5 Stocks Benefiting from the Mobile Payments Boom

by Anthony John Agnello | May 30, 2011 1:20 pm

Smartphone sales are expected to rise nearly 50% this year, according to research firm IDC, which means that whatever the make and modelthe Apple (NASDAQ: AAPL[1]) iPhone, Motorola (NYSE: MMI[2]) Droid, Research in Motion (NASDAQ: RIMM[3]) BlackBerry– consumer demand isn’t waning.

That’s good news for mobile payment services, or technologies that let consumers create an electronic wallet online and use their phones to pay for things at checkout instead of using cash or swiping a credit card. Mobile payments totaled $32 billion in 2009. In 2010, they hit $245 billion. More than just a niche service, mobile payments are increasingly big business.

It’s natural to want to get in on the mobile payments boom while the technology is still hot. Luckily for investors, some familiar and reliable stocks are poised to benefit greatly from the increasing interest in mobile payments. These five stocks both offer their own mobile payment services and are heavily invested in mobile payment technologies. These stocks stand to benefit as mobile payments are again expected to grow in 2011.

American Express (NYSE: AXP[4]): The originator of the plastic credit card is moving fast to stake its claim in the mobile payments sector. It opened its own digital payments service called Serve at the end of March, allowing customers not only make payments using their mobile phones but even make cash withdrawals at ATMs. Users fund the wallets with a bank account number or even a competing credit card like MasterCard (NYSE: MA[5]). American Express also invested $19 million in mobile payment service Payfon—which lets you check out using your mobile phone’s number—in April. Payfone’s service will be supported by Serve.

Visa (NYSE: V[6]): Like American Express, Visa is busy making its own digital payments service as well as investing in new mobile payment start-ups. The company announced May 11 that it would start its own, still-unnamed digital wallet service in the fall that will let users make one-click purchases at online stores as well as through their phones. More significant for its long-term stake in the mobile payment business, however, is Visa’s $27.5 million investment in Square. The start-up manufactures its own mobile payment technology that does away with cash registers entirely—customers merely wave their Square-supported phone in front of an electronic dongle. Visa’s support should spur adoption of Square’s technology.

Paypal: The original giant of online payments, the eBay (NASDAQ: EBAY[7]) subsidiary Paypal is already an established player in the mobile payments field. The company started the Titanium+Conference mobile payment program in October 2010. The program lets small businesses design their own smartphone applications for accepting mobile payments. Paypal claims to have a stable of 98 million active accounts, meaning that it has a ready-made base of customers with accounts set to use its mobile payment services.

Amazon (NASDAQ: AMZN[8]): Amazon started its Paypal competitor Amazon Payments back in 2006. While it hasn’t quite matched Paypal’s popularity, it’s still managed to grow a sizable customer base. A March report at Bloomberg[9] noted that Amazon is likely to unveil a near field communication (NFC) based mobile payment service for Amazon Payments later this year. Amazon’s aggressively expanded into the mobile business with services like the Kindle electronic bookstore and the Amazon Appstore for Google (NASDAQ: GOOG[10]) Android devices. The mobile payment service should get a huge push from the company this year.

VeriFone (NYSE: PAY[11]): VeriFone is behind many of the programs and devices that accept and process the financial services offered by the aforementioned four companies. It is already deeply entrenched in the mobile payments business with products like the iPhone-based VeriFone application. Last week, it announced a partnership with Micros Systems to create a mobile payment technology specifically for use at restaurants.  Share price grew 25% between December and April.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello[12] and become a fan of InvestorPlace on Facebook.[13]

  1. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  2. MMI: http://studio-5.financialcontent.com/investplace/quote?Symbol=MMI
  3. RIMM: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIMM
  4. AXP: http://studio-5.financialcontent.com/investplace/quote?Symbol=AXP
  5. MA: http://studio-5.financialcontent.com/investplace/quote?Symbol=MA
  6. V: http://studio-5.financialcontent.com/investplace/quote?Symbol=V
  7. EBAY: http://studio-5.financialcontent.com/investplace/quote?Symbol=EBAY
  8. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  9. Bloomberg: http://www.bloomberg.com/news/2011-03-31/amazon-com-said-to-be-considering-mobile-payment-service-for-smartphones.html
  10. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  11. PAY: http://studio-5.financialcontent.com/investplace/quote?Symbol=PAY
  12. @ajohnagnello: http://twitter.com/#%21/ajohnagnello
  13. InvestorPlace on Facebook.: http://www.facebook.com/pages/InvestorPlace/178906405484848

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