Table 1: Prominent players in the digital payments ecosystem
| Companies | Business description |
| VISA, Mastercard | Card networks |
| Paypal, Square, Alipay | Digital platform; provides payment gateway and payment processing services |
| JPMorgan, Bank of America | Acquiring/Issuing bank |
| Global Payments, Fidelity National Information Svs | Provides payment gateway and processing services |
Source:
iFAST compilations Data as of September 2020 |
|
How the payment ecosystem works
Chart 1: Simple illustration of the payment ecosystem
Digitalisation in consumption to benefit payment companies
Chart 2: Higher e-commerce adoption rates across the world
Increasing smartphone and Internet adoption rate to drive digital payment transactions
Table 2: Growing smartphone penetration rate globally
| Markets | 2013 | 2019 |
| Global* | 44.7% | 54.6% |
| China | 46.9% | 59.9% |
| Indonesia | 14.0% | 31.1% |
| Malaysia | 34.5% | 57.5% |
| Vietnam | 19.7% | 44.9% |
| India | 12.8% | 36.7% |
| Brazil | 26.3% | 45.6% |
| Developed economies' average | 60.5% | 73.9% |
Source: Newzoo, Google, iFAST
compilations *Global penetration rate is based on a simple average across all the
countries in the report Data as of September 2020 |
||
Chart 3: Room for non-cash usage to grow
Digital payment systems bring about benefits to all stakeholders
An attractive growth play in the financial services ecosystem
Table 3: Top ten holdings of the IPAY ETF
| Company Name | % of total assets |
| Square Inc. | 6.2% |
| MasterCard | 5.9% |
| PayPal Holdings | 5.9% |
| Fidelity National Information Services | 5.6% |
| VISA | 5.6% |
| Fiserv Inc. | 5.4% |
| American Express | 5.4% |
| Adyen NV | 5.0% |
| Global Payments | 4.7% |
| Afterpay Ltd | 3.0% |
Source: Bloomberg Finance
L.P., iFAST compilations Data as of September 2020 |
|
Table 4: Earnings growth expected going forward
| 2019 | 2020E | 2021E | 2022E | |
| PE ratio | - | 34.6 | 24.7 | 20.0 |
| Earnings growth | - | -4.9% | 40.2% | 23.2% |
| EPS (USD) | 5.7 | 5.5 | 7.6 | 9.4 |
Source:
Bloomberg, iFAST compilations Data as of September 2020 |
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Chart 4: IPAY ETF price vs. earnings
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