The Next Big Tech Trend in America Is Already Here
By Chris Igou
After I double-checked my pockets, my anxiety began to set in…
Then it hit me. My wallet was sitting on my dining room table, right next to the bowl of fake lemons.
I was prepared to do the “walk of shame.” I had no money. I had no credit card with me. And I could feel the glares from the five people waiting behind me in line.
All I wanted was a cup of coffee from Starbucks…
I thought at that point it was best to just avoid eye contact and go. But right before I was ready to leave the store, I realized I had my phone…
And I remembered that Starbucks accepted Apple Pay.
I grabbed my phone and put it up to the reader next to the cash register. In less than four seconds, my coffee was paid for and I was on my way.
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I didn’t need my wallet, any cash, or a credit card. All I needed was my phone. And it was much easier than digging through my wallet or keeping track of loose pocket change.
Mobile payments are still relatively new in the U.S. But as I’ll share today, that’s starting to change. And a surprising example shows this lucrative trend could take over sooner than you think…
I live in a small town outside of Jacksonville, Florida, with a population of less than 13,000. And yet, I can still pay for coffee at the local Starbucks with my smartphone.
The foundation for mobile payments has already been laid… Tech giants like Amazon, Apple, and others are all trying to get consumers to move to a more cashless society right now.
Interestingly, if you want to see a good example of what this means down the road, look no further than China…
For a visitor, walking into a restaurant in China might feel like stepping into the future.
In some places, you won’t see any cashiers or servers. No cash changes hands. And you certainly won’t find any paper receipts.
My friend and colleague Dr. Steve Sjuggerud just returned from one of his many trips to China. And it was a trip from a few years ago that first inspired him to break this story. Here’s what he told investors in 2017…
I wouldn’t have believed in this “cashless society” idea if I hadn’t seen it firsthand. I never imagined that I’d see the future of money for the first time in Beijing, China. But I did… in our very first meeting in Beijing last summer…
The executive across the table from us told us that she doesn’t carry a wallet or a purse. She doesn’t carry any money or credit cards, either. Everything she needs is on her phone – everything.
She is not alone. What she does is “normal” among businesspeople in Beijing.
In the past two years, paper money has almost been completely replaced by mobile phones in China’s major cities.
You see, China went from basically a cash-only society to a massive user of mobile payments in a little more than five years. Today, more and more stores are popping up with no cashiers. And cash is increasingly irrelevant in China’s major cities.
It’s a great example of how this unstoppable trend will likely play out at home – and a sneak peek at the fast-moving opportunity for investors…
In China, nearly half of the population used mobile payments in 2018 – up from almost nobody in 2011. Mobile payments didn’t really exist in China only five years ago. Now, they’re ubiquitous.
When Steve broke this story, he recommended shares of Chinese tech giant Tencent… the owner of one of China’s top mobile-payment apps. The stock more than doubled over the next year.
Now, we have a similar revolution happening in the U.S.
Four out of five American adults own a smartphone today. That means roughly 202 million people have access to mobile-payment apps such as Apple Pay, Google Pay, and more.
Like me, these folks can all pay at many places without their wallets, cash, or credit cards. And soon, your smartphone will be all you need… no matter where you go.
How to Profit From America’s Shift to Mobile Payments
In late March, Apple unveiled its new “Apple Card.”
It’s like a lot of other credit cards, offering a lousy 1% cash back on all transactions when you swipe your card. But that’s not the interesting part…
The Apple Card also offers 2% cash back when you purchase goods using Apple Pay.
In other words, the card will reward folks who use Apple’s mobile-payments system.
Apple isn’t alone in pushing mobile payments, either… Restaurants like Starbucks and Panera Bread have offered reward points through mobile payments.
Amazon has even come out with plans to open as many as 3,000 “Amazon Go” stores by 2021. These stores don’t have any cashiers. You just grab your things and walk out the door, and you’re charged what you owe through an app on your smartphone.
Mobile payments are no longer just a futuristic idea for American citizens, they’re actually here…
In 2018, 55 million people in the U.S. used mobile payments. By the end of this year, that number will rise to nearly 62 million… still less than 20% of the population.
Mobile payments are safer and more secure than paying with credit cards or cash.
I believe we’ll see continued growth, once the average American becomes educated on this simple fact: Mobile payments are safer and more secure than paying with credit cards or cash.
This is where Americans’ perceptions are furthest from reality. People assume mobile payments aren’t secure. But that simply isn’t the case…
You see, one thing makes mobile-payment options among the safest ways to handle a transaction. It’s called “tokenization.” It sounds technical. But all you need to know is that it means your personal payment information never gets used.
Through the tokenization process, a unique number is generated that won’t be used again. This digital representation – or “token” – takes the place of your actual card information.
Swiping a credit or debit card still makes your name, card number, and expiration date vulnerable throughout the payment process. Hackers can grab your data from store databases. We’ve seen this play out time and time again over the past several years.
Using a mobile-payment app is far superior to swiping a card in terms of security. And that’s why, as folks wake up to this fact, I expect growth to continue rapidly in the years to come.
So how do we profit from this major trend?
Well, we’re still in the early stages of this revolution. And the winners aren’t completely clear at this point. But that’s OK…
If you don’t want to gamble on which company will dominate the market over the next three to five years, you can “play the field” with the ETFMG Prime Mobile Payments Fund (IPAY).
IPAY is an exchange-traded fund that you can buy like any stock… And it holds a broad basket of companies that focus on mobile payments.
For example, digital-payment giants PayPal and Global Payments are both in IPAY’s top 10 holdings. So are credit-card giants Visa, Mastercard, and American Express. And mobile-payments player Square is a key part of this fund, too.
These are companies in the thick of this revolution… And their long-term success depends on getting it right.
You don’t need to pick the winners to make money as mobile payments become more popular in America. You can play the field. If you’re looking to take advantage of this explosive opportunity in the years ahead, IPAY is the simplest way to do it.
Chris Igou received an undergraduate degree in finance from the University of North Florida. He worked at the Bank of New York Mellon before joining Stansberry Research.
