Well before the novel coronavirus upended the manner with which we conduct business, PayPal (NASDAQ:PYPL) was long on its way to reinforcing the shift toward a cashless society. Leveraging years of digital payment know-how, PayPal stock has been a consistent winner since spinning off from eBay (NASDAQ:EBAY). All indications suggest that shares will keep on driving forward.
First and foremost, PayPal stock benefits from the convenience factor. If you look at consumer technology today, it’s all about consolidating multiple functionalities into as few platforms as possible. Looking out into the future, we’ll likely not need to carry anything but our smartphone. However, to achieve such true “cashless-ness,” we must have a robust network of digital payment applications.
Obviously, this is where PayPal fits in perfectly.
Second, the statistics speak for themselves. According to a Harvard Business Review publication one year ago, “cash represented just 30% of all payments in 2017. Furthermore, 68.7% of U.S. households had a credit card in 2017 vs. 63.8% in 2015.” Simply, the need to carry cash and loose change is declining as society adapts to this transition.
And adapt they must. Sure, some businesses operate on a cash-only basis, in large part to avoid credit card transaction fees. However, with greater economies of scale, this issue becomes less prominent. Also, companies must respond to these wholesale consumer shifts or risk becoming antiquated. Fundamentally, this supports the overall narrative for PayPal stock.
Thus, if we didn’t suffer from this pandemic, I would wholeheartedly pound the table on PayPal. But the coronavirus makes this story even more compelling. Here are three reasons why.
Luckily for PayPal Stock, Cash Isn’t King in a Pandemic
When the virus first started making an unfortunate impact in the U.S., millions had the same question: how long does the coronavirus live on various surfaces? As the movie Contagion reminded us — and I know you know what I’m talking about — we touch all kinds of things every day.
According to Healthline.com, the coronavirus can be detected on different types of surfaces. The time frame ranges from a few hours to several days. But like anything related to this terrible virus, we just don’t know much. In this case, detection doesn’t necessarily mean viability.
However, many people have elected to adopt the “precautionary principle” toward handling cash. Admittedly, science doesn’t know definitively if touching coronavirus-compromised cash will lead to our infection. Similarly, science doesn’t know if lobsters feel pain when boiled alive. Therefore, it’s best to err on the side of caution.
Believe me, we’re not just talking about folks wiping down their groceries with Lysol. Rather, the Federal Reserve delayed “processing dollars that have been repatriated from Asia. The Louvre Museum in Paris isn’t accepting cash from visitors. And Iran has urged its citizens to stop using bank notes over fears the coronavirus can be transmitted to humans through contaminated objects like cash.”
Collectively, our mitigated actions may have at least a semi-permanent effect on our psyche. And that psychologically helps the case for PayPal stock.
PayPal Has an Opportunity to Help the Unbanked
Although society’s quick embrace of digital and card payments may have contributed to mitigating the spread of the coronavirus, going cashless isn’t an effective solution for many communities.
According to a CNBC report, 25% of “U.S. households are unbanked or underbanked.” Further, more than half of unbanked households stated that they did not have enough money to keep in an account. That is a significant percentage of the population and one that could easily worsen due to this crisis.
However, this is also the type of opportunity that PayPal has long envisioned. Thanks to the progress of fintech, it has never been easier to provide payment and financial services to those who have been historically left out of the banking system. With a mobile device, anybody can have access to such services.
And because of the coronavirus, the idea of a traditional bank may eventually fade out. As I mentioned earlier, consumer tech has driven consolidation to where a person only needs one device to conduct their business and transactions. So, the unbanked or underbanked of today may be a step ahead of the game. Eventually, this could be a huge catalyst for PayPal stock.
One of the Biggest Transitions of Them All
As you know, there’s not much to cheer about in 2020. However, if Americans had to pick something, it would be the wholesale, rapid-fire move to remote work.
Due to the infectiousness of Covid-19, most companies didn’t want to take chances with their employees. Also, for most states, their governors’ offices took matters out of most organizations’ hands. For a brief moment, we were all united in defeating this invisible enemy.
Today, things have changed. What hasn’t changed for many workers, though, is their remote operations. Millions are still typing away at their keyboards from home and jumping on teleconferencing platforms like Zoom Video Communications (NASDAQ:ZM).
Not surprisingly, the New York Times reported that many employees want to hold onto the benefits associated with remote work. To be honest, I’m not sure how many companies will go for that transition permanently. Nevertheless, those who are dead set on this newfound lifestyle may join the gig economy en masse.
And if that occurs, I couldn’t think of a better marketing pitch for PayPal stock. With the underlying platform’s intuitiveness, it screams gig economy. Therefore, keep a watch on this trend as you mull entering PayPal.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.
