Overview

Index description

The Thematic Payments Innovation Index (TPAIN) tracks the performance of companies innovating all over the world. The index was developed by experienced payment operators that built the payment systems at Airbnb, PayPal, Brex, and Plaid. The companies included were selected for their best-in-class product offerings for these high-growth use cases - from consumer payments to business to business, from credit underwriting to payments infrastructure. The index constituents have a multi-year track record of innovating in the payments industry at least one of the following ways:

Increasing the breadth of online and/or offline commerce while lowering transaction friction
Creating new products and services to capture new markets
Improving existing use cases through the development of disruptive technologies
Increasing financial access and economic opportunity

Index creators

The Payments Innovation Index was created by the team at Thematic. Prior to Thematic, the team built the global payments infrastructure at Airbnb, processing tens of billions of dollars per year, across 192 countries and 70+ currencies. The team also has deep fintech product and engineering experience from Dropbox, Brex, Plaid, PayPal, Eventbrite, and Blackrock.

Index thesis

We created this index to track the performance of the best-in-class payments products created by the most innovative payments companies all over the world. We believe that this cohort of companies has the potential to create outsized value and investment returns over a reasonable time horizon, based on their product and technical leadership. Based on our team’s decades of experience building consumer and business products in the payments industry, we have seen firsthand the rapid shift in industry trends, facilitated by technology, scaled to different parts of the world.

Historically, change and innovation in the payments industry progressed slowly. In the United States, the payments industry was dominated by banks