With smart-phone applications now ranging from text messaging to
marine navigation, people are using their phones for a wide variety
of things thought impossible just years ago.
"It's clear the American mobile phone subscriber is beginning
to expect more from their phones
This comment came from Kay Nichols, executive vice president of
FIS Channel Solutions. The group, which is part of payment
processor Fidelity National Information Services Inc., shares a
view with an increasing number of people who believe smart-phone
capabilities are reshaping social and business norms.
One practice that is gaining popularity with mobile devices is
now available through a variety of applications- mobile
That's right - we're talking about making purchases with your
phones. I remember when online banking was a new hit. Now the hype
is surrounding mobile banking. And the industry is expected to grow
extremely fast in coming years.
The chart below, taken from a report released by the Mobile
Marketing Association, shows the upward trend in mobile banking
projected over the next six years.
Charles Landry, executive vice president at Syniverse
Technologies Inc., suggests that around 1,000 banks out of the
30,000 financial institutions in the U.S. offer mobile banking. He
"...there is still a lot of room to grow"
According to research firm Thomson Reuters, a majority of
respondents in a recent survey said they're interested in using
their phones to make in-store purchases just as they would with a
credit card. There are currently 10 million mobile banking users in
the U.S., and the practice could become increasingly popular due to
its simplicity and convenience.
Bank of America Corp. (
, the largest consumer bank in the U.S., has joined forces with
payment processor giant
Visa Inc. (
to allow customers with smart-phones to make purchases in certain
stores with mobile devices. Bank of America introduced mobile
banking back in 2007 and now has over 5 million customers that
contribute $15 billion in transactions. Most of these transactions
are bill payments and account transfers.
These two companies are testing this payment method in the New
York City area from September to the beginning of next year.
Visa and its technology vendors are expected to install small
chips in stores and smart-phones over the next few weeks. These
chips will emit a radio signal over a short distance. In order to
make a purchase, customers will have to wave a phone over the chip.
The chip will collect bank account data and allow the customer to
complete the purchase.
This could be the future of shopping - and there are already a
few companies within the industry that small cap investors could
jump on for potential profits.
The first company is
VeriFone Systems, Inc. (
and it focuses on developing electronic payment solutions. VeriFone
offers products that use near field communications (
) - a wireless communication technology that allows devices to
exchange data over about a 4-inch distance. In this case, a signal
would be transmitted from the smart-phone to the electronic device
in the store. The convenience of these transactions will allow
customers to move in and out of stores quickly and easily as they
VeriFone Systems has a market cap of $1.93 billion and closed at
$22.60 on Friday. Analysts expect earnings to increase 35 percent
this year and 21 percent in 2011. The stock has been moving higher
since early 2009, posting a return of 110 percent over the last
***As more people use smart-phones to make payments, listen to
music, watch videos, or surf the web, companies are trying to
accommodate the massive bandwidth demands of customers. Bandwidth
refers to the data transfer rate on a specific network, and these
tiny devices eat up large amounts of it.
I recently uncovered a tiny Israeli technology company that
develops technology specifically designed to manage bandwidth use.
The company's solutions are critical for Internet Service Providers
(ISPs), cable companies, landline operators, mobile phone
companies, businesses and governments.
I pulled the trigger and added this small cap stock to the
Small Cap Investor PRO
The company just reported earnings a couple of weeks ago and I'm
currently up modestly on the position.
In the first and second quarters of 2010, this tiny tech company
reported greater than 30 percent revenue growth over the comparable
quarters in 2009. It is profitable on a non-GAAP basis, and is
sitting on $55 million in cash. This company is a play on the
future growth of smart-phones, and the near certainty that service
providers will segment bandwidth in order to design service plans
tailored to customer behavior.
If you're interested in getting my full research report on this
company, I encourage you to sign up for a trial subscription to
Small Cap Investor PRO
. The service is only $199 a year and I offer a 30-day money back
here to get started today.
***These are just a couple companies you should consider if you
think the mobile-banking industry will grow in coming years. One is
a direct play on mobile payments, and the other is a play on the
increasing popularity of smart-phone applications in general.
Either, or both, are great ways to gain exposure to a growing