My iPhone must have thought I’d become a bank robber.
Please don’t think I’m being flip. I’m a huge believer in the convenience of mobile commerce, often referred to simply as m-commerce.
See, I use Apple Pay from Apple Inc. (AAPL) on my phone regularly when shopping. I love putting the phone next to the reader and double-clicking to make the purchase.
There’s just one problem; My iPhone can’t recognize me and approve my identity with facial recognition. At least, not when I am wearing my Covid-19 safety mask.
That’s where the new field of touchless commerce comes into play. It’s a process in which you simply tap the store’s reader with an enabled credit card.
Don’t scoff; it’s quickly gaining share in m-commerce, a field worth $284 billion.
Moving the Marketplace Online
Now then, let’s be clear about one thing; overall retail is down sharply due to the Covid-19 panic that closed most retail stores.
But e-commerce is a very bright spot for global growth and profits. Consider that in Latin America alone, some 13 million made e-commerce transactions for the first time.
Here in the U.S., we have become even more dependent on online shopping, much of it done through handhelds.
Just think of all those stores that are now reopening on a limited basis, providing curbside checkout. That’s a process just made for touchless commerce because it’s so easy to tap the store’s portable reader with your credit card.
All of this is great news for Visa Inc. (V). While the company didn’t reveal dollar figures, it recently said that touchless payments in the U.S. rose 150% – in March alone.
Online shopping is surging too, with Visa seeing 18% more online payments in April, excluding travel.
Now, online shopping is very convenient, and during these lockdowns has become quite literally a lifesaver.
But it can be a surprisingly complicated process. According to Visa’s own research, the average online card payment requires you to enter your information into 23 different fields – name, address, phone number, card details, and so on.
It can be a real downer, but Visa is working to fix it. The company already operates the Visa Checkout system, a platform that lets you pay online with your Visa card without the buyer getting your card details.
Visa has already upgraded 10,000 merchants over to a newer system that validates your identity and fills in your information for you, speeding up the checkout process.
The rest of the world is also seeing a bump in touchless payments.
Visa says 60% of in-person transactions are now done using this technology, also contactless transactions.
Using it is very simple. First, you have to make sure your card and the payment terminal supports the technology. Just look for the “tap-to-pay” symbol on both. It looks like four or five vertical waves, sometimes with a small credit card next to them.
Then, instead of handing your card to the cashier, swiping it, or inserting it into the chip reader, just hold your credit card right next to the payment terminal.
That’s it. A second or two later, and your payment information will be processed.
Not only do you not expose your credit card to whatever germs may be on the payment terminal. You also don’t give the merchant your card information – only a “token” version that cannot be reused, even if it was somehow stolen.
A Digital Money Network
The technology enabling this is Visa’s real business. To be clear, Visa is not a “credit card” company. It makes no money off credit card balances or interest. It doesn’t even issue the cards. Banks do that, under license from Visa.
What Visa does is link the banks all over the world with almost every merchant you’d ever need, making sure your bank-issued Visa card works wherever you need it.
This computerized global payment grid is called VisaNet. It operates out of four high-security data centers located in Virginia, Colorado, London, and Singapore.
These state-of-the-art server facilities are some of the most secure buildings on the planet. They are built to withstand natural disasters and terrorist attacks. Visa’s units also can operate without external power.
These centers can handle 64,000 transactions every second. That’s a lot of capacity, but it doesn’t go to waste.
There are 3.3 billion Visa cards worldwide, bringing VisaNet up to a total volume of $11 Trillion. And Visa gets a cut of each transaction.
Add it all up and you can see why Visa is such a great fintech leader and why it faces so much upside as digital payment continues to grow.
See, over the past three years, the firm has grown per-share profits by 25%. I’m shaving off roughly 10% to account for the slowing growth of the U.S. economy because of the COVID pandemic.
Now we use what I call my doubling calculator. Mathematicians call it the Rule of 72. Let’s divide the compound profit growth rate of 22% into the number 72.
We find that it should double in just a little more than three years.
Remember, the economy is starting to reopen. And Visa will get a slice of all that action as shoppers step up the use of the debit and credit cards.
The Next Step in Electronic Payments
All of Visa’s qualities that I’ve mentioned above make it an excellent choice for investors looking to maximize their chances at market-crushing gains in the high-profit world of high-tech.
That being said, there is another option out there for more aggressive investors. I’m talking about another digital financial network that is completely new, high security, and native to the electronic space.
Even better, it’s an asset that is already up 33% in 2020, nearly doubled in value in 2019, and multiplied investor wealth by 1,000% even before that.
It’s something I’ve had my eye on for quite some time, and it could be ready to pay out massively again while adding an entirely new dimension to the concept of “money.”
Just click here to check out what I’ve discovered.
Cheers and good investing,
Michael A. Robinson