Market Overview

The Digital Wallet Is Here: How To Play It (V, NXPI, MA, QCOM, AAPL, GOOG)


This morning Visa (NYSE: V) unveiled its entry into the digital wallet. This is going to be a huge boom for consumers, merchants, and chip makers, as the technology will revolutionize how we pay for our everyday purchases.

In the press release, Joseph W. Saunders, Chairman and Chief Executive Officer of Visa said, “Our new solutions deliver greater consumer choice, convenience and control while helping our clients grow their businesses. By helping to reduce abandoned online shopping carts and bringing new account holders into the Visa network, we create a win-win-win for merchants, consumers and financial institutions."

Saunders went on to say, "In addition, we believe Visa's new payments products and services will help expand financial inclusion to the billions of mobile subscribers today who currently lack access to traditional financial services."

"The widespread adoption of Internet and mobile technology is changing the way people connect and transact across the globe, so we're focused on delivering locally-tailored payments products and services,” said Saunders. “We are introducing new solutions for eCommerce and mobile devices that provide the same ‘Visa-quality' experience—convenience, reliability and security—people enjoy when using their Visa cards at a retail location. In doing so, we are accelerating the global shift to digital payments by harnessing our brand, products, network and 50-plus years of payments experience.”

So far, the companies supporting Visa's "digital wallet" are Barclaycard US, BB&T Corporation, Card Services for Credit Unions (CSCU), ICBA Bancard, First Financial Bank of Ohio, Nordstrom fsb, Pentagon Federal Credit Union, PNC Bank, PSCU Financial Services, Regions Bank, Royal Bank of Canada, Scotiabank, TD Bank Group (US and Canada), and US Bank.

This is what is known as near field communications (NFC), something that has been written about before at Benzinga extensively.

So who are the beneficiaries?

NXP Semiconductor (NASDAQ: NXPI) and Qualcomm (NASDAQ: QCOM) are going to be major beneficiaries, as these are the semiconductor companies who make the NFC chips. NXP is the leader in the industry, and there has been much speculation that it could be acquired by a larger chip company, perhaps Intel (NASDAQ: INTC) or Broadcom (NASDAQ: BRCM).

Google (NASDAQ: GOOG) has already started to put NFC into its Nexus phones, but the game changer will be when Apple (NASDAQ: AAPL) does it. This news out of Visa only adds credence to NFC, and it is inevitable that Apple will eventually add NFC to its iconic iPhone. It's not a matter of if, it is a matter of when.

Visa and Mastercard (NYSE: MA) are facilitating the revolution in the digital wallet, and investors do not want to be left out of this major trend.

Important Statement from PayPal: “It's clear that the payments industry is starting to look more and more like PayPal. PayPal was built 12 years ago, because traditional payment methods weren't designed for the digital world. We're light years ahead: more than 98 million people around the world have already trusted us with their digital wallets. We've offered mobile payments since 2006 and expect to do more than $2 billion in mobile this year; and we've offered micropayments since 2005 and launched our solution for digital goods last year. PayPal's approach has always been very simple: we make money work better no matter how you choose to pay, across devices, platforms and borders.”
- Sara Gorman, PayPal

Fast Facts:

* PayPal partners with more than 15,000 banks and 57 financial networks in 190 markets around the world.

* PayPal processed $92 billion in global payment volume in 2010.

* PayPal has offered mobile payments since 2006 and expects to do more than $2 billion in mobile payment volume this year.

* PayPal has offered micropayments since 2005. We launched PayPal for Digital Goods last year and processed more than $3.4 billion in digital goods payments in 2010.

* PayPal has 98 million active accounts around the world.

Posted-In: Long Ideas Rumors M&A Tech Trading Ideas Best of Benzinga


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