E Nxt-ID Gets A New Lease On Life

The platform uses NFC technology to interact with over 10 million retail POS terminals worldwide, making it possible to pay for goods and services almost anywhere with a simple tap. FitPay’s end-to- end payment solution allows IoT and wearable device manufacturers to add payment and authentication capabilities to their products with very little start-up time, no investment in software development and access to the leading card networks. 

Garmin (GRMN) has been FitPay's main customer (here is a case study). Recently they added Swatch, which started selling in Switzerland and will move to the rest of Europe, Asia and the US.

The main element is a TRM (Token Requester Management) Platform, which removes personal data from the device and replaces it with a unique identifier (token) to enhance security

FitPay is actually pretty impressive and has a number of important competitive advantages:

  • The breadth of its network.
  • The independence of its network (not beholden to a single OEM).
  • The range of possible services.
  • The security provided by tokens.
  • The cost-effectiveness for payment card networks and issuing banks.
  • It offers a comprehensive, end-to-end solution as a single source for all of its cloud-based and IoT applications, including full-featured APIs (application programming interfaces) and SDKs (software development kits) to simplify implementation.
  • It works without internet connection at POS (the point of sale) or secondary device (like a smartphone). 
  • FitPay solutions are extendable to any operating system or device.
  • It involves some switching cost and hence a degree of customer lock-in.

The company has virtually all the main card payment networks on board, as well as a large amount of issuing banks in numerous countries, from the 2018 10-K:

Fit Pay is currently one of the few platform providers that is certified by the major card networks (Visa, Mastercard, Discover and Maestro) to provide tokenization services, particularly within an embedded secure element chipset, which many wearables and IoT devices utilize because it requires less power and memory capacity.

This will be difficult to replicate for competitors, from the Q1 10-Q

the geographic and issuer footprint for Garmin Pay™ is expanding and now is a network of more than 280 issuing banks in 34 countries with additions being made regularly. This represents a significant increase from year-end 2017, at which time the network included 60 issuing banks in 8 countries. As a part of this growth, Fit Pay announced recent agreements with Chase, Westpac, Discover and Mastercard’s Maestro network in Europe. This expansion of the Garmin Pay™ network increases the overall revenue opportunity of this flagship customer and establishes banking and network relationships that may be leveraged for future payment solution offerings.

By the end of Q1 2019, the network included 340 issuing banks in 245 countries and the company added Visa's Token Service as a partner (from the Q1 10-Q):

It was also announced in October 2018 that Fit Pay is a technology partner for Visa’s Token Service for credential-on-file (“COF”) token requestors. Through this program, Fit Pay will be able to tokenize COF digital payments on behalf of merchant and payment ecosystem clients, greatly expanding the addressable market for its platform services. Fit Pay leverages the EMVCo Payment Tokenization Standard to “tokenize” or replace sensitive personal information, such as payment card numbers and expiration dates, with a unique digital identifier or “token.” 

And here is additional information of the possibilities, from the 2018 Q4CC:

We announced in October as a launch partner with Visa (V) with their card on file program and credential on file program, which essentially allow ecommerce and merchants that have large portfolios of credit cards we're billing ongoing purposes to use our tokenization services as part of their transaction. That will expand the capabilities beyond and physical wearable devices and to a whole new breadth of merchants and business opportunities as we bring on Visa and the other networks the same capabilities.

The TRM platform maintains the security keys for contactless devices, which limits the ability of its customers to change providers without a major service disruption so there is an element of customer lock-in.

The tokenization is also a cost-effective solution for the payment networks and issuing banks. It is secure and frugal (company website):

FitPay leverages Embedded Secure Element (ESE) chip technology within devices to offer a payment solution that is very power and memory efficient and does not need to refresh a token once it is issued. This frees devices like the vívoactive 3 from needing to be tethered to a host device or connected the Internet to transact payments, creating a better user experience.

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Disclosure: This article is part of a new “UnderCovered” series of exclusive articles featuring companies with limited coverage. Authors are compensated by TalkMarkets for their time, and ...

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Wannabe Warren 1 year ago Member's comment

Great article on $NXTD. Would like you to investigate the following from a journalistic point of view. I’ve emailed the SEC asking them if the Form 10 was effective and they responded, yes 60 days after they filed on April 29th. Gino said on the last webcast they’d announce the spinoff after the SEC made registration statement effective. That’s complete according to an SEC attorney. What’s the hold up?

