ETF Buys into Cashless Consumption

09/28/2015 9:00 am EST

Focus: STOCKS

Chris Versace

Editor, PowerTrend Bulletin, Growth & Dividend Report, and PowerTrader

One PowerTrend that is getting much more visibility these days is my Cashless Consumption PowerTrend, explains Chris Versace, editor of PowerTrader.

Most of us are using credit and debit cards and MasterCard (MA) and Visa (V) are very happy every time you swipe one of their cards.

We've also seen some movement toward mobile payments with the Google Wallet from Google (GOOGL), while Apple (AAPL) introduced Apple Pay almost a year ago.

Nearly two-thirds of consumers are now at least somewhat familiar with Apple Pay. More recently, eBay (EBAY) spun-out PayPal (PYPL).

And while many people tend to view PayPal as an Apple Pay competitor, the reality is its services are part of the mechanism that Apple, Airbnb, Uber, and others use in clearing transactions.

More banks are adding Apple Pay services and Apple is expected to add gift cards as well as loyalty cards, which should help drive both acceptance and consumer adoption.

From an ETF perspective, I recommend PureFunds ISE Mobile Payments ETF (IPAY), which debuted in mid-July and counts Visa, MasterCard, American Express (AXP), and PayPal among its top holdings.

On a combined basis, those four positions account for 24% of IPAY’s overall holdings.

The fund should also get a boost on the news that Starbucks (SBUX) will start accepting Google’s Android Pay.

In other bullish news, Ferguson Hill, PayPal’s senior vice president of consumer operations, scooped up more shares. Insider buying is always a favorable sign, as we like to see management voting with its dollars.

Much like Apple shares, as we head into the holiday season, all forecasts call for a pick up in online and mobile payments as consumers continue to shift toward online shopping for their gift giving needs.

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