It's no secret that digital and cash payments have been usurping cash as a primary form of payment as consumers shift towards online shopping, curb-side pickup and delivery due to the coronavirus pandemic. Moningstar analyst Vikram Barhat recently noted that "global non-cash transactions were blooming even before the coronavirus pandemic struck. And then the pandemic further accelerated the shift to digital payments as people avoided handling cash to prevent contact and spread of infections."
As a whole, the global digital payments market is forecasted to grow from $3.89 trillion in 2019 to $8.06 trillion by 2023. Moreover, the global mobile payments market that was valued at $1.14 trillion in 2019 is projected to grow to a towering $4.69 trillion by 2025.
So far this year, financial technology stocks--better known as fintechs--like PayPal (NASDAQ: PYPL) and Square (NYSE: SQ) have soared far above the broader market, leaving behind others in the financial sector as bank stocks as low-interest rates mare the sector. The Financial Select Sector SPDR Fund (NYSE: XLF) is currently down over 16% for its year-to-date, with no relief in sight as the Federal Reserve continues its easing measures to boost economic activity amid the slowdown.
Yet, seemingly unaffected by the central bank's ongoing efforts, fintech exchange-traded funds are becoming an attractive portfolio addition, with long-term growth expected even after the pandemic. Popular fintech ETFs include:
Global X FinTech ETF (NASDAQ: FINX)
FINX follows the Indxx Global FinTech Thematic index, offers cross-sector exposure to the fintech sector. The fund focuses on themes like mobile payments, marketplace lending, crowd funding, enterprise solutions, blockchain and alternative currencies, and personal finance software. The ETF holds the majority of its weight from Software & IT Services stocks, with its top 10 holdings include Square, PayPal, Intuit (NASDAQ: INTU), and Fidelity National Financial (NYSE: FNF).
ARK FinTech Innovation ETF (NYSE: ARKF)
ARKF is an actively-managed ETF that follows innovators in the fintech sector, focusing on themes like transaction innovations, blockchain technology, risk transformation, frictionless funding platforms, customer facing platforms, and new intermediaries. While the majority of its holdings are within the Software & IT Services sector, the fund also holds a large amount of Investment Banking stocks. ARKF's top ten holdings include MercadoLibre (NASDAQ: MELI), Zillow Group (NASDAQ: ZG), Pinterest (NYSE: PINS), and Tencent Holdings (OTC: TCEHY).