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Google Inc. (GOOG) Facing Intense Digital Wallet Competition

Google Inc. (NASDAQ:GOOG) has built its empire on making things easier for users of digital devices. One of the more recent ways it has done this is through what is known as Google Wallet, an application on Android-based smartphones that allows consumers to use their phones as a payment device. Well, now several prominent retailers like Wal-Mart Stores Inc. (NYSE:WMT), Target Corporation (NYSE:TGT) and Best Buy Co., Inc. (NYSE:BBY) have announced plans to join forces to compete with Google in this emerging market.

Google Inc (GOOG)

Google Inc. (NASDAQ:GOOG) will put its Wallet application against the Merchant Customer Exchange (MCX), which was announced Wednesday and will be formed from retailers like Wal-Mart Stores, Inc. (NYSE:WMT), Target Corporation (NYSE:TGT) and Best Buy Co., Inc. (NYSE:BBY). This mobile-payment space was slow to develop, but now it has stepped up in recent months, and this is the newest salvo. This new concept is in its very early stages – there is not launch date set, and the new venture is looking for a CEO to run it – but the concept is that consumers will be able to download software onto their smartphones and just tap the phone at the register to pay for their purchases either directly from their bank accounts or from a credit-card account.

The mobile-payment market is still small, but an estimate describes that a $172 billion market this year will grown to about $617 billion in four years. While PayPal has been a pioneer in online and digital payment services – and has stepped up its mobile application as well in recent months – and Google Inc. (NASDAQ:GOOG) introduced its Wallet program last year, the belief that this Merchant Customer Exchange may likely be a formidable competitor because of the gravitas of the companies involved 0 Wal-Mart Stores, Inc. (NYSE:WMT), Target Corporation (NYSE:TGT) and Best Buy Co., Inc. (NYSE:BBY) – and their desire to create integration among their payment systems so that one software program will allow consumers to pay in all their stores by their smartphones – and, they say, their market research of customers’ spending habits will allow them to target their system to customers more accurately.

Google Inc. (NASDAQ:GOOG) may be the pioneer in mobile payments but it seems pretty clear that it will not be the king without a fight. Taking on the likes of a partnership like Wal-Mart Stores Inc. (NYSE:WMT), Target Corporation (NYSE:TGT) and Best Buy Co., Inc. (NYSE:BBY), with their brand exposure and the idea of their seamless payment-system integration, will mean that Goggle Inc. (NASDAQ:GOOG) will have a battle on its hands for revenue in this space. This likely makes this very interesting to watch for investors – including hedge funds invested in Google like Julian Robertson’s Tiger Management; Wal-Mart investors like Warren Buffett’s Berkshire Hathaway; Target interests like Steven Cohen’s SAC Capital Advisors; and Best Buy stakeholders like David Einhorn’s Greenlight Capital.

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