PayPal recently acquired Paydiant
In the previous part of the series, we discussed how eBay’s (EBAY) PayPal has made a number of acquisitions in the past to further strengthen its position in the mobile payments market. One of the major acquisitions that PayPal made in March this year was Paydiant.
Paydiant is a mobile platform that gives retailers the ability to develop customized applications such as customer-royalty programs in order to engage with their customers. Paydiant also offers a mobile wallet platform for MCX. MCX is a group of top retailers such as Wal-Mart (WMT), CVS (CVS), and Rite Aid (RAD). A few months back, these retailers were in the news when they abandoned the support of Apple (AAPL) Pay.
Paydiant possesses a number of advanced features in mobile payments
During the conference call to announce 1Q15 earnings, PayPal mentioned that Paydiant technology will also allow its customers to make payments through other systems such as near-field communication (or NFC) and QR codes. NFC technology has huge growth potential. Apple Pay and Google (GOOG) Wallet systems are already compatible with this technology.
According to a report from Berg Insight, and as the chart above shows, NFC handset shipments grew from 35 million in 2011 to 140 million in 2012. Shipments could grow to as many as 1 billion by 2017 at a compound annual growth rate, or CAGR, of 48%.
Feature-rich Paydiant technology should definitely help PayPal offer a competitive edge in the mobile payments market. To gain exposure to the e-commerce industry, you can invest in the Consumer Discretionary Select Sector SPDR (XLY). XLY invests about 6% of its holdings in Amazon (AMZN).