My Favorite Trend of All

Oct 09, 2021

This is my favorite trend in all of the markets right now.

The battle lines have been drawn, and consumers are already signaling who will lose… and who will win big.

The battle is between legacy payment providers (banks, brokerages, credit cards) and digital wallet platforms like Square (SQ), PayPal (PYPL), and Coinbase (COIN).

And the early results are incredible.

Just look at this chart of the Consumer Happiness levels for digital wallet platforms (green) and legacy payment providers (maroon):

What is driving success and future growth for these platforms?

  1. Ecosystem Vision
  2. Macro Trend Leverage

Last week LikeFolio readers learned how PayPal is making inroads into Square’s ecosystem dominance, thanks to improvements in its Venmo platform.

Now we’re unpacking the major trends driving digital wallet usage higher, including a shift to buy now, pay later (BNPL) services versus traditional credit cards.

Digital wallet usage Mentions are at all-time highs and have increased +196% YoY.

These digital ecosystems offer many traditional services like direct deposit and debit card functionality… and now they’re tapping into a major emerging market.

PayPal offers a “Pay in 4” option on its namesake platform and had expressed plans to expand BNPL functionality to Venmo in 2020. So far, BNPL functionality on Venmo remains to be seen. However, it’s clear the company is serious about the service. Last month PayPal announced plans to purchase Japanese BNPL firm Paidy for $2.7 billion.

This follows moves by Square, which is acquiring Afterpay in a $29 billion all-stock deal.

As of June 30, Afterpay boasted more than 16 million consumers and 100,000 merchants globally.

It’s easy to see how this growing consumer macro trend could translate to growth for wallet platforms facilitating these types of transactions.

We’ll be keeping a very close eye on digital payment platforms, looking for breakout success stories that are truly disrupting the industry and gaining favor with consumers.

As always, LikeFolio members will be the first to know when we spot big, new opportunities in this incredible growth story.

Andy Swan,
Founder, LikeFolio