Planet Payment (LON:PPT) said that Visa’s (NYSE:V) decision to end its moratorium on dynamic currency conversion (DCC) would facilitate its sales and entry into new markets.
This means that Planet Payment’s acquirer customers are able to activate new accounts and new merchant locations for DCC on both Visa and MasterCard (NYSE:MA) in all regions.
Visa issued the new rules in April 2010, limiting the addition of new DCC participants.
The move put pressure on Planet Payment’s shares as it was feared that another major payment processor MasterCard would follow suit.
That, however, did not come to pass as MasterCard said it would not limit future DCC transactions, which broker Daniel Stewart & Company said negated the main risk affecting Planet Payment’s stock.
And now Visa has reversed the changes to its policy.
“We believe that this positive development will facilitate our sales and marketing efforts and entry into new markets.
“Planet Payment's services help acquirers open new sales channels, merchants sell more goods and services, and cardholders enjoy informed choice and transparency at the point-of-sale.
“We look forward to continuing the growth of our business and revenues,” said chairman hilip Beck.
Visa’s long standing restriction on DCC in Central and Eastern Europe, Middle East and Africa (CEMEA) will be lifted immediately. In Latin America, acquirers and merchants will be able to offer the service effective 15 April 2011.
Planet Payment's Pay in Your Currency DCC service provides international Visa and MasterCard cardholders with the choice to pay in their home currency at the point of sale.
The move has enabled Planet Payment to offer the service to new acquirers in all regions around the world, building on its customer base of more than 40 acquirers and processors in 16 countries stretching from North America to the Middle East, South Africa and Asia Pacific.
At the beginning of September, DS&C commented on Mastercard’s acquisition of Datacash for £333 million, saying the deal made Planet Payment look cheap relative to its peers.
Datacash had a price to earnings (p/e) ratio of 21x, while Planet Payment has a p/e ratio of 6x for 2011.
Two weeks prior to the DS&C note, broker Canaccord Genuity said Planet Payment could be a potential bid target given the recent wave of consolidation.
For the six-months ended 30 June 2010, the company generated U$27.7 in total revenues compared to US$21.3 million in H1 2009. Notably its multi-currency revenues grew by 54% to US$21.6 million from US$14.1 million a year ago.