Private Equity Firms Invested in Digital Payments

The online shopping industry is the next frontier for huge returns on investment.

As technology in the e-commerce arena becomes more sophisticated, private equity firms are taking an increasingly strong interest in the likelihood of a cashless economy in the near future.

Global e-commerce is in touching distance of the $3 trillion milestone. The tipping point is expected this year with ‘mobile proximity’ payments expected to accrue $53 billion in 2019.

As a matter of fact, EMarketers predicts online transactions will account for more than 16% of global retail sales by 2021 – totalling $4.48 trillion.

The rapid growth will be helped by changes to industry regulations that are designed to encourage payment systems to collaborate and improve security and boost customer confidence.

Payment processing firm Worldpay was recently acquired by Fidelity National Information Services for $43bn. The deal is the latest in a long line of mergers with payment gateways.

Blockchain Payment Systems

The next logical step for digital transactions is blockchain networks like the one launched by IBM in March.

JP Morgan became the first investment bank to launch their own cryptocurrency earlier this year and numerous other banks have shown an interest in developing a “stable” coin that will be used across a World Wire network.

Distributed ledger technology enables low-cost cross border payment and introduces greater liquidity into global markets. The strategy is also designed to enhance security for users and facilitate transparency and accessibility.

Blockchain technology binds real-world investments whilst providing an extra layer of security to assets. The immutable ledger and smart contracts ensure ownership of investments remain secure and contractual obligations are fulfilled.

With the head of the International Monetary Fund, Christine Legarde, urging governments to offer their own cryptocurrencies, the rapid expansion of financial services will flood across every industry.

PEA is a forward-thinking fund administrator specialising in alternative fund structures. With offices in Guernsey, Sweden and Denmark, we are already starting to see the shift towards digital payments and cryptocurrencies. Contact our team for valuable insights.

James Orrick James Orrick holds a Masters in Corporate Governance from Bournemouth University, a BSc (Hons) in Accounting and Finance from the University of Essex, is a Fellow of the Association of Chartered Certified Accountants and the Institute of Chartered Secretaries and Administrators.

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