The Cashless Society Accelerates
The pandemic has stopped and started world trends, permanently, temporarily, silently, and with loud tire squeals. Is it just us, or has anyone else noticed how little pocket change they’re carrying?
We’re mindful of what we touch, experts say, fending off coins and notes that have been in circulation for years without being washed. In South Korea, banknotes have been quarantined. In the United States, ATM use is down 32%!
There’s nothing more fundamental to an investor than a customer paying for something, and with the rise of e-commerce and digitalization, payment methods have changed.
We’ve gone cashless to be contactless, no checks anymore, and the rapid adoption of contactless debit and credit cards plays right into the hands of a stock market duopoly, Visa, and Mastercard.
If more customers get contactless cards, more businesses will accept them, so Visa and Mastercard can take 2-3% of even more transactions. It makes for incredible network effects, high switching costs, and recurring revenues (which de-risk a stock). These companies even control their own regulator!
If you still own brick and mortar, consider these companies a possible hedge, as it’s those high street merchants on the wrong side of the 2-3% transaction.
We’re also about to become terrible tippers if we’re not careful, and we risk leaving behind folk who don’t have bank accounts and can’t get credit cards. We need to get low-income people from all backgrounds a bank account, or this trade just won’t work!