An ETF for the Times? Capture Digital Payments with 'DAPP'

Social distancing measures during the pandemic only accelerated growth in the financial technology (fintech) space. As such, the environment is rife for digital payments via the VanEck Vectors Digital Transformation ETF (DAPP).

One of DAPP’s holdings is payment processing company PayPal, which saw posted a monster 2020.

“The fintech giant had a record year as the pandemic drove shoppers from stores,” a Time article said. “Instead, they bought groceries, movies and underwear on their phones and computers. PayPal does business in more than 200 countries and deals in more than 100 currencies.”

“It did a staggering amount of business last year, processing transactions at a rate of 1,000 per second during the peak holiday shopping season,” the article added. “In total, PayPal processed 15.4 billion payments, with a value of $936 billion last year.”

DAPP seeks to track the price and yield performance of the MVIS Global Digital Assets Equity Index, which is a rules-based modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of companies involved in digital assets.

As the Index is designed to be a pure-play overview of the relevant players in the space, to be eligible for inclusion, a company must generate at least 50% of its revenues from digital assets projects; generate at least 50% of its revenues from projects that, when developed, have the potential to generate at least 50% of their revenues from digital assets or digital asset projects; and/or have at least 50% of its assets invested in direct digital asset holdings or digital asset projects.

The Index provides significant exposure to key companies in mining, hardware, exchanges, holding and trading, payment gateways, patents and services, and banking. DAPP will not invest in digital assets (including cryptocurrencies) directly or indirectly through the use of digital asset derivatives.

PayPal’s Tremendous Growth

While DAPP is certainly relevant at present, the fintech space was already seeing strong growth prior to the pandemic.

“There were two things that dramatically accelerated the trend of digital payments by as little as three years and maybe as much as five years,” said Dan Schulman, president and CEO of PayPal. “And by the way, that’s just continuing to grow at an accelerating rate. The first is, we had no choice. We were all quarantined in our homes. We needed to live. We needed to buy things, and everybody had to buy things online. Eventually that turned from this necessity to convenience. People realized, you don’t have to wait in line at a cashier; it can be delivered whenever you want, you have more choice, more different deals.”

‘No. 2 is everything started to go digital, even in-store, because of hygiene,” Schulman added. “People wanted to be sure that they could protect their cashiers, and customers wanted to be sure that they were going to be safe.”

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