As I fumbled through my wallet, looking for enough cash to pay for my Big Mac, I could feel the eyes on me.
Everyone else in line, I realized, was paying for their meals with their smartphones. In fact, nobody in the Hong Kong restaurant was even carrying a wallet...
When I sat down to eat, an advertisement on my placemat encouraged diners to download the McDonald's app to pay for their meals with a simple scan. You didn't even need to walk up to the cashier to place your order.
It was a snapshot of a moment. But I quickly realized that it was just the tip of the iceberg.
Over the next few years, this idea will go global. And it all starts with two companies leading the way in China...
During our trip last month, we saw firsthand how little cash was changing hands in some of the country's largest metropolitan cities.
In Beijing, some restaurants at a nearby mall food court politely turned us away for trying to use cash.
The city's countless rental bikes cost just $1 for a 30-minute ride. But they didn't have a slot for coins or credit cards. Instead, you scan the quick-response ("QR") code with your smartphone, and off you go.
Amazingly, the QR code technology makes it possible for anyone to receive payments. Long gone are the days of beggars standing on the corner with a cup full of coins... or street musicians with their guitar cases open. Now, they simply display a unique QR code. Passersby can send a payment without hardly slowing down...
WeChat generates a unique, scannable QR code for every user
Two years ago, less than one in six Chinese people were using mobile payments. Research firm Statista says that by 2022, that number will triple to more than 47%... And in a country of 1.4 billion citizens, that means more than 650 million people will buy with their smartphones.
That's twice the entire U.S. population.
Yet this growth makes sense. Cellphones caught on lightning-fast in China. From 2000 to 2016, China went from 85 million cellphone subscriptions to more than 1.3 billion... a 1,400% increase. And more than 55% of China's cellphone users have smartphones today.
As I said, this is only the tip of the iceberg. Mobile payments should make up a much bigger portion of the global e-commerce market over the next few years...
This will be a big, unstoppable trend over the next several years. It's already started. And China is way ahead of the game.
Even better, you can already pick out the big winners in China...
Here in the U.S., dozens of companies make up the mobile-payments market. Consumers can send money through PayPal, Venmo, Google Pay, Apple Pay, Samsung Pay, and dozens of other services.
But just two companies control 93% of China's market: Alibaba (BABA) and Tencent (TCEHY).
Regular DailyWealth readers are familiar with Tencent, which Steve predicted would soon be the largest company in the world in 2016. Tencent's WeChat Pay has roughly 900 million monthly active users, while Alibaba's Alipay service has more than 500 million of its own.
Alipay and WeChat Pay are even making headway in the U.S... In Las Vegas and New York City, tens of thousands of taxi cabs now accept them as a form of payment. And last year, some of the vendors at various Caesars Entertainment properties in Vegas started accepting WeChat Pay for everything from booking hotel rooms to buying food or tickets to shows.
As China's population continues to turn to mobile payments instead of credit cards, personal checks, or cash, Alibaba and Tencent stand to benefit the most.
And from what I've seen on the ground in China, it's not too late to get in on this rapidly growing megatrend...
Good investing,
Sam Latter
Editor's note: As China draws an ever-greater slice of the pie, beginning this summer... billions of dollars will be legally required to flow into Chinese stocks. President Trump can't stop this. Neither can a "trade war." The longer-term story in China is inevitable and unprecedented. And folks who get in early could make a fortune over the next few years. After our trip to China, Steve put together a presentation detailing this incredibly powerful trend... Watch it here.
Further Reading
Last month, Sam provided more "boots on the ground" reporting from China... including some eye-popping numbers about its real estate market. Catch up on the story here: A Huge Tailwind for These Stocks That You Haven't Heard About.
With Chinese stocks pulling back sharply over the past several weeks, Steve recently shared an urgent update with DailyWealth readers. Get the full story here: An Urgent China Investing Update.
In less than five years, your kids won't carry wallets. They won't carry cash. They won't carry credit cards...
GLOBAL CONSUMERS HAVE CASH TO BURN ON ENTERTAINMENT
Today, we're highlighting one of our favorite gauges of consumer confidence...
Regular DailyWealth readers know we look at several sectors that show us how the U.S. economy is doing. When people are buying leisure items like swimming pools and luxury cars, it's a sign that consumer confidence is strong. Today, we take look at a rise in entertainment spending – both in the U.S., and worldwide...
Live Nation (LYV) is a global events promoter and venue operator. It claims more than 200 venues worldwide, including clubs, theaters, stadiums, and festival sites. Live Nation's venues are increasingly popular... In fiscal year 2017, 86 million people attended Live Nation concerts. That's up 20%-plus over the year before. And it's a sign that folks have more money to spend on concert tickets...
As you can see in the chart below, Live Nation is trending higher. Shares are up more than 200% over the past five years, and they recently hit an all-time high. It's a sign that things are still going well in the global economy...
