Replies to post #787 on USA Technologies Inc (USAT)

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On Track Innovations (OTIV) and USA Technologies (USAT) Report Being Ready for Apple Pay

October 21, 2014 9:08 AM EDT

USA Technologies Inc. (NASDAQ: USAT), a solutions provider of secure cashless transactions for unattended point-of-sale and On Track Innovations Ltd. (oti) (NASDAQ: OTIV), a global provider of near field communication (NFC) and cashless payment solutions, today confirm that oti's NFC contactless Saturn 6500 readers deployed in the U.S. with USAT's ePort solutions are compatible with Apple Pay, Apple's new mobile payment service, and will accept payment made by consumers with Apple Pay.

Apple Pay enables iPhone 6, iPhone 6 Plus, and Apple Watch users to make secure cashless payments at terminals that support NFC. oti's Saturn 6500 line of readers was designed specifically for the unattended self-service market, providing reliable support for quick and easy electronic payments involving either magnetic strip or contactless transactions.

"We began this work nearly 10 years ago as a valued partner of USA Technologies," said Gonen Ziv, president of oti America. "We have seen significant traction in NFC with the introduction of Softcard and other mobile-based payment wallets, and the sales momentum for our family of cashless payment readers continues to grow, now fueled also by the introduction of Apple Pay. We believe that the market is at a tipping point in the transition to NFC-based cashless payments given their extra level of security and convenience. Thanks to strong channel partners like USA Technologies, the growing adoption of our NFC based products in the self-serve markets ideally positions us to capitalize on this multi-billion dollar revolution."

Cary Sagady, Sr. VP Network Solutions and Product Management for USA Technologies commented: "oti has been a great strategic partner for us. Our shared vision for the future of NFC enabled cashless payments has enabled us to work closely together to equip our customers with cutting-edge hardware and services. Today, these customers are benefitting from that vision by being able to accept mobile payment on their existing point of sale devices. For example, based on our experience with mobile payments thus far, the average ticket for mobile purchases in our customer locations is approximately $1.70, compared to an average cash ticket of $1.16, and an average credit/debit card purchase of $1.53. While our solutions using oti NFC technology have long-supported electronic wallets based on Android, BlackBerry and Windows platform, we anticipate the roll out of Apple Pay will further transform the industry and accelerate demand for NFC enabled locations as consumer acceptance, participation at machines and overall sales increases as a result."

With 150,000 NFC terminals already in the marketplace ready to accept Apple Pay, USA Technologies is a market leader, and the largest provider of NFC acceptance points in the unattended machine market.

oti CEO Ofer Tziperman added: "The unattended machine market presents a tremendous growth opportunity for oti and USA Technologies. There are an estimated $120 billion in transactions flowing through 15-20 million unattended/self-serve retail locations in the U.S. alone. This includes millions of locations in commercial laundry, kiosks, ticket machines, parking meters, Internet access terminals, bike kiosks and other locations that involve unattended cashless transactions. Additionally, there are more than 30 million food and drink vending machines worldwide, with a vast majority lacking cashless transaction capabilities. As market leaders, oti and USA Technologies expect to continue to drive significant growth as consumer demand for electronic payments continues to grow."

The Apple Pay compatible oti NFC readers include the Saturn 6000 indoor and desktop reader, theSaturn 6500 for outdoor applications, and the trio, a new modular payment reader.

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USA Technologies (NASDAQ:USAT), a provider of consumer payment systems, had its “buy” rating reiterated at H.C. Wainwright & Co this morning, with the firm citing Apple Pay's (NASDAQ:AAPL) influence in power and utility.

“For USA Tech, providing customers (cash-less, self-serve, automated POS machine operators) more utility is a good thing,” analyst Kevin Dede said in a research note emailed to clients today.

“We expect more of them to exploit the flexibility and opportunity Apple Pay grants the end consumer (using the machines).”

On Oct. 21, USA Technologies, along with On Track Innovations Ltd. (oti) (NASDAQ:OTIV), a provider of near field communication (NFC) and cashless payment solutions, confirmed that oti's NFC contactless Saturn 6500 readers deployed in the U.S. with USAT's ePort solutions are compatible with Apple Pay, Apple's new mobile payment service, and will accept payment made by consumers with Apple Pay.

Apple Pay enables iPhone 6, iPhone 6 Plus, and Apple Watch users to make secure cashless payments at terminals that support NFC.

“By our checks, feedback has been generally positive, and we believe that mobile connectivity and smart phone technology is now revolutionizing yet another industry,” Dede wrote.

But on Oct. 27, CVS and Rite Aid said they have stopped accepting Apple Pay, dragging customers into a confusing and annoying fight over payment politics.

The drug stores are part of a consortium of major retailers who oppose mobile payment technology like Apple Pay, mainly for two reasons. One, they want to escape the 1.5% to 3% fees they pay every time you swipe your credit card. Two, they want to keep collecting data on shoppers.

“Amounting to roughly 12,500 stores combined, these two drug store chains appear to have contractually obligated themselves in supporting a different organization now testing a different technology,” Dede said.

“While conjecture on our part, realizing the legal implications of a previous, exclusive agreement, these chains bowed out of Apple Pay creating a stir in its nascent launch.”

Dede, which has $2.65 target price on USA Tech, said that he suspects “the 'tectonic shift' in automated payments this company's CEO speaks to is underway,” given USA Tech’s “stand as a technology-agnostic solution provider, and the 80,000 new connections implemented in the last fiscal year.”

Shares of the Malvern, Pennsylvania-based company were up 0.8 percent at $1.75 at 9:47 a.m. in New York today.