Its the news
we have all been waiting for the tooth fairy and Visa have joined together to
produce an application that finally sheds light on what the tooth fairy pays. The
app will finally answer the age old question of what is the going rate for a
tooth in America! The results are based on 2,000 phone
interviews conducted as recently as July.
According to the application $3.70 is the average per lost tooth children received this
year from the tooth fairy.
Tooth fairy inflation
That's up 23 percent from the $US3.00 per tooth that the
Tooth Fairy paid out last year and $2.60 in 2011. Who said there is no
inflation! This means that the tooth fairy pays out $74 per child for a
full set of 20 baby teeth enough to buy a couple of months supplies of sweets.
Now to business
Unfortunately as adults we cannot rely on the tooth fairy we
have to rely on the other partner Visa to make money. Visa recently held its investor day, it is a triennial event and its first with the new CEO
Charles Scharf. Investor days are useful as companies release more
information than usual to investors and tend to give a three year outlook for
their business.
The big driver for Visa is the movement from cash and cheque
to card and debit. These are powerful trends (see chart below) as Visa
volumes grow even through recessions. Another driver
is eCommerce when buying on the internet you cannot pay pay cash you
tend to use cards or Paypal. Visa has 47% marketshare of the eCommerce market
in the US. Ecommerce is estimated to be between 8-10% of the US market while
other developed markets have further to go at 2-5% online penetration.
Visa has 22%
market share in the developed world with Mastercard second at 15% of overall
personal consumption expenses. Importantly the level of acceptance below in most
developed countries still has a ways to go when compared to US levels ten years ago.
The developing world is an even greater opportunity with 62% of personal transactions cash and cheque compared to 41% in the developed world. This trend
from cash and cheque to card has a long way to play out. Either way I can't
imagine a day when the tooth fairy pays electronic that's one expense that even
Visa can't shift!
Jason
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
