Mobile Wallet Technology Will Make You Rich

Your future is calling on your mobile phone, and the ringtone sounds like a cash register.

The proliferation of affordable mobile phones has created a global paradigm shift that will give investors with vision innumerable investment opportunities.

As I discussed in an earlier article, you don't realize it but there's a fortune in your wallet right now. Mobile wallet technology will make you rich.

Let me explain.

Traditional wallets and purses are being replaced with smartphone "mobile wallets" that incorporate cameras, Internet connectivity, thousands of "apps" and increasingly, banking, credit and payment transaction technologies.

Knowing who the winners and losers will be in this world of tomorrow is the stuff investors' dreams are made of.

This report is the first in a series of four articles. Consider it your first reality check. Or better yet, your wake-up call.

From it you'll learn why the world is moving to mobile wallets, how we'll all get there, and when.

More importantly, you'll be primed for making investment decisions on hardware device makers, on network providers, and on what software solutions will be most in demand.

You'll be able to weigh the future of banks and banking, credit and debit card issuers, and their love-hate relationship with powerful non-bank commerce facilitators.

You'll be able to picture how some merchants will profit more than others, and what impact social media will have on commerce and payment schemes.

You'll understand what the singularly most important question is that hangs over our digital future: who will own, control and profit from the data that drives everything.

You will be able to glimpse what the big security issues will be and how to profit from them as well.

You will recognize who the giants are now, who are the up-and-coming giants, and who will be the likely giant killers.

You'll understand the importance of interoperability and what that means to creating economies of scale.

And you will be able to see how an evolving regulatory environment will change fortunes.

Above all, you will be tuned in and abreast of the changing dynamics and investment opportunities in this brave new world.

At its core, it is about change.

Mobile Wallets Change How We Think About Cash

Cash may be king, but the truth is no one has a lot of cash.

Cash can be lost or stolen and it's not traceable. Cash doesn't earn interest. Cash isn't convenient or conventional any more.

And governments like it that way.

Until 1945 the U.S. issued notes in large denominations. We used to have $500, $1,000, $5,000, $10,000 and $100,000 (mostly used by banks) notes. Not anymore - today the highest denomination is $100.

Besides the cost of printing and minting cash and problems of counterfeiting, governments want to be able to trace money transfers.

Checks, wire and ACH transfers, credit and debit payments, and e-commerce make it easier for governments to keep an eye on who's got what, where, and who's paying taxes.

It's also a lot easier for governments and central banks to control the "money supply" by controlling credits and debits rather than shelling out and soaking up cold hard cash.

The U.S. isn't leading the way into the mobile wallet future, however. It's actually way behind.

Swedes only transact commerce in cash 3% of the time. The buses take text-message payments and you can wave a mobile device at some church collection plates there.

Over 50,000 merchants in the U.K. can accept payment from mobile wallet users who merely need to wave their smartphones in front of stores' NFC (near field communication) terminals.

And it's not just the developed world that's embracing mobile wallets.

There's an even bigger push towards mobile wallet commerce and mobile-device person-to-person money transfers in the third-world than in the developed world.

That's because there are huge numbers of "unbanked" people in developing countries. The ability to "store" money and transact commerce through a mobile wallet has huge advantages in rural areas where there are few or no banks - or when bank fees are prohibitively high.

In Kenya, 14 million people, 70% of the adult population, use M-PESA (M for mobile and pesa is the Swahili word for money), a mobile phone banking application offered by Safaricom.

Can you invest in Safaricom, the country's largest mobile phone network carrier? No, but you can invest in Safaricom's parent company, Vodafone (Nasdaq: VOD).

Whether mobile wallets are serving the unbanked or being used by Italians whose government restricts cash withdrawals from banks to 1,000 euros at a time, the handwriting on the wall says: the sky's the limit when it comes to mobile wallets.

And when the time is right, I'll tell my Capital Wavessubscribers exactly how to play it.

But first you need to understand all of the players.

Mobile Wallet Technology: Banks as Players and Stakeholders

The biggest banks in the world are all working on mobile wallet applications. So are most large regional banks in the U.S. and many smaller community banks.

Eventually, some large banks will start working together to engineer mobile wallet economies of scale.

But because of intense competition for essentially the same customer base, the big banks are each vying for a leadership role in the digital world and specifically the mobile wallet future.

Banks are already hedging their big bets on going it alone by partnering directly and indirectly with competitors vying to serve private label card issuers and giant retailers.

These "shared" relationships are driven by retailers and merchants who don't want their customers to be restricted in any way when it comes to paying for merchandise.

And, as competitors from outside the banking world succeed in grabbing market share from banks -- as they most certainly will do early in the race (especially in the U.S.) -- banks may eventually brave cries of "cartelling" and join forces. They'll have to in order to stem what is shaping up to be a direct assault on the hegemony they once enjoyed providing consumer banking services.

The direct threat of the "disintermediation" of banks in the rapidly changing world of digital money, credit and transaction services represents the most serious threat to the banks' traditional hold on the public since the credit crisis laid bare their unseen vulnerabilities.

But in the early stages of the mobile wallet movement, banks will not be the best pure-plays, or top peripheral investment vehicles for investors looking to capitalize on mobile wallet profitability.

The reasons include the public's apprehension over banks' capital requirements in the future and their legacy loan portfolios, the uncertain regulatory future they face, the general perception that banks are not technological innovators, and, ironically, the misconception that putting their digital money alongside their traditional banking resources constitutes putting too many eggs in one basket.

Banks, on the other hand, are quietly promoting their status as regulated entities with the backing of the FDIC and the Federal Reserve as the safest place to establish digital and mobile wallet banking and transaction relationships.

While there will always be innovation challenges to existing technologies, widely adopted virtual and physical payment schemes will have tremendous cost and scale advantages that may ultimately shape who and how many giants will own the mobile wallet space.

And you can count on the banks to scratch and claw, if not steamroll their way, to the high ground of the digital money world.

Can the big banks make it to the top? You'll find out in part two of this four-part series.

In my next piece, I'll discuss the greater fears of the big banks and how the mobile wallet movement is positioning a host of "New Barbarians" at their gates.

[Editor's Note: Capital Waves Strategist Shah Gilani is a rare commodity. As a retired hedge fund manager, Shah knows all of the ins and outs of the markets and can always spot the hottest opportunities.

And since he's no longer directly a part of the Wall Street power structure, he is willing to show you how to capitalize on them. This report is just one way Shah helps investors level the playing field.

To learn more about Shah Gilani
click here. You'll be glad you decided to follow along.]

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About the Author

Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.

The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.

Shah founded a second hedge fund in 1999, which he ran until 2003.

Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.

Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.

Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.

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