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Weekend: Kiss Your Wallet Goodbye

Wealth Daily's Weekend Edition

Written by Brian Hicks
Posted April 2, 2011

Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.


At the ripe age of 47, the fact that I'm an old-timer is kind of hard for me to admit these days.

But every time I check out of a store, I am reminded how out of step with the rest of the world I really am.

That's because — without fail — nearly everyone but me seems to be using a bank card for practically everything that they buy... even for something as small as a Big Gulp. It kind of drives me crazy.

And to be honest, I just don't understand it at all. Why anyone would want to turn over their freedom to a machine is simply beyond me...

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Cash is King

Ultimately, that's what electronic money means to anyone that uses it. After all, no one buys anything with a card until it is approved by the machine.

And while that may be OK for most people because it's just so darn convenient, that's just too big of a leap of faith for me. And it always will be.

Your money and your freedom go hand in hand.

That's why, in my world, cash will always be king — no matter what happens.

But despite all of my "old school" thinking on the matter, it's clear to me from the habits of a much younger generation that electronic money is the wave of the future. So that makes it a trend to be reckoned with.

In fact a recent trend in smartphone design is about to allow future generations to ditch their cash-filled wallets altogether.  

Of course, how these poor souls will ever learn about the joys of counting off a big stack $100 dollar bills is beyond me... Personally, I’d rather do that than just about anything else.

NFC Turns Your Phone into Your Wallet

This disturbing piece of progress is called Near Field Communications (NFC), and it's an advance in transaction technology that will push cash even further on the back burner.

In short, it works by transforming your cell phone into the equivalent of a bank card. But instead of having to slide your card through a reader, NFC technology will allow you to make payment by simply waving your cell phone over the terminal.

All of the banking information is transmitted wirelessly and without contact — like some sort of "gee whiz!" magic.

This ought to be a great boon for electronic pickpockets. But who am I to stand in the way of progress? Crooks have to eat, too, I suppose...

Since money makes the world go 'round, cell phone makers, credit card companies, telecom carriers, and the big banks can’t wait to earn a few bucks on this new trend.

According to a recent report by the Yankee Group, the value of NFC-based transactions will explode from $27 million in 2010 to $40 billion in 2014 as the number of NFC-enabled phones grows from 834,000 last year to 151 million in just four years.

(For the mathematically challenged, that's a compound annual growth rate (CAGR) of more than 300%.)

Meanwhile, according to the same report, the total worldwide value of mobile transactions will increase from $162 billion in 2010 to $984 billion in 2014. That’s nearly $1 trillion dollars.

With figures like those, all of the big boys are now lining up for a piece of the action — including Google (NASDAQ: GOOG), MasterCard (NYSE: MA), Citigroup (NYSE: C), AT&T Mobility (NYSE: T), Verizon Wireless (NYSE: VZ), and VeriFone Systems (NYSE: PAY).

Of course, none of it will probably amount to much until Apple (NASDAQ: AAPL) enters the market with their NFC smart phone...

Then every dork in town will be using one to pay for their $5 cup of coffee.

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That ought to be enough to send shares of Apple to the $800 mark, which makes me wonder about the strength of the safety nets at Foxconn.

Think about that the next time you use your really cool, sweatshop-produced iPhone.  

As for me, they'll have to pry my wallet from my cold, dead hands.

For more great investment ideas, check out this week's top-read articles from Wealth Daily and Energy & Capital, below.

Have a great weekend.

Your bargain-hunting analyst,


steve sig

Steve Christ
Editor, Wealth Daily


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