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Canaccord says Mastercard’s DCC decision favourable for Planet Payment

Published: 22:20 17 Jun 2010 BST

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Broker Canaccord issued a note on Planet Payment (LON:PPT, PINK:PLPM), responding to Mastercard’s decision to implement new rules and reporting standards for Dynamic Currency Conversion (DCC) at the beginning of this month after VISA decided to limit DCC on May 1, calling this development “favourable” for the company.

Mastercard is increasing the DCC information that acquiring banks must report to Mastercard and the disclosure that acquirers must make to end clients at point of sale, but it has affirmed that DCC is allowed globally. Acquiring banks will now have to provide the names and locations of existing merchants and ATM operators offering DCC and whether or not they are in compliance with Mastercard rules by 1 February 2011. Canaccord noted that Planet Payment had already been in compliance with these rules and that the discussions between the company and Mastercard regarding the new rules have been positive.

“Mastercard’s move after the Visa announcement gives us comfort that Mastercard has not followed Visa in stopping acquirers’ DCC rollouts and is allowing acquiring banks time to comply with reasonable new rules and procedures,” commented Canaccord, adding that it did not change its outlook on the company, expecting Mastercard rollouts to continue as planned.

Planet Payment has indicated that its new businesses in the Philippines, Brunei, Sri Lanka, Singapore, the Maldives, South Africa and UAE are rolling out rapidly. Additionally, the new rules will not affect the company’s high-margin Multi-Currency Processing (MCP) e-commerce products.

Earlier this month, broker Daniel Stewart & Company (DS&C) said that Mastercard’s decision not to limit future DCC transactions negated the main risk that had recently kept Planet Payment’s share price under pressure. The report also noted the “high potential for future forecast outperformance from an attractive new client pipeline” and major roll-out of services in the aforementioned territories.

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