Go back
05 September 2023 10h55
Source: Banco Carregosa

E-wallets: new opportunities in the world of digital payments

E-Wallets

E-Wallets

 

E-wallets are transforming the world of physical and digital payments, creating unique opportunities for investors. Find out more about how you can invest in this area.

 

In 2022, 3.4 billion people worldwide used at least one e-wallet, such as PayPal, Apple Pay, Google Pay and many others. By 2026, this number is estimated to grow to 5.2 billion (or 65% of the world’s population). This level of growth and consumer adoption demonstrates the simplicity that e-wallets bring to everyday life and the myriad opportunities for investors. Find out what e-wallets are, the most important ones on the market, and how you can take advantage of these opportunities.

 

What are e-wallets and what are their benefits?

E-wallets allow users to link their credit or debit card to an electronic device (smartphone, tablet or computer) and pay securely and conveniently in online or physical stores. Some of the best known examples of e-wallets are PayPal, Apple Pay, Google Pay, Samsung Pay or MB Way, the most popular in Portugal.

 

 TheGlobalE-WalletsLandscape_2023AndBeyond

Source: Zai

 

 

The main benefits of e-wallets are security and convenience. In terms of security, e-wallets use encryption technology to protect users' payment information. This means that even if the data is intercepted, it is useless without the encryption key. In addition, many e-wallets also offer fraud protection, which means that users can be reimbursed if they fall victim to fraudulent transactions. Convenience is another major benefit of e-wallets. Instead of having to enter credit card details for every purchase, users can simply select the e-wallet and the payment is processed automatically. With so many benefits, it is likely that the universe of e-wallets will continue to grow, to the benefit of consumers.

 

How to invest in e-wallets

The popularity of e-wallets and the growth of e-commerce create new opportunities for investors. Here are the best ways to invest in the world of e-wallets:

 

Investing in shares

Investing directly in companies that develop and operate e-wallets can be a good option. As online transactions continue to grow and financial services become increasingly digital, there is growth potential for companies that develop e-wallets. On the other hand, investments in companies that develop e-wallets offer exposure to the ever-evolving technology sector.

 

The following are some of the most attractive examples of shares in e-wallet related companies:

 

Apple Inc. (AAPL): Tech giant Apple offers its users a secure and private digital wallet solution through its Apple Pay service. With an ever-growing user base and expanding digital financial services, Apple is a solid investment option.

 

Samsung Electronics Co., Ltd. (SMSN): Samsung is also a strong contender in the e-wallet market with its Samsung Pay service. The South Korean company has a global reach and a strong presence in emerging markets, making it an attractive option for investors.

 

PayPal Holdings, Inc. (PYPL): PayPal is one of the leading companies in digital payments, offering e-wallet solutions through its platform. PayPal is an attractive investment opportunity as digital payments continue to gain traction around the world.

 

Square (Block SQ): Founded by Jack Dorsey (co-founder of Twitter), Square started out as a payment processing company for small businesses, but has expanded to include an e-wallet, Square Cash. Square Cash allows you to pay for goods and services, and to transfer money. Square has been growing steadily, making it a good investment option.

 

Visa (V): As one of the world’s largest credit and debit card networks, Visa has made significant strides in the e-wallet space. The company launched Visa Checkout, an e-wallet that allows you to pay for goods and services online without having to enter your card details. With Visa's vast network and expertise in the payments sector, this could prove to be a solid place to invest.

 

Mastercard (MA): Like Visa, Mastercard is a global payments giant that has also ventured into the e-wallet space. Mastercard offers Masterpass, an e-wallet that allows you to make payments online and in-app. Mastercard is a well-established company with a global presence, making it an attractive investment option.

 

Investing in technology funds

As well as investing directly in companies developing electronic wallets, you can also choose technology investment funds with exposure to companies in this sector, either through ETFs or "traditional” investment funds. Investing in a technology investment fund offers diversification by holding several companies in the sector, reducing the risk associated with investing in individual stocks. In addition, technology investment funds can invest in technology companies around the world, allowing investors to diversify their portfolio geographically. Moreover, the funds are managed by experts who make investment decisions based on in-depth research and analysis.

 

These are some of the ETFs that focus on companies in the technology sector, including those that develop e-wallet solutions:

 

ETFMG Prime Mobile Payments ETF (IPAY): This fund invests primarily in companies leading the mobile payments industry. This includes companies providing payment processing technology, infrastructure, software and online payment services. Some of the largest holdings in this fund include companies like Visa, Mastercard and PayPal.

 

Global X FinTech ETF (FINX): The fund invests in companies that are using technology to revolutionise the financial sector. The companies that make up the fund operate in areas such as mobile payments, peer-to-lending platforms and financial process automation. Square, PayPal and Adyen are among the fund’s largest holdings.

 

Fidelity MSCI Information Technology Index ETF (FTEC): This fund invests in US-based information technology companies. Although this fund doesn't focus specifically on e-wallets, many of the companies it invests in are involved in developing technology for digital payments. Apple, Microsoft and Visa are among the fund’s largest holdings.

 

In addition to ETFs, there are a number of investment funds with exposure to the technology sector, including the following:

BlackRock Next Generation Technology (EUR Hedge): The Next Generation Technology Fund invests at least 70% of its total assets in equities of global companies engaged in the research, development, production and/or marketing of new and emerging technologies. These companies are mostly small and mid-caps.

 

Franklin Technology Fund N (EUR): The primary objective of the fund is capital appreciation. The Fund invests at least two thirds of its total net assets in equity securities of companies that are expected to benefit significantly from the use, development and advancement of technology, such as technology services, including software, data and internet services; electronic technology, including computers and related products and electronic components; telecommunications, including data transmission networks and related equipment and services; information and media services; electrical and semiconductor equipment; precision instruments.

 

Morgan Stanley US Growth (EUR): The investment objective of the US Growth Fund is to seek long-term capital appreciation, measured in US dollars, by investing primarily in growth stocks of large capitalisation US companies and, to some extent, foreign companies. It invests primarily in companies in the technology and communications service sectors. The Fund may also invest on an ancillary basis in debt securities convertible into ordinary shares, preferential shares, warrants and other related equity securities.

 

 

Banco Carregosa, innovative financial solutions

E-wallets offer fast, secure and convenient payments, both in online and physical stores. Banco Carregosa recognises the importance of offering innovative financial solutions nd invests in tools to exploit the potential of these advanced technologies and integrate them into your financial life. To find out more about the investment opportunities offered by the e-wallet concept, contact our team of experts.