As Payment Processing Evolves, Look To These Companies: eBay Inc (EBAY), Research In Motion Ltd (BBRY), The Western Union Company (WU)

The Western Union Company (NYSE:WU), in an attempt to greatly expand its mobile money transfer service, recently announced a strategic agreement with Ericsson. The Western Union Company (NYSE:WU) has certified the Ericsson Wallet Platform, which allows customers to use their mobile phones to transfer money. With its strong brand image and loyalty, Western Union is set to benefit greatly from this agreement.

PT Bank Permata’s head of electronic channels Bianto Surodjo said, “If they (users) want to do the payment, they just go into BBM Money and they transfer in a simple way as if they were chatting. We want to put financial activities into customers’ habits because Research In Motion Ltd (NASDAQ:BBRY) Messenger is becoming like the culture here for people to communicate.”

Testing of this mobile-payment technology is restricted to only one bank in Jakarta keeping in view the complexity and regulatory constraints, according to T.A. McCann, vice president of BlackBerry Messenger.

McCann cautiously warned that the BBM Money is just one of the features of ongoing makeover of the smartphone maker’s messaging service, and that he doesn’t expect the money transfer service alone to bring back customers who have stopped using Research In Motion Ltd (NASDAQ:BBRY) devices.

Valuation considerations

Based on valuation multiples, only BlackBerry and Western Union are attractive:

Ticker	Company	P/E	P/S	P/B	P/FCF	D/E	EPS Growth Next 5 Years
BBRY	BlackBerry	NA	0.56	0.74	8.48	0	5.0%
MGI	MoneyGram International	NA	0.75	NA	NA	NA	14.7%
WU	Western Union	8.54	1.45	8.8	12.38	4.28	10.7%
INTU	Intuit	30.22	4.81	7.21	25.25	0.18	13.4%
EBAY	eBay	26.92	4.94	3.32	26.91	0.22	14.6%
MA	MasterCard	24.05	8.76	9.4	24.93	0	17.8%
V	Visa	73.54	12.07	3.87	NA	0	18.6%

Unfortunately, Research In Motion Ltd (NASDAQ:BBRY) is too speculative at this point. It is trying to be David to multiple Goliaths in Apple Inc. (NASDAQ:AAPL) and Samsung in the smartphone market.

Western Union is a more plausible investment candidate based on its positive earnings and low price-to-sales and price-to-earnings ratios.

Conclusion

eBay Inc (NASDAQ:EBAY)’s payment processing story is very interesting, but not investible at current price multiples. Research In Motion Ltd (NASDAQ:BBRY) is has too many uphill battles to face, making it “cheap for a reason.”

The article As Payment Processing Evolves, Look To These Companies originally appeared on Fool.com and is written by Bill Edson.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.