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Bet on Digital Payments With These ETFs and Stocks

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As the deadly coronavirus started spreading and governments took resort to lockdowns with no vaccine or cure at hand, human life took a radical digital shift for almost anything and everything they want. Internet or online shopping and payment activities found every reason to surge in this trying time as these have less to do with human contact and conform to social distancing (read: Online Retail ETFs Riding the Coronavirus-Led Shopping Trend).

Customers are all choosing digital payments to serve their bills for essential items, while merchants and utility providers are encouraging the same. The fear for contamination through notes was so acute that banks in China disinfected and isolated used banknotes in March. The U.S. Federal Reserve too raised the holding period for bills coming from Asia and Europe to America from a five-day to a 10-day minimum, to ensure the non-existence of virus.

While digital payment is almost commonplace in developed countries, emerging markets still lag to a large extent when it comes to paying online. Sheer concerns of security in handling money online, fears of cybercrime and still-low penetration of smartphones have kept emerging economies’ efforts toward digitization at the back burner. But coronavirus-led lockdowns have now forced many to opt for online operation.

For example, the National Payments Corporation of India (NPCI) has been advising Indians to use more digital payment methods, to avoid stepping out even to the ATM and curb the spread of COVID-19. The net result was that 42% Indians have boosted the use of digital payments in the last three weeks, per a report.

China will launch trialling payments in its digital currency in four cities from next week, in order to become the world’s first cashless society. As per media reports, e-RMB has been first infused into the country’s monetary systems, with some public servants to receive their salaries in digital currency from May.

Per Statista, total transaction value in the Digital Payments segment should see a15.3% year-over-year growth rate in 2020 with a 5.4% uptick in users. Total transaction value is expected to show a CAGR of 12.0% by 2023.

Payment services from tech titans like Google Pay, Facebook Pay, Apple Pay, Amazon Pay, PayPal (PYPL - Free Report) , and Square Inc.’s (SQ - Free Report) Cash App are the key winners of this burgeoning trend. Investors can bet on the below-mentioned ETFs too.

ETFMG Prime Mobile Payments ETF (IPAY - Free Report)

The underlying Prime Mobile Payments Index provides a benchmark for investors interested in tracking the mobile and electronic payments industry, specifically focusing on credit card networks, payment infrastructure and software services, payment processing services, and payment solutions (read: Forget Slump, Buy Tech ETFs That Offer Value).

PayPal, Visa and Fidelity National Information Services are the top three holdings of the fund. The fund charges 75 bps in fees.

Tortoise Digital Payments Infrastructure ETF (TPAY - Free Report)

The underlying Tortoise Global Digital Payments Infrastructure Index is proprietary rules-based, modified market capitalization weighted, float-adjusted and designed to track the overall performance of equity securities of global digital payments infrastructure companies listed on developed country exchanges. The fund charges 40 bps in fees. Docusign, Wirecard and PayPal hold the top three spots in the fund.

Global X FinTech ETF (FINX - Free Report)

The underlying Indxx Global FinTech Thematic Index invests in companies on the leading edge of the emerging financial technology sector, which encompasses a range of innovations helping to transform established industries like insurance, investing, fundraising, and third-party lending through unique mobile and digital solutions. The fund charges 68 bps in fees. Fiserv, Adyen and Fidelity National are the top three stocks of the fund.

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