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Whether online or mobile, a large number of companies want to get a slice of the ever-growing digital cake for themselves. That is why they are all battling for a place in the smartphone, or even the smart watch. In the middle of January, for instance, Swatch introduced its new “Swatch Pay”, which allows Mastercard customers to pay contactlessly with a flick of the wrist. In the apps for mobile payment, however, the incumbents do not just include card providers Visa and Mastercard: the industry pioneer for online payment services, PayPal, is also frequently represented. The US group has been on a sustained growth trajectory for years already, meeting with resounding success. The number of active accounts, for instance, has risen from 84 at the start of 2010 to 267 million now. PayPal is also focusing for inorganic expansion, having recorded the biggest purchase in the company’s history in 2018: for 2.2 billion dollars, PayPal acquired Swedish card reader specialist iZettle in order to further expand its product range for mobile payment in shops.
Takeover carousel continues to turn
That there is movement in the payment market at present is also indicated by a recently announced mega deal. Payment technology provider Fiserv, for instance, would like to swallow up payment processor First Data for 22 billion dollars. Both of them, like the German Wirecard, offer payment services and software for banks and retailers. First Data’s customer base includes six million retailers and 4,000 financial institutions in more than 100 countries. The company processes 3,000 transactions every second. However, billion-dollar mergers among industry giants are nothing new: back in 2017, US credit card processor Vantiv amalgamated with its British rival Worldpay. With 31 million transactions a day, Worldpay is not only the largest British payment processor, but also one of the leading players worldwide.
Digital payment services are entirely on trend, and investors can participate directly in the opportunities of the sector. To that end a tracker certificate based on the Swissquote Digital Payments Index is being launched. It includes an initial 21 stocks of leading companies such as Visa, Mastercard, Worldpay, PayPal and even the two “newlyweds” Fiserv and First Data. Alongside them are also less well-known companies such as the South Korean NHN KCP and Net 1 from South Africa. In all, the barometer includes global payment system operators, financial service providers and suppliers of electronic payment solutions whose solid market share and existing partnerships put them in an excellent position to profit from the current mega trend. The weightings of the individual index members lie between four and seven per cent initially. In terms of regions, the USA sets the tone with a total of 16 companies and an index share of 77 per cent.