Tag Archives: credit card transactions

Small business: Best practices for online credit card processing

Introducing a credit card payment option is a great way to enhance customer satisfaction. Most shoppers prefer using credit and debit card when shopping online. In America, people have become more dependent on credit cards.

Thus, for small business owners, integrating credit card processing is a huge advantage over competitors. Using credit cards is convenient and easy for both the business owner and the customer. However, if not correctly implemented, credit card processing could be risky for small businesses.

Needless to say, online credit card processing is highly vulnerable to the illicit acts of cyber criminals. Nevertheless, there are several ways on how entrepreneurs can effectively integrate a credit card payment option with their small businesses. Continue reading

T-Mobile USA Becomes The First Operator To Offer Square Credit Card Readers

T-Mobile USA has become the first mobile operator to offer Square payment readers to its customers, allowing smartphone owners on its networks to buy the payment accessory direct from its stores from today.

Square’s attachments are already on sale in Apple Stores and other retailers including Best Buy and Target, allowing iPhone, iPad and Android device owners to process credit card transactions on their mobile device.

The device is being aimed at small business owners that want to offer credit card payments to their customers. The company has set up a dedicated page on its website, here.

Square founder and Twitter co-founder Jack Dorsey announced via Twitter in December that the service now serves over 1 million merchants who are signed up and ready to process transactions.

As a counterpoint, Dorsey said that there are only 8 million merchants who accept credit cards in the US, giving Square a solid chunk of that market. Taking into account the figures that the Twitter co-founder shared, Square had managed to expand and capture 1/8th of the entire credit card processing market in just 2 short years since its launch.

Square is currently on the lookout for the best talent in software engineering, hardware engineering, creative, communications and public relations, compliance, finance, legal, marketing, and risk. With $168M in funding, the company can definitely afford to hire all of these positions and so created a slick new recruitment video to help it do so.

T-Mobile USA becomes the first operator to offer Square Credit Card Readers. By Matt Brian. (2012, January 31). Retrieved from http://thenextweb.com/mobile/2012/01/31/t-mobile-usa-becomes-the-first-operator-to-offer-square-credit-card-readers/.

5 Credit Card Stocks Set To Spring Higher

The analysts at Citigroup have put out an upbeat report on credit card companies as a group, expressing expectations this sector of the financial sector will out perform in 2012. Citigroup’s reasons for the positive outlook on these companies cover three aspects:

  1. The primary revenue source for the credit card companies – merchant fees – has not been affected by government regulations. Fears were that consumer protection laws would put limits on how much credit card companies could charge retailers for credit card transactions.
  2. Credit card use is expected to grow as consumer confidence and spending increase throughout 2012. The U.S. economy is starting to give more indications of a slightly more robust level of growth.
  3. Alternate payment systems are not ready to make a significant dent in the credit cardstranglehold on payments processing. 

Here is a look at the major players in the credit card sector, from largest market capitalization to smallest:

Visa (V): With a current market cap of $81 billion, Visa is the largest of the credit card processing companies. At $100 per share, the stock has a P/E of 20 based on FY 2011 earnings and a forward P/E of 17 based on a 2012 consensus earnings estimate of $5.86 per share. Earnings growth is forecast to be 17 percent in 2012 and 16 percent in 2012.

DJIA component American Express (AXP) checks in second on the size meter with a market cap of $56 billion. American Express is trading at just under 12 times the expected 2011 net earnings – once the fourth quarter results are released on January 19. Net income is forecast to grow by just 2 percent to $4.17 per share in 2012.

MasterCard (MA) has a market cap of $44 billion and is trading at 18.5 times consensus 2011 earnings. The fourth quarter earnings release is scheduled for February 2. The Wall Street consensus earnings estimate for 2012 has MasterCard’s net income growing by 16.4 percent. At $346 per share MA has a forward P/E of 16 – right in line with the projected growth estimates.

Capital One Financial (COF) was called out, along with Visa and MasterCard, by the positive Citigroup report. This $21 billion market cap company earns its money on credit card and other consumer loan spreads rather than from transaction fees. Capital One has a P/E ratio of 6.1 based on consensus 2011 earnings – Q4 earnings out on February 19. The Wall Street consensus for 2012 has Capital One’s net income declining by 20 percent. This stock may have the most to gain from stronger credit card results.

Discover Financial Services (DFS), at $13 billion market capitalization, splits its business between credit cards and banking services. Like Capital One, Discover earns the bulk of its revenues from interest income. DFS also trades at a current P/E of 6 and the Wall Street consensus estimate has 2012 earnings falling by 18 percent compared to 2011.

From the numbers given here, Visa and MasterCard are set to continue existing strong growth trends into 2012 and the share valuations and P/E ratios reflect those forecasts. Capital One and Discover are struggling with loan charge-offs due to consumers stuck in a tough economy, and need economic conditions to improve for profits to follow suit. American Express is valued for slow growth and needs some form of catalyst to spark earnings growth.

The earnings forecasts used here are the consensus earnings estimates – an average of the different analyst estimates. All of the stocks have individual analysts forecasting significantly higher results in 2012, especially MasterCard and Capital One Financial. Investor should watch for more signs like the Citigroup report with increased estimates as the year moves along.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

5 Credit Card Stocks Set To Spring Higher. (2012, January 11). Retrieved from http://seekingalpha.com/article/318860-5-credit-card-stocks-set-to-spring-higher.

E-banking Rides High On IT

The financial sector made remarkable progress in adopting electronic forms of payments instead of traditional paper-based ones in the just concluded year.

The use of debit card, credit card, automated teller machine (ATM), internet banking, mobile banking, automated cheque processing and credit information system increased significantly in 2011.

Banks were in the forefront of harnessing technology to improve their products, services and efficiency to rope in customers.

According to Bangladesh Bank (BB) data, out of 47 scheduled banks 43 are now engaged more or less in electronic operations.

The four banks that are yet to adopt electronic banking are: Bangladesh Krishi Bank, Bangladesh Development Bank, Rajshahi Krishi Unnayan Bank and Rupali Bank. All these are state-owned.

BB data shows 38 banks were providing online banking facilities and 18 banks internet banking. On the other hand, nearly 40 banks have now ATM or debit card services and 26 banks offer credit card facilities.

Transactions through ATMs increased by more than 50 percent to around Tk 35,000 crore in 2011. Credit card transactions also rose more than 50 percent to nearly Tk 5,000 crore.

The central bank also took steps to make automated cheque processing system and mobile banking more effective. The BB issued guidelines for mobile-based banking services in the same year in a bid to ensure financial inclusion of the non-banked population.

“It (2011) was a great year for the financial sector in terms of IT adoption,” said Tapan Kanti Sarker, head of IT of NCC Bank.

Cheque processing, credit information and fund transfer all have been automated in the just concluded year, he added.

Syed Masodul Bari, head of IT of Al-Arafah Bank, said banking has become much easier due to the use of IT in 2011. He cited an example of remittance transfer, which has now become a matter of a few minutes instead of weeks needed earlier.

He said mobile banking would rise with a huge potential in 2012.

“Banks’ activities have become more transparent due to the use of IT,” said Bari.

E-banking Rides High on IT. (2012, January 1). By Sajjadur Rahman. Retrieved from http://www.thedailystar.net/newDesign/news-details.php?nid=216486.