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Payment Services Potential

Global Equities

BNP Paribas Asset Management
 

Key Takeaways

Globally, more than 50% of all payments are still made in cash. It is estimated that annually, electronic payments grow c.10% driven by growth in global consumption and electronic payments at the expense of cash. The transition to electronic payments is supported by the increased consumption within e-commerce where new product categories from flight tickets, hotels, household staples, clothing, etc. are bought and paid for online. Also, it is easier and safer to pay electronically. This provides an attractive background for electronic payment systems globally and thus an interesting investment opportunity for the longer-term investor.

High barriers to entry and low marginal costs

Today, consumers can easily and safely pay through a payment system (e.g. Visa, MasterCard, American Express) because the underlying confidence in the system is high. This is the result of the large payment service providers having built-up an extensive network over many years, which is very difficult to replicate and thereby has high barriers to entry.

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