(S) Sprint-Nextel Rolls Out Google Wallet

Sprint Nextel Corp. (S) has introduced Google (GOOG) Wallet, a mobile payment service on its Samsung Nexus S 4G smartphones. Notably, Sprint is first U.S. carrier to deploy this application. Users can avail of this payment option by downloading the latest version of the Android operating system.

Google Wallet remains one of the latest innovations in e-commerce that enables users to make secure and faster payments. The service virtually transforms phones into wallets, allowing storage of credit cards, loyalty cards, and gift cards as well as a variety of other plastic money by accessing any PayPass-enabled terminal. It operates on a specific personal identification number (PIN) that ensures total security and a chip known as Secure Element that stores encrypted information.

Transactions through Google Wallet is supported by Citi Bank, a division of Citigroup (C), MasterCard (MA) and Google Prepaid MasterCard and managed by merchant processing service company –– First Data.

The application was unveiled on May 26 at a joint press conference by Google, Citi, MasterCard, First Data and Sprint.

Given a market capitalization of approximately $250 billion, digital payment services are in a fray to capture market share. In addition, the roll out of Google Wallet, which comes close on the heels of the launch of PayPal’s Digital Wallet services, will only spark further competition. Given market veterans like PayPal already boasts of more than 70 million active users, we believe Sprint’s foray into the e-commerce biz will counter serious competition.

However, the spreading 4G networks as well as Sprint’s superior infrastructure and encouraging subscriber additions, will help popularize the application and aid revenue growth.

We currently maintain our long-term Neutral recommendation on Sprint. For the short term (1–3 months), the stock retains a Zacks #3 Rank (Hold).

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