Does MasterCard's new deal make it a buy?

The company wil work with retailers to make cards and consumer information more secure.

By Motley Fool Jun 5, 2014 11:43AM
Shares of credit card titan MasterCard (MA) remained steady Wednesday after the company announced it has struck a deal with warehouse retailer Sam's Club. Sam's Club will use MasterCard's in-card chip technology, called ENV, in its credit cards to make it harder for criminals to steal consumer's identities.

According to Motley Fool analyst Simon Erickson, Sam's Club is taking this step because, frankly, nobody wants to be the next Target (TGT), which saw information for more than 40 million of its customers get stolen late last year.

Using chip technology is the next step to prevent that from happening again, and Sam's Club is one of the first major retailers to take this step.Image: Credit card © Corbis


But is that reason enough for investors to jump into MasterCard? Simon thinks that this is a good step, but it's only an incremental win. Consumers spend over $15 trillion a year in retail these days, and everybody wants a piece of that, including criminals -- retailers will need a way to keep their consumers safe. Companies like MasterCard and Visa (V) will be the beneficiaries of this trend. 

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