Guy de Blonay, manager of funds including Jupiter Financial Opportunities Fund (GB00B5LG4657), explains why he thinks the Covid-19 pandemic is likely to be a catalyst for more cashless transactions.
"The lockdowns implemented in the wake of the coronavirus pandemic have had profound implications on the way people live,” he said. “One of them has been a surge in e-commerce activity. More importantly, perhaps, Covid-19 is blurring the lines between e-commerce and traditional retail, as social distancing forces merchants to rethink and build an interchangeable presence between the online and offline channels.
None of these trends are new. But the pace of change may have accelerated by a few years and online payment providers are the winners. They benefit from the shift to e-commerce and tap into new revenue opportunities by leveraging their technology to help traditional retailers in the transition to this new 'omni-channel' world.
Generally, Covid-19 has led to an acceleration of the transition to cashless societies globally.
Winners of the migration to e-commerce include online payment providers such as PayPal (US:PYPL). It announced a record number of new account openings in its first quarter. The emergence of omni-channel provides these players with entry into the traditional in-store payment processing market, with in-store transactions still representing close to 80 per cent of all payments.
Several of the fund’s holdings in payment processing companies continued to outperform [in May]. PayPal was a notable highlight after the company announced it expects strong recovery in payment volumes in the second quarter. In May, it rolled out a new feature on its app, which allows customers to pay for items by scanning a QR code with their smartphone, without contact with a payment terminal.
At the end of May, PayPal was Jupiter Financial Opportunities Fund’s largest holding and accounted for 5.1 per cent of its assets.
