One of the stronger performers in the Stocks Under $10 portfolio thus far in 2017 is USA Technologies (USAT) . Year to date, the shares are up more than 45% and consumers continue to embrace digital payments in general and more specifically with USA Technologies at unattended point-of-sale vending machines and kiosks.
This week we received a number of 2017 holiday shopping forecasts that on average call for holiday sales to climb 3.5% to 4% vs. 2016. Under the hood, however, e-commerce holiday sales are expected to climb 11%-16%, fueled in part by mobile shopping. All told, mobile shopping is slated to account for more than one-third of 2017 holiday e-commerce sales this year.
Again, that’s this year and if we strap on our forward-looking thinking caps, there are a variety of reasons why mobile payments will continue to take share vs. debit and credit cards as well as cash and checks. From greater ease of use as more retailers accept mobile payments, to security-related concerns, as well as the desire to crack down on graft and rein in costs associated with paper currencies, there are several forces at work. In India, for example, after Prime Minister Narendra Modi’s government moved last year to take 86% of currency out of circulation to curb corruption and expand the addressable tax base, mobile payments exploded.
The inadequate banking infrastructure relative to India’s population is, of course, another factor spurring mobile payment adoption. Recent data show the number of bank branches per 1,000 Indian adults clocks in around 18.7 in urban markets vs. 7.8 in rural ones, while the country has all of 222,000 ATMs for a population of more than 1.3 billion. By comparison, the U.S. has 425,000 ATMs for its 323 million people. How about this for some perspective — for India to have the same level of AMT saturation as the U.S., the country would require over 200 million more ATMs! Why would India install what is likely to be yesterday’s technology that requires legacy infrastructure when it is deploying 4G wireless networks?
We digress … now back to mobile payments overtaking debit and credit cards….
