What Digital Payment Growth Might Mean For Your Portfolio

DEWITT, Mich. - Dec. 28, 2015 - PRLog -- Cash, Check or Phone? Payments Get a Mobile Makeover

Thanksgiving weekend and the kickoff of the holiday shopping season are right around the corner. But not everyone will be standing in a checkout line this year.

According to the National Retail Federation, 40% of consumers used their smartphones to make a purchase decision over the 2014 holiday weekend. This trend has led to a fast-growing market known as mobile commerce, or m-commerce for short. We estimate that m-commerce sales will grow from roughly $200 billion in 2014 to around $1 trillion by 2019, representing an annual growth rate of 38%. We believe this growth is creating attractive investment opportunities in the digital payments industry.

Digital Payments Landscape Still Being Defined

Many merchants and technology companies have introduced their own digital wallets, and as a result, the three leading payment solutions are using different underlying technologies. One thing they have in common, though, is enhanced security. We believe this feature, as well as the popularity of mobile devices, will ultimately result in widespread adoption of the technology.

According to MasterCard, more than one-quarter of the global population will use smartphones in 2015, yet 85% of global retail transactions are still being made via cash or check. We see a significant opportunity as the percentage of electronic payments should align with the percentage of mobile device users.

Action for Investors

If you’re looking for investment ideas within the digital payments industry, talk to your Edward Jones financial advisor. Together, you can discuss the current trends in this market and which companies may be appropriate for your portfolio.

Who Benefits from Mobile Payments?

Consumers now spend an average of three hours a day on their mobile device, up from just one hour five years ago.* This growth benefits:

• Merchants
  • Higher mobile use creates a 24/7 opportunity to reach customers.
  • Mobile technology can improve security and drive faster checkout times.
  • More potential customers can be targeted.

• Clients
  • Busy shoppers can enjoy more convenience.
  • Customers benefit from loyalty reward programs.

Important Information:
*Source: eMarketer.