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Stake Your Claim to This Mobile Market “Land Grab”

There’s no question that mobility is one of today’s biggest growth trends.

In North America alone, Cisco (Nasdaq: CSCO) predicts that…

  • Mobile traffic will jump by 128% each year through 2013…
  • The number of mobile phones is expected to equal the world’s population in 2015…
  • More than 400 million of the world’s Internet users will access the network solely through a mobile connection by 2014.

But with mobile proliferation hitting full steam, consumers will expect to accomplish more with their devices other than surf the web.

The Next Big Thing for Mobile

So what do we do more than eat, text, check email or sleep?

That’s right: Buy stuff.

The ability to make purchases with mobile devices is gaining some serious traction right now. In fact, my colleague Louis Basenese highlighted the mobile banking market in a recent article.

Indeed, the enormity of this trend warrants our careful attention. Just consider:

  • Mobile payments in the United States alone could reach $56.7 billion in 2015, up from $5.2 billion in 2009, according to MarketResearch.com.
  • Gartner predicts that the number of people using phones for purchases will reach more than 190 million in 2012.
  • And MarketResearch.com adds that with only about 1.7% of people currently using mobile payment processing in the United States, it’s “in the nascent stage [and] represents a huge opportunity for early movers” in the space.

So who’s in on the trend?

The Tech Giants are Going All In

Unsurprisingly, Google (Nasdaq: GOOG) is on board.

In August 2010, the company acquired payment platform provider, Jambool. It plans to integrate Jambool’s technology into its Google Checkout service, which will streamline purchases made within web applications. The service is expected to debut during the Google I/O developer conference on May 10 and 11.

In December 2010, Google also bought Canadian startup Zetawire, which owns a patent that can transform your phone into a virtual wallet. And one of Google’s latest Android phones, the Samsung Nexus S already has this capability built in.

Apple (Nasdaq: AAPL) has plans to incorporate this virtual wallet technology into future iPads and iPhones, too.

Other big names are actually teaming up to take the mobile payment rush head on. In November 2010, AT&T (NYSE: T), T-Mobile and Verizon Wireless (NYSE: VZ) created a joint venture called ISIS. This venture is focusing specifically on point-of-sale transactions (i.e. using your smartphone to make purchases).

An ISIS spokesperson told Bloomberg that this market is “a land grab. Folks are sort of jockeying for position.”

No doubt Wall Street analysts are going to talk up these big tech names in the coming months, too, as the mobile payment market heats up. However, the tech titans aren’t the only companies poised to profit…

Small Caps With Monster Potential

Truth is, ample opportunities exist for small, nimble companies to stake a claim in the mobile payment market, too. And that’s precisely what’s happening.

Take $10 million market cap Vringo, Inc. (AMEX: VRNG), for instance – a company that allows users to download videos and set them as ringtones. On March 8, it signed a Letter of Intent to acquire payment platform and delivery company, m-Wise, Inc. (Other OTC: MWIS.PK) for about $5 million.

M-Wise’s platform is used in over 300 applications from 50 international content and media providers. Even Universal Music Group (the company we can blame for bringing us Justin Bieber) is a customer.

We recommend focusing on small pure play opportunities like Vringo. The tech titans are just too darn big already for the mobile payment boom to have a dramatic impact on overall profits (and share prices). But that’s not the case for smaller companies. Their upside potential is virtually unlimited. So invest accordingly.

Good investing,

Justin Fritz

Editor’s Note: Wall Street Daily’s Louis Basenese recently uncovered a small company that’s perfectly structured to cash in on mobile payment growth. Shares are on the move already, up 33% since he recommended the stock to subscribers of The White Cap Report. For full details and how you can sign up for a trial subscription, go here.

Justin Fritz

, Executive Editor

View More By Justin Fritz