When a technology is automatically accepted it becomes a norm in our daily lives. Not every technology blends in so seamlessly to make our daily life easier. As an investor, these are the stocks that slid in silently racking in the growth effortlessly. With our mobile phones are getting thinner and so is our wallet and many thanks to ‘Cashless Transaction Technology’.
I was in London briefly for a short-term October 2017 break and I notice that most places were accepting ‘Ali Pay’. At that point, I didn’t realise the Giant Chinese company Alibaba had started a cashless transaction. I was naive enough to only think Apple and Paypal were the only players around. Then my research started then in London.
What is a cashless transaction? Back in the 80/90s, we had credit cards from AMEX, Dinners, Visa and Mastercard. These cards allowed us to pay without using money (via bank credit) and only privilege people could only use them. Back in the very late 90s, Debit card started going the main stream where we could pay with our own money in the bank directly. In the 2010’s contactless mobile phone payment via e-wallets started in the various part of the developing world. In the last 5 years, Apple, Paypal, Square, WorldPay and much more are going down this next generation contactless transaction. This can be found almost everywhere including the parking meter. There are no more reasons to carry money and coins in our pocket. All we need is our mobile phones with our security pin, fingerprints or faceID.
China and India are picking this mobile phone cashless transaction very quickly. Even better, you do not need a bank account to do so. In China, you can hold credit (e-wallet) with WeChat and Alibaba account and then bank it via your bank or cash end of the month. Surprisingly, even fishmongers are no longer carrying cash. All you need is to key in the transaction amount on your phone, then zap the QR code and that’s it!
Paypal, Square, Apple Pay, Visa, Master and Amex all use active sensor technology where the merchant/vendor requires a specific equipment which is a link to the internet for verification purposes before a transaction is successful. The trust is based on the merchant/vendor, to input the amount of money required to be received,
However in Indian and China, Alipay, WeChat, PayTm utilises a different passive technology where the buyer needs a phone with security recognition and the vendor has a QR code. The trust is based on the buyer where the amount transaction is inputted on the buyer’s device/phone for an amount to me transmitted.
Two different technology and for different cultures and regions.
If you look at the stock for all the cashless transaction players (not including the Indian and South American Market yet), all have been on the positive bull for the past year. Among all, Visa is the largest and most experience large-cap players (in golden yellow) at a 43% rise this year, which is more than any consumer manage funds.
I do not see this train stopping and foresee a long steady growth. It is still not too late to get into this quite steady mobile phone/e-wallet cashless transaction business.
Personally, I have gone in Paypal, Alibaba and Tencent (WeChat). I forecast investing more in this momentum train.