WHAT'S THE STORY?     

•  The global payments industry presents a growth pattern which seems to match the following formula: GDP growth + growth of the share of payments moving from cash to digital. The latter is a structural growth component inherent to digital payments, and is related to the growth of digital commerce.

•  As people increasingly shop online, they are also shifting their online payments to credit cards, as well as new digital payment methods (esp. smartphone-linked). Mobile payments and contactless payments (NFC-enabled credit cards) are also picking up as payment methods at physical points of sale (PoS).

•  The digital payments industry is highly-competitive, with already-consolidated incumbents facing the threat of seeing their business models eroded by newer entrants (especially through commoditisation of payments services), or being unable to capture further market share. These industry dynamics warrant taking a portfolio approach to investing in digital payments.

•  We recommend investors gain exposure to this theme by investing in stocks of companies expected to benefit from digital payments’ future developments via the JB Tracker Certificate on the Digital Payment Basket II. The product comprises twelve stocks and is suitable for investors with a considerable risk tolerance.