Tags: mobile wallet, mobile wallet technology, Starbucks (Nasdaq: SBUX)

Mobile Wallet Technology Just Perked up With Starbucks Deal (Nasdaq: SBUX)

By , Contributing Writer, Money Morning •

For the mobile payment movement, today's (Wednesday) Starbucks Corp. (Nasdaq: SBUX) deal could be the first of many as mobile wallet technology begins to take hold.

Starbucks announced it is pouring some big bucks ($25 million) into the mobile payments start-up Square.

Starting this fall, Square will process all credit and debit card transactions at Starbucks stores scattered across the United States.

According to Starbucks CEO Howard Shultz, the partnership with Square represents a "breakthrough deal for the marketplace."

"Anyone who is going to break the mobile payments barrier in the U.S. has to overcome the resistance to try anything new when everything we have works really, really well, even cash, which is very convenient. But if a big merchant jumping into some mobile payment solution signals to other merchants that there is an opportunity here, that might change the psychology for other merchants," Bill Maurer, director of the Institute for Money, Technology and Financial Inclusion at the University of California, Irvine, told The New York Times.

What's Brewing at Starbucks (Nasdaq: SBUX)

In some ways, Starbucks is already ahead of the mobile payments crowd.

Since 2011, Starbucks has offered its own mobile payment app which already processes more than one million payments a week.

Customers will still be able to use the original app, but in a few months' time they will also have the option of using the Square's app, called "Pay With Square."

To start the transaction, Starbucks customers will simply have to open the new app and show the merchant a bar code that appears on their smartphones. A quick scan completes the deal.

"People have their phone on them all the time, it's a seamless transaction," Schultz said.

But that's just the beginning.

Eventually, when Starbucks implements Square's full GPS technology, customers will be able to place their order for a "skinny, mocha grande latte with a dash of cinnamon' and charge it to their credit cards by simply saying their name.

As each customer arrives, their name and photo will automatically be displayed on the cashier's screen. The payment is completed when the match is made.

According to Shultz, these types of payments "are causing seismic changes in consumer behaviors and creating equally disruptive opportunities for business."

The Future of Mobile Wallet Technology

Of course, mobile phones have long been expected to become a dominant player in the way consumers make payments, perhaps even going so far as to replace cash transactions.

As Money Morning Capital Wave Strategist Shah Gilani noted in a recent series on mobile wallet technology, "Cash is no longer convenient or conventional. Not only is it expensive to print and store, it can be lost, stolen and it is untraceable."

Surprisingly, the biggest push in developing mobile wallet technology is not in the developing world, but in third world countries.

According to Gilani, "That's because there are a huge number 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."

For investors clamoring for a piece of the mobile wallet action, there are several forward- looking opportunities available. According to Gilani, those include Visa (NYSE: V), Discover (NYSE: DFS), American Express (NYSE: AXP), Google (Nasdaq: GOOG), Microsoft (Nasdaq: MSFT), Facebook (Nasdaq: FB), Apple (Nasdaq: AAPL), and Vodafone (NYSE:VOD).

Meanwhile, smaller -but significant - players in mobile wallet technology include VeriFone (NYSE: PAY) and TNS Inc. (NYSE: TNS).

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

Expect the Starbucks deal with Square to be the first of many in the new mobile wallet technology era.

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