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Tech and Financials Vie to Control Payments

NEW YORK ( TheStreet Ratings) -- With billions of dollars of purchases coursing through the retail sector every day, technology companies like Google (GOOG - Get Report) are teaming up with Citigroup (C - Get Report) and MasterCard (MA - Get Report) to introduce mobile wallet payments made with smart phones.

Fighting to retain its leading position in online payments, eBay (EBAY - Get Report) is suing Google alleging intellectual theft.

There are even Apple (AAPL - Get Report) applications, such as Square, that help turn iPhones into credit card readers while avoiding the need to open a traditional merchant account. With Square, your garage sale can now accept Visa (V - Get Report), MasterCard, American Express (AXP) and Discover (DFS).

One of the benefits to technological innovations is the ability to charge relatively high fees on each transaction. Plus, small amounts of millions of transactions can really add up to big money. Don't count out the players who have been in the payment processing game the longest. Dow Jones U.S. Financial Services Index Fund (IYG) holds proven payment leaders Citigroup, Visa, and American Express among its top 10 holdings.

When selecting an exchange-traded funds to cover the tech companies positioned to take advantage of mobile payments, take a look at Internet HOLDRS (HHH) which is weighted to 19.7% eBay and 46.7% Amazon.com (AMZN - Get Report). Or, for a more diverse tech ETF, consider the First Trust Dow Jones Internet Index Fund (FDN) with Google as its top holding at 8.5% of assets.

-- Reported by Kevin Baker in Jupiter, Fla.

For additional Investment Research check out our Ratings Research Center.
Kevin Baker became the senior financial analyst for TheStreet Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering equity and mutual fund ratings. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

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