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Mobile Wallet Technology: The Giant Killers in the Weeds

Companies / Telecoms May 22, 2012 - 06:28 AM GMT

By: Money_Morning

Companies

Best Financial Markets Analysis ArticleShah Gilani writes: When it comes to the revolution in mobile wallet technology, Isis Mobile Wallet is a collaboration between some super-heavyweights.

Its founders and main partners are AT&T Mobility, T-Mobile, Visa (NYSE: V), Discover (NYSE: DFS), American Express (NYSE: AXP) and Verizon Wireless.


This is a monster worth watching.

The idea behind Isis is to allow users to pay with "preferred" credit or debit resources available through their Isis-enabled phones by tapping or waving their devices at NFC (near field communications) terminals in participating merchant outlets.

Isis-enabled phones are being manufactured by additional partners Research in Motion, Samsung and Sony Ericsson.

Card.io is a mobile phone application (available at the Apple App Store and as a Google Android app) that allows users to receive and make payments by letting them (in the case of making a payment) enter an amount they want to charge on their app, for what they want to buy, and holding the card they want to use up to the phone's camera lens, which logs the card and processes the transaction.

Received payments can be channeled directly into the user's checking account, savings account, or PayPal account. Card.io charges a hefty 3.5% (of the transaction amount) fee and 15 cents per transaction.

Another mobile solution to not having a credit swiping machine in your pocket is offered by Square.

Square, named after the small square magnetic tape data reader that you plug into your phone's audio jack to convert encoded data from the tape on the back of cards to an electronic file, was started by Jack Dorsey, creator of Twitter.

Electronic data from the magnetic strips on the backs of cards is encrypted automatically, sent to Square's servers and rerouted through the Global Payments Network. You sign the electronic receipt with your finger, which is then sent to you via SMS or email. Now anyone can accept credit cards for anything.

There are lots of start-ups and up-and-comers wading aggressively into the exploding mobile wallet space. Some of these companies will become giants and some will go the way of the dodo.

But, one thing's for sure, the winners will be worth investing in.

Hardware Won't Be Hard to Make a Lot of Money On
Of course software is sexy, but hardware is where the nuts and bolts come together.

And there are plenty of hardware manufacturers to build a mobile wallet portfolio on.

Device makers like Research in Motion (Nasdaq: RIMM) and Nokia (NYSE: NOK) will not only be saved by the mobile wallet future, they could end up as polished and shiny as Apple stock has been lately.

RIMM, for example, may be having its problems, but investors don't realize that the enterprise servers that give Blackberries their corporate go-to status can't be utilized by other devices.

And as RIMM gets its act together in the mobile wallet game, its enterprise systems will be a powerful pull on commerce-minded corporate customers.

Sure there has been a push to "bring your own device" to work, but here again corporations are going to tire of security issues inherent in crossing different devices through internal servers housing critical data.

The eventual backlash against allowing multiple devices into the workspace will be a boost for RIMM and Nokia, which is still the world's largest phone manufacturer.

But it's not just smartphone hardware manufacturers that will make you money.

Connecting the dots between mobile buyers and sellers will be the device makers who provide the terminals and technology against which mobile wallets are swiped, waved, tapped and talked into.

Companies like VeriFone (NYSE: PAY), Ingenico, TNS Inc. (NYSE: TNS), and ViVOtech, to name some of the big players, are major stakeholders in the digital wallet's future.

And it's not just merchant terminals that these device makers offer.

The technology and hardware in unattended point-of-sale locations like vending machines and remote location kiosks will all rely on connectivity made possible between buyers and sellers through the magic of NFC devices.

Mobile Wallets Mean More Power to Merchants
Merchandising and marketing is changing, rapidly.

Every time you buy something electronically, whether you like it or not, you're being watched.

Not by Big Brother, although he's out there too, but by the data capture and collection technology inherent in all electronic transactions.

The subject of data mining, and who owns what data, and who can use what data for what purposes, is a huge conundrum.

Whether consumer profiling, which is essentially what's being done, is a "black art" or some kind of eHarmony love-in where groping buyers and sellers are married through adaptive matching technology at the altar of high consumerism, remains to be weighed by the public, and probably eventually the Supreme Court.

But, it's happening and it's changing merchandising, marketing, advertising and buying habits. And once again, it is the mobile wallet that's paving the way for these changes.

When it comes to data mining, faster is better, but real-time is best.

In the not-too-distant future (the technology is already here and being tested) every electronic transaction we make will be mined, sliced and diced and used to target market to us.

Think of it as a magic potion for merchants. Adaptive matching technologies, eventually in just about real-time, will alert us on our smartphones to merchant specials, promotions and discounts.

We will get messages on our phones after we just purchased something at Sears to go to Macy's, which may be offering a deal on a similar product or a related product we may be considering as our next purchase.

We'll be targeted by event-based marketing, dynamically and seamlessly. We'll be tempted with coupons and "statement credits" and we'll be tempted with what's out there for us to buy in ways we can't even imagine now.

Mobile wallets will make merchants more efficient in merchants' purchasing, stocking, inventory control, sales and cross-selling.

We will be rewarded with elaborate loyalty programs tailored to our buying habits, better shopping experiences, and more stuff than we probably need or can afford.

But that's the point. Having all of this constantly at your fingertips with your mobile wallet changes everything for everyone.

In my final installment, I'll tell you everything that needs to happen as this race unfolds.
[Editor's Note: Capital Waves Strategist Shah Gilani is a rare commodity. As a retired hedge fund manager, Shah knows all of the ins and outs of the markets and can always spot the hottest opportunities.

And since he's no longer directly a part of the Wall Street power structure, he is willing to show you how to capitalize on them. This report is just one way Shah helps investors level the playing field.

His Capital Waves Forecast is another.

To learn more about Shah Gilani click here. You'll be glad you decided to follow along.]

Source :http://moneymorning.com/2012/05/22/mobile-wallet-technology-the-giant-killers-in-the-weeds/

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