2020 has been defined by the outbreak of the coronavirus pandemic and the associated economic shutdowns that it has necessitated. But I think the remaining years of the 2020s decade will also feel residual effects from this crisis. We may see permanent shifts in the way people behave, spend money and interact within the economy.
In my opinion, one of those shifts will be how Australians pay for things – an acceleration towards a cashless society. Cash was already becoming less popular as a payment method prior to 2020. But with the onset of the coronavirus bringing hygienic concerns about using physical cash to light, this trend has rapidly accelerated. Many shops and places of business are even ‘temporarily’ banning cash payments altogether.
I think that the group of people who were holding out on ‘going cashless’ will now be forced to adapt – and many won’t go back when the virus eventually fades away.
How can we invest to take advantage of a cashless society?
It’s all well and good to make predictions about the future, but how are we to profit from these predictions? Well, I think having a look at the ASX’s best payments shares is a great place to start. US payment giants Mastercard and Visa have already been some of the largest beneficiaries of the ‘shift to cashless’, but I think we have some strong future contenders on the ASX as well.
Afterpay Ltd (ASX: APT) is an obvious choice as the market leader in the ‘buy now, pay later’ (BNPL) space. The fact that Chinese giant Tencent Holdings was willing to invest up to $300 million in Afterpay over the past month proves its future potential in my view.
Pushpay Holdings Ltd (ASX: PPH) is another payments share that I think is exciting. Pushpay is aiming to offer a digital, cashless solution for charities and religious organisations that might be using a ‘pass the hat around’ funding model. I can see this expansion continuing at a healthy pace once restrictions on social gatherings are eased over the coming months and years.
Investing in the trends of the future is an exciting and potentially lucrative way to view the businesses on the ASX. I think payments is one of the most fertile grounds for investors to till in 2020 and beyond, and it’s a space I’m certainly keeping an eye on.
Sebastian Bowen owns shares of Mastercard and Visa. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Mastercard and Visa. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Mastercard. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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