The number of ways consumers can spend their money is poised to get larger. The familiar credit and debit cards are threatened by all manner of electronic payment methods, and none of the big three card issuers wants to get left behind.

Juniper Research says that consumers will use their mobile phones to pay for $670 billion worth of goods and services by 2015.  American Express Co. (NYSE: AXP), Visa Inc. (NYSE: V), and Mastercard Inc. (NYSE: MA) definitely want a big piece of that action. Their problem is that many of the biggest technology and internet companies are also staking out turf on the payment playing field. The stiffest competition comes from EBay Inc. (NASDAQ: EBAY) and its PayPal online payment system, but Google Inc. (NASDAQ: GOOG) is developing its own payments system, Apple Inc. (NASDAQ: AAPL) already operates the successful iTunes stores, and Verifone Systems, Inc. (NYSE: PAY) controls the lion’s share of the point-of-sale terminal space. The field is also crowded with new entrants like Square and other start-up payment companies.

American Express paid $660 million last year for a loyalty marketing firm with customers in Germany, Poland, and India, and the company executive charged with running Amex’s online and mobile business told Bloomberg that we “shouldn’t assume that’s the largest acquisition we can do.”  He’s not lying about that — the company had $32 billion in cash sitting on its balance sheet at the end of June.

So where is Amex likely to look for acquisitions? China and India, with about 2.5 billion people between them, is the most obvious place. Credit cards and smartphones are being added quickly by consumers in these countries, and even Amex expects mobile phone transactions to surpass credit card sales within a few years.

Amex could obviously look for more loyalty-type marketing firms, and build on its already well-established brand. The company could also continue developing its own technology and continue making purchasing small companies that incrementally improve its online and mobile payment service.

Or it could do something big — like acquire Verifone. Verifone’s terminals are everywhere and the company’s growth in Europe and Asia has been on a hockey-stick trajectory. European sales grew 56% in the last quarter and sales in Asia grew by 42%. The company’s market cap is about $3.3 billion and American Express could easily afford to make Verifone shareholders an offer they couldn’t refuse. Like a 100% premium to the current Verifone share price, all in cash. That would be a game changer.

What are the chances of such a deal happening? Probably not very high right now, but as Amex discovers that it is going to have to fight a hundred different little battles against all the competition in mobile payments, the company may see the sense in making one big move. Acquiring Verifone would be out of character for Amex, but that may be just what the credit card giant needs.

Verifone’s 52-week share-price range is $27.15-$58.88, and the stock closed yesterday at $36.91. Amex’s 52-week range is $37.33-$53.80 and its stock closed yesterday at $48.99.

Paul Ausick

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