Profiting From Google Wallet

| About: Alphabet Inc. (GOOG)

Google (NASDAQ:GOOG) today announced a new way to pay for goods using mobile phones - the Google Wallet.

Google Wallet is an app that does more than conventional electronic wallets. Google says, “When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you. Someday, even things like boarding passes, tickets, ID, and keys could be stored in the Google Wallet.”

Obviously, security is a big concern in this type of app. Google claims that the security is air tight. Google Wallet is protected with multiple levels of security including a phone lock, a required PIN, and encrypted credit card information.

NFC and RFID are the underlying technologies powering Google Wallet.

NFC stands for near field communication. It is a set of short-range wireless technologies operating at 13.56 MHz. NFC includes an initiating device such as a phone and a target.

RFID stands for radio frequency identification. RFID uses radio waves to exchange data between a tag and a reader. There are two kinds of tags: active (with a battery) and passive (with no battery). Here we are dealing with primarily passive but also active RFID tags.

A majority of the phones today are not NFC equipped, but it is anticipated that NFC will become a standard feature of the smart phones in the future.

This is an ambitious initiative and has the potential to change the world. From an investment prospective, buying Google stock is not the best way to profit from this coming revolution. Instead, investors need to look at other companies involved with the program. Here is a list:

  • First Data (NYSE:FDC) will process the payments.
  • Citigroup (NYSE:C) is a pioneering bank using and promoting Google Wallet. Google Wallet will support a PayPass eligible Citi MasterCard. Most people who already have a PayPass Citi MasterCard can easily add it to Google Wallet.
  • Google has decided to use the MasterCard (NYSE:MA) network for its Google Wallet.
  • Sprint (NYSE:S) is the first phone company to offer Google Wallet.
  • Zebra (NASDAQ:ZBRA) is well positioned to supply RFID tags.
  • The retailers pioneering Google Wallet include Macy’s (NYSE:M), RadioShack (NYSE:RSH), Foot Locker (NYSE:FL) and American Eagle (NYSE:AEO).
  • Google Wallet will use NXP Semi (NASDAQ:NXPI) NFC technology.
  • VeriFone (NYSE:PAY) has partnered with Google to power NFC based mobile payments.
  • On Track Innovations (NASDAQ:OTIV) provides smart card technology for PayPass.

As my long time readers know, I follow the ZYX Change Method. So far only one of the above listed securities has generated a buy signal based on the ZYX Change Method, but several more are close to generating a buy signal.

Disclosure: I am long NXPI.

Additional disclosure: I intend to go long on several of the stocks listed when they meet all six screens of the ZYX Change Method. Such information will be made available in real time on the Real Time Feed of the ZYX Buy Change Alert. Some information on such trades may also be posted in real time on my blog here.

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