Our Take on American Express’s Mobile Payment Ambitions: Lame!
The growth in the mobile payments industry is reaching a boiling point.
As I said a couple weeks ago, analysts predict that “mobile payments in the United States alone could reach $56.7 billion in 2015, up from $5.2 billion in 2009.”
Well, it looks like that was a bit of an understatement.
New figures from Generator Research now show the mobile payment market catapulting to $633 billion by 2014. That’s a whopping 11,784% spike over 2009.
No matter which way you slice it, though, the momentum is surging and banks are scrambling to get a foothold.
Case in point: Tech blogs and financial websites are buzzing about American Express’s (NYSE: AXP) attempt to shove itself into the mobile payment marketplace.
In short, American Express’s new payment service (Serve) lets users transfer funds onto a refillable pre-paid card. Sounds just like what you can do with any gift card now, doesn’t it?
With regard to the mobile payment area, users can also transfer money through e-mail… but only if the retailer uses Serve as well. Again, sounds just like another service that’s already out there – PayPal.
The bloggers and techies might as well save their energy. There’s much bigger news – and a better opportunity – happening in this area…
Your Smartphone Just Got Even Smarter… And the Big Banks Are Piling in
As I said two weeks ago, the momentum in mobile payments is jumpstarting a shift to Near-Field Communication (NFC) technology.
Recall that NFC technology enables you to turn your smartphone into a virtual credit card, so you never need to carry a wallet again. The chips themselves also work without contact when you make a purchase. For example, with Visa’s (NYSE: V) Blink credit card, you just hover it by the card reader and the transaction goes through.
I also mentioned that Google (Nasdaq: GOOG) plans to jumpstart NFC adoption by running live tests in New York and San Francisco over the next four months.
You don’t get a much bigger name than that these days – and it’s no surprise to see MasterCard (NYSE: MA) and Citigroup (NYSE: C) throwing their support behind Google’s efforts.
The banks have officially teamed up with Google to allow their credit card customers to link their accounts through an Android application. That means users with NFC-enabled smartphones can make payments by simply waving their phones near the card reader.
How big could this be for Google’s NFC adoption ambitions? Well, consider that MasterCard alone boasts more than 171 million credit card holders and 123 million debit holders.
And with MasterCard and Citigroup on board, the partnership merely highlights both the rapid growth of mobile payment technology, as well as Google’s stampede to NFC dominance.
For proof, just ask yourself why the banks didn’t team up with Apple’s (Nasdaq: AAPL) iPhone instead…
iPhone Takes a Backseat to Android… Again
In short, the iPhone doesn’t have NFC built in. And conflicting reports on the iPhone 5 show that nobody even has a clue whether Apple will put NFC in its next model, either.
Meanwhile, Google is plowing ahead. Its Samsung Nexus S smartphone is one of the first mobile devices to come with NFC technology baked in. The phone is also available in Europe, where Android phone shipments blasted 1,580% higher over last year. Its new Galaxy S II smartphone is NFC compatible, too.
As if that weren’t enough, Google plans to integrate NFC in the Nexus S 4G headed to Sprint (NYSE: S) this spring.
Can you say “market dominance?”
So where’s the opportunity here? Stay tuned for tomorrow’s issue, when I’ll reveal the company that’s front and center of this technology.
Meantime, my colleague, Louis Basenese has identified another company that’s perfectly structured to cash in on mobile payment growth. Shares are already on the move, too – up 22% since he recommended the stock to subscribers of The White Cap Report. Go here for full details, plus how you can sign up for a trial subscription.
Good investing,
Justin Fritz
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