Investors agree with us: Cash is dead.
Last week, “buy now, pay later” stock Affirm (AFRM) went public on the stock market. And its shares immediately doubled the first day. Since then, it’s risen another 11%.
Wall Street bet on Affirm because it’s part of a growing trend — a class of payment companies heralding the next step for ecommerce.
You may have seen it online — Affirm partners with big companies like Peloton, David’s Bridal and Expedia. It’s on those websites’ checkout screens letting you split large purchases into smaller chunks over time — think three, six or 12-month installments. It’s similar to opening a temporary credit card, except it’s only for one purchase, and it will close as soon as you pay it off.
These “BNPL” companies are seeing massive demand now, boosted by the pandemic. It makes sense: Customers appreciate budgeting big-ticket items more easily, and retailers love the increased cart value.
That’s why analysts expect the market for these services — companies like Affirm, Klarna and Afterpay — to grow 10 to 15 times by 2025.
This is just the latest blow to traditional cash and banks, though. And we’re showing you one way to profit…
BUYING ONLINE KEEPS GETTING EASIER
Today, people are increasingly cautious about paying with cash — even avoiding it altogether.
Instead of opening our wallets, we’re learning new habits: We’re tapping our phones onto payment terminals or ordering groceries ahead of time.
We’re also skipping the line altogether and buying online more than ever before.
As you can see, ecommerce boomed during the pandemic:
According to analysis from Seeking Alpha, before 2020, ecommerce spending was steadily increasing about 1.5% per year.
Then the pandemic hit.
In just a few months, spending jumped 4% to over $3 billion. And it’s not dropping any time soon.
As they say: You can’t put the toothpaste back in the tube. The growing BNPL trend is just one sign.
Knowing all that, we want your portfolio to be well-prepared for the months and years ahead.
Remember: We’ve been telling you for a while that the pandemic will have both long-term winners and losers. And as the economy recovers, the winners will outstrip the losers by a wide margin.
The long-term winner here: ecommerce and digital payment solutions.
The long-term losers: banks and cash-based businesses.
We believe that while cash will always have a place, the future of money will be a lot more digital.
So here’s what you can do to get ahead…
OUR FAVORITE STOCKS ARE SET TO PROFIT
One of our old favorites, PayPal (PYPL), is right in the middle of ecommerce’s evolution — giving us a good illustration of the future of money.
Think about it: Most ecommerce sites have a “pay with PayPal” button, making it easier to pay with a PayPal account.
And the platform offers a number of payment options: People can link PayPal to an existing bank account, or they can store money right in the app. They can also use “PayPal Credit,” which offers a credit line with no interest for six months.
But PayPal isn’t resting on its laurels. It now offers a BNPL plan — splitting large purchases into four smaller payments.
And we have a great way to tap into that trend…
One of our favorite exchange-traded funds is the Vanguard Information Technology ETF (NYSE: VGT). This gives you a one-click way to get in on payment companies like Visa, PayPal and Global Payments. These companies will be at the forefront of this shift to digital.
Don’t miss it.
Managing Editor, American Investor Today