Wednesday, April 25, 2007
I knew I liked Washington Mutual
Besides the recent upward movement to $43 per share from a recommended price of $39.50 I have a new reason for liking WM.
The contact less card!
First I should start this blog by saying I am a huge fan of consumer credit cards. I have many cards which give me 2% on everything I buy. Plus, for using plastic I get essentially a 55 day, interest free loan while the billing cycle is calculated. Along with the credit also comes 0% offers that add up to the tune of hundreds of dollars in free interest on their money. That said, I am a huge fan of credit if used correctly. Poor use can get you into trouble and that’s never a good thing. I would highly encourage stores to accept this new form of payment because I think it’s a gateway into the future.
This new card offered by both Visa and Mastercard has the ability to change the credit scene forever. The contact less card offers consumers a way to pay for goods via credit or debit accounts without ever handing the card over to a sales associate. The card which has been shown attached to car keys or in places such as Europe, imbedded in cell phones, offers more security than traditional cards. The card is simply “swiped” or “placed” within two inches of the high tech payment terminal which reads the information wirelessly then records a transaction on an account. The sales associate never handles the card nor needs to see ID for the transaction. While the sales terminal will be completely wireless, it will be just as, if not more, secured than tradition Point Of Sale machines.
I expect the terminals to become a new favorite of high volume, high trafficked businesses such as large retailers and even gas stations. Due to the card remaining in the customers hand at all times, a few seconds can be taken off each transaction just for the handling of money. Figure also that the machine requires no changed to be tendered back to the consumer and no signature is needed for purchases under $25 this machine should be a great timesaver.
Even today we have machines such as automatic change counters that deliver change to the customer while the clerk administers the bills. This interface alone saves time for the companies employing such machines and I can foresee this new payment system shaving even more time off each transaction. The time may only amount to a few seconds, but for businesses such as WalMart, that is valuable time.
Washington Mutual is the first bank I have seen to work with the new payment type which I think will make it a market leader. Eventually, all cards will probably go contact less which puts WaMu in an outstanding position to capitalize in the beginning.
Washington Mutual has no small credit base either. The company reports $23.5 Billion dollars in bank card assets which makes it the fifth largest in the nation. WaMu serves over 11 million accounts with generally decent credit. In the consumer credit scene, WaMu is considered a prime lender.
Not just added security will make this program a success. I think the largest selling point is the time savings in tendering the cards and change to consumers. Ideally, WaMu should pick up many more credit accounts from its acceptance of the new terminals. I would expect that if Washington Mutual does follow through with the program that it probably doubles the amount of current cardholders it holds now.
WaMu is a buy here.