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Wall Street Banks Declare War On Silicon Valley Mobile Payments

Wall Street banks have declared war on Silicon Valley mobile payments platforms, arming to do battle in the peer-to-peer mobile payments business. As the likes of Square ( SQ ), Facebook ( FB ) and PayPal ( PYPL ) have charged into the uncharted waters of peer-to-peer payments, Wall Street banks have spent five years stitching together an alliance among  JPMorgan Chase ( JPM ), Bank of America ( BAC ), Wells Fargo ( WFC ) and U.S. Bancorp ( USB ) and others,  according to a press release from Early Warning. Early Warning is a real-time payments and authentication firm that will manage clearXchange, a technology that lets bank customers make quick — near-instant — transactions. It now generally takes one to three days to transfer money between banks. Banks had been slow to innovate after the financial crisis, but now “what we are doing now is delivering payments in real time, which is what our customers have asked for,” Mary Harman, managing director for payments at Bank of America, said in an interview with Reuters . The banks are starting to use clearXchange to allow customers to transfer money almost instantly to friends and family. Peer-to-peer payments have been popular among millennials for splitting dinner bills, cab fare and paying rent. Achieving a critical mass fast is important for the banks using clearXchange. The so-called network effects — the value unlocked from having a large customer base — were critical to PayPal’s early success in online payments, for example. PayPal was early to the peer-to-peer market and snapped up the popular Venmo app as a part of its $800 million Braintree acquisition in 2013. Braintree had acquired Venmo in 2012. Last year, Venmo moved $7.5 billion between people, and in January alone it handled $1 billion, PayPal told Reuters. As of Wednesday, only customers at U.S. Bancorp and Bank of America will be able to send money via mobile devices with the clearXchange platform. JPMorgan and Capital One Financial ( COF ) told Reuters they plan to plug in to the platform “later this year.” Citigroup ( C ) is among banks that have not joined the alliance, Reuters said. PayPal stock was up a fraction, near 38, in afternoon trading on the stock market today . The company is an IBD Leaderboard stock. Shares are just below an early entry at 38.62. A conventional buy point lies at 42.65. Square stock was down a fraction Wednesday afternoon, as the company was set to report its Q4 earnings after the close . Investors are likely going to focus on Square Capital, the company’s financial services arm, as an area of growth. Square’s peer-to-peer payments app Square Cash recently added a feature that let customers store money in it, much like a PayPal account already does. Facebook built its peer-to-peer payments play within its Messenger app , and it did so in-house. The company has said Messenger has more than 800 million customers. Facebook stock was up 1% Wednesday afternoon, near 107.

This Payment Processor Stock Is Testing Critical Support

Loading the player… Global Payments ( GPN ) is testing critical support in the stock market today . The move comes one month ahead of the payment processor’s next quarterly report, which is expected to show earnings growth of 19% and a sales decline of 24%. Shares are testing support at the 50-day and 200-day lines, falling 2.2% to breach those levels in intraday trade. Global Payments’ volume was tracking lighter than average. The two lines are converging, which is a bearish sign. Global Payments’ performance over the past few months has lagged, with the stock coming as much as 31% below its December high. Shares are now about 20% below a consolidation buy point. Elsewhere in the payments space, Square ( SQ ) will issue its quarterly results after the close on Wednesday. Analysts expect to see a per-share loss of 13 cents. Revenue is projected to jump 37%. Square is working on an IPO base with a 14.88 buy point. The stock is currently trading 21% below the pivot, down 5.7% Tuesday afternoon. PayPal ( PYPL ), which is on the IBD 50 list of leading stocks, is also working on an IPO base. PayPal shares are trading 9% below a potential buy point, down 1.5% in afternoon trade. Fellow IBD 50 member Vantiv ( VNTV ) is hovering under a 53.56 cup buy point, which it attempted to break out of late last month. Vantiv’s stock fell 3.1% Tuesday, and is 5% below its recent high. Visa ( V ) dropped below its converging 50-day and 200-day lines on Monday, while MasterCard ( MA ) dropped below its downward-sloping 50-day line on Monday. Visa and Mastercard fell 1.6% and 1.5%, respectively, Tuesday afternoon.

Square Set For First Earnings Report; Square Capital A Focal Point

Payments processor and digital cash register maker Square ( SQ ) is set to release its first earnings report since its November IPO after the close Wednesday, with analysts keen to see results from its Square Capital and Square Cash operations. The fourth-quarter report could be better than expected, RBC Capital Markets analyst Daniel Perlin said in a research note Monday. Analysts polled by Thomson Reuters expect Q4 revenue to clock a 37% year-on-year gain to $343 million, with a per-share loss minus items of 13 cents, compared with an 11-cent loss a year earlier. Square produces a line of digital cash registers and credit card readers targeting smaller businesses. It also processes the payments on these devices. Square has branched out to marketing and financial services — such as payroll — and offers short-term cash advances based on the transaction data it collects. RBC’s Perlin expects a 14% sequential increase in software and data revenue, driven by Square Capital, the company’s financial services business. “Arguably one of the more important drivers to total revenue growth, Square Capital will be a key focal point on the earnings call, as management has devoted considerable resources to the growth of this business,” Perlin wrote. Perlin expects a lofty 140% increase in hardware sales, saying demand for the company’s credit card chip readers has been strong. Square also has a peer-to-peer payments app called Square Cash that competes with payments giant PayPal ( PYPL ) and its P2P app, Venmo. Both are said to be popular with millennials, the coveted young-adult demographic. Perlin has a price target of 15 on Square stock, which was down 2% in morning trading in the stock market today , near 12. Square priced its IPO at 9, peaking its first day on the market, at 14.78. Shares touched a two-month high of 12.65 last week. The company has a weak IBD Composite Rating of 46, where 99 is the highest.