The Digital Wallet Is Here: How to Play It

Includes: GOOG, NXPI, QCOM, V
by: Benzinga

By Jonathan Chen

Yesterday 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 CEO 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 ....

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. 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 (NYSE:BBT), Card Services for Credit Unions, ICBA Bancard, First Financial Bank of Ohio, Nordstrom (NYSE:JWN), Pentagon Federal Credit Union, PNC Bank, PSCU Financial Services, Regions Bank, Royal Bank of Canada (NYSE:RY), Scotiabank, TD Bank Group (US and Canada), and US Bank.

This is what is known as near field communications (NFC), something we have written about before.

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 (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.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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