge year for mobile payment-- Apple (AAPL) released its digital wallet service in October. Google (GOOGL) wallet, PayPal and payment apps like Venmo also gained popularity.
2015 might offer more. “I think the real discussion around Apple pay is about how Apple and its new offering can disrupt the industry,” says Nicole Sinclair, senior stock analyst at TheStreet.com. “Right now we’re not seeing a really big uptake on the consumer or business side but the potential there is strong.” Still, says Sinclair, people are starting to think about how this will affect companies in the industry. Bears believe that Visa (V) and Mastercard (MA) are all but dead and that they’ll lose out.
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“That’s just not true,” says Sinclair. Large credit card companies are partnering with Apple. “Also, 50% of payments in the U.S. are strict cash and that’s much higher in emerging markets around the world-- it’s more like 75%.” Sinclair thinks we’re still in the midst of a switch to card payments and that it will be years before mobile payments become typical.
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Still, Sinclair doesn’t believe that the potential for Apple Pay has been priced into Apple shares. “I don’t think a lot of things have been priced into Apple shares,” she says. “Apple is still a very cheap stock.” She points to the new cycle of iPhone 6 and iPhone 6 Plus, where demand remains strong, as well the Apple watch and more. “It’s a cheap stock relative to where the S&P (^GSPC) is trading and relative to its growth and its innovation,” she says.
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VeriPhone (PAY) reports on Monday at 1:30pm and Sinclair believes it's a “stealth read if you want to learn more about Apple Pay.” There are 8 million cell terminals within the U.S. and VeriPhone owns 5 million of those. “They actually have the technology that enables Apple Pay to work,” says Sinclair. She believes the company will give some color on Apple Pay and trends in mobile payment in general.
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