We are on the brink of a revolution.
But let me tell you, this revolution doesn't involve explosive
growth in Asia, the collapse of the euro, or the end of the world
as we know it (although some may be wondering about that in light
of today's market).
The revolution I'm speaking of deals with something more near and
dear to our hearts: Money, and more specifically, how we spend it.
Going back to the Romans, there have only been two major
revolutions in money -- the switch from coins to paper bills and
the switch from paper bills to plastic cards.
Think about it -- when you get paid, how much cash actually makes
it to your wallet? Do you ever physically see your money, or are
you like most Americans who simply swipe a plastic card and keep
track of a digital number out in cyberspace?
We've arrived at the point in this nation where it is possible to
live without cash or checks. Transactions have moved to plastic,
electronic transfers, direct deposits. I do, however, need my cell
phone. And the ubiquitous search giant
is onto an idea that will put these two things together.
Google's innovation, known as Google Wallet, combines the
convenience of a debit card with the popularity of a smartphone.
The idea is that instead of swiping a plastic card at the checkout
line, consumers will simply tap their phones on a special device
that will automatically bill them for the purchase.
It may sound a little crazy. But as far as I'm concerned, this
could be the next step in the payment revolution.
Here's how it works…
The system has three parts: There's a special microchip in the
phone that stores account data, there's an electronic reader
attached to the cash register, and, lastly, there's a customer
The special chip in the phone emits a highly-specialized radio
signal that the reader can detect. This radio signal provides
secure account information to the register. Instead of reading your
account number off the magnetic strip on the back of your card by
swiping it through a special terminal, the device picks up the
The bank account at the center of this wireless phone transaction
-- so far -- can be one of two things: either a prepaid account
directly administered by Google, or a certain special
account administered by
So... you pull in to the gas station to fill up, tap your phone to
a special reader on the pump, fill your tank -- and go. The receipt
is emailed to you.
Now if you're thinking this idea sounds familiar, then you're
right. Lots of companies have had access-card readers in lieu of
door locks that use the same technology. Mobil also implemented its
"Speedpass" in 1997 using the same system.
But don't let this alter your vision of the effect that Google
Wallet will have going forward.
It's important to remember most breakthrough products don't just
come out of nowhere. They arise from innovation and continue to be
refined until they find an
. From there, they begin to grow -- a process that takes, even in
the digital age, a relatively long time.
In July, Wired magazine's Clive Thompson quoted Microsoft
researcher Bill Buxton as saying "Anything that's going to have an
impact over the next decade -- that's going to be a billion-dollar
industry -- has already been around for 10 years."
That being said, I believe the time for this technology has come.
It's been predicted that a half-billion people will be using the
technology within the next three years. Clearly the market is
large, the technology is available and a big-name Google-branded
roll-out is imminent.
What's most compelling about this impending change is the scale.
This isn't one major change, it's billions of the same minor change
happening again and again. At first, the usual corps of affluent
early adopters will gravitate toward it, but after that, the entire
population is going to want in. And the demand will be such that
they will get in, one way or another.
Ok, so Google Wallet will be huge. What's the investment angle?
After all, I'm on the hunt for game-changing stocks... and I think
Google is far too large at this point to see the sort of gains I'm
There are a couple of different ways to invest. The two main
components of this system, and the two areas that could experience
rapid growth, are in the hardware and software businesses.
On the hardware side,
might make a good choice. Zebra makes RFID chips, which is one of
the technologies on which contactless payment systems can be based.
If you have a toll tag on your car, it likely uses RFID technology.
As a leader in this field, Zebra could do well if Google Wallet
If you're interest is in software, then a company like
Elephant Talk (
could be a smart play. Elephant Talk, based in the Netherlands,
owns some unique elements of the mobile-phone business in Europe.
Because it controls the operating system, it has the ability to
integrate mobile-payment systems.
Because Europe is already ahead of the United States in some mobile
functionality and Elephant Talk is one of the companies that made
this possible, its international footprint ensures it will be part
of the future.
Action to Take -->
Now, keep in mind these are both growth-oriented plays. In a rocky
market, their share prices will swing. This means more volatility,
but also more opportunities to enter at an attractive price.
But however you decide to invest in this revolution, I think one
thing is almost certain -- Google Wallet will be big.
P.S. -- If you're interested in learning more about the types of
investments that can "move the needle" on your portfolio, I invite
you to watch this presentation. Here, I document some of the most
compelling game-changing opportunities I've come across recently,
and exactly how you can use them for your own portfolio. Visit this
link to watch.
Disclosure: Neither Andy Obermueller nor StreetAuthority, LLC
hold positions in any securities mentioned in this article.
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