Dan Jones 1 year ago Member's comment

so SEC confirmed for you that the Form 10 is effective?

Wannabe Warren 1 year ago Member's comment

That's what I was told.

Dan Jones 1 year ago Member's comment

Its strange. My understanding is that there is not really a decision to be made by the SEC. If you meet all the necessary requirements for the spin, you submit the Form 10 and automatically 60 days later it goes into effect. It almost seems like a formality. Yet, here we are 3 months + later and the company says nothing. The whole thing is odd.

Joe Black 1 year ago Member's comment

I agree. Shareholders Unite or Nathan Feifel, do either of you have access to the company executives to ask?

Shareholders Unite 1 year ago Author's comment

I'm not sure what the hold-up is, as puzzled as the commentators but I've contacted the company, stay tuned..

Joe Black 1 year ago Member's comment

Thank you!

Shareholders Unite 1 year ago Author's comment

Will let you know what they answered ASAP.

Adam Reynolds 1 year ago Member's comment

$NXTD's stock price has not fared well since this was published.

Dan Jones 1 year ago Member's comment

This should garner much attention when the company gives us a bit of a tighter timeline with regards to the actual spin. The fact that bitcoin is back heading north will certainly help sentiment as well. Regarding the delist, that's a half a year out. I wouldn't lose any sleep over that. That's an eternity in micro cap land.

Dan Nicholson 1 year ago Member's comment

$NXTD sounds like a stock worth taking a closer look at. But I can't find any other analysts that cover it besides you! I hope there will be more articles about it soon.

Shareholders Unite 1 year ago Author's comment

There's not really much we can do about that Dan..

Dick Kaplan 1 year ago Member's comment

Very thorough analysis on $NXTD, a stock that gets little to no coverage. I'm impressed.

Shareholders Unite 1 year ago Author's comment

Thanks Dick, my pleasure

Scott Lesser 1 year ago Member's comment

I own over 2% of the outstanding shares and expect big things. I love the article and hate the share price. It’s all manipulation and once real buyers arrive shorts will be on the run. They’ve had problems with timelines but everything they’ve been promising is coming through. Once they split the companies things should start to click.

James Dean Samuels 1 year ago Member's comment

You could always sell some now.

Dan Jones 1 year ago Member's comment

Forget about short sellers....non existent and immaterial

Duanne Johnson 1 year ago Member's comment

Yes, I agree with you Scott Lesser.

Dan Jones 1 year ago Member's comment

Scott- don't worry about shorts that may or may not exist. That's not the problem here. The best hope here is that as we getter a tighter timeline with regards to the spin the stock will move up into the actual event. Also, if Fitpay can continue to sign up big name customers that can only help with the perception of what this can be

Mike Nolan 1 year ago Member's comment

Thanks Dan. Why do you like $NXTD so much though?

John Williams 1 year ago Member's comment

I agree, ignore the $NXTD shorts. The future looks bright.

Dan Richards 1 year ago Member's comment

Good points.

Adam Reynolds 1 year ago Member's comment

Yes, I agree. I think many of the problems are behind them and they are on the right track. The delisting is a buying opportunity, no question about it. Bullish on $NXTD

Sensible Cents 1 year ago Member's comment

The company has a lot of cash and big ideas. Looks like a promising opportunity to me. But how does the competition look?

Harry Goldstein 1 year ago Member's comment

My tech skills don't go beyond "cash or credit" but how does FitPay compare to ApplePay and the likes?

Alpha Stockman 1 year ago Member's comment

Spinning off #FitPay was a very smart move. Personally I think the positives far outweigh the risks. $NXTD has plenty of cash and a ton of upside potential.

Angry Old Lady 1 year ago Member's comment

I've heard great things about the XNTD's Notifi911 product. Much better than the old "I've fallen and I can't get up" Life Alert product which charges almost as much for a single month or two of service. But I would think this product is easy to replicate no? As far as I know there is no patented technology involved.

Bill Johnson 1 year ago Member's comment

Sounds like I'll have to take a deeper look at this company. Thanks for the extensive analysis.

Shareholders Unite 1 year ago Author's comment

Thanks, my pleasure Bill.