Let’s face it, financial services are succumbing to digitisation. In the past decade alone, a new and powerful economy for digital payments has emerged. This economy offers speed, agility and convenience. It has also instilled a sensibility in us that payment transactions can happen seamlessly in the background as we hop in and out of Ubers.
But for many investors this economy still looks complex, confusing, something of a technological tangle, really. You might want to invest in it, but don’t know where to start.
One possible answer is using an exchange traded fund, or ETF. This is a – usually – passive investment instrument which tracks an index of stocks or futures. It can be traded just like a share. Fund manager Rize ETF has just unveiled a new ETF targeting the digital payments economy.
The Rize Digital Payments Economy UCITS ETF (LSE:PMNT) is the first ETF of its kind focused on both the digital payments economy and the burgeoning crypto payments economy. The fund is designed to provide investors with exposure to companies that potentially stand to benefit from the structural transition away from traditional cash payments to the speed and convenience of digital wallets, digital payments and digital currencies. These include card payment networks, payment processors, payment infrastructure providers, payment services and solutions providers and digital/crypto currency pioneers.
So why invest in the digital payments economy?
In the years ahead, ecommerce growth, enthusiastic adoption of transparent payment experiences and alternative transaction modes are going to continue to drive non-cash momentum. This could support the valuations of today’s digital payments leaders. Importantly, today’s institutional strangleholds on not just payments but also other banking services such as credit, savings, investments, insurance, etc… will get unravelled in the next decade. This will yield a new digital finance economy that is better connected, faster, built for the consumer and most importantly, both equitable and inclusive.
“Our fund captures the incredible disruption we are seeing today in the banking sector,” said Stuart Forbes, co-founder and director at fund manager Rize ETF. “What’s most fascinating to me is that, although developed economies introduced cashless payment infrastructure – relying principally on credit cards – several decades ago, the demand for “anytime, anywhere” payments today is fuelling unprecedented growth in digital payments, digital wallets and digital currencies. For investors, we believe this presents an unprecedented opportunity to get in on the ground floor and ride this disruptive elevator to the top.”
More on that new digital payments ETF
PMNT is available to buy from today on the London Stock Exchange (LSE) trading under the tickers PMNT (USD) and PAYG (GBP). In addition to the LSE, the fund will also be listed on the Deutsche Börse Xetra, Borsa Italiana and the SIX Swiss Exchange. The fund has a TER (total expense ratio) of 0.45%.
PMNT has been purpose-built in partnership with Euromonitor International, one of the world’s largest market research firms with expertise in strategy research for consumer and industrial markets. PMNT was created and builds upon Euromonitor’s classification for the “Digital Payments Economy”. The classification seeks to identify and score leaders and innovators of in the new payments economy that are not only driving non-cash momentum and merging with technologies like wearables, biometrics and blockchain but also challenging traditional banks that have been both slow to adapt and have hindered innovation in speed, agility and convenience.
Euromonitor’s classification is designed to serve as a guide for where the digital payments revolution is heading as the FinTech revolution ushers in a new era in the way the world transacts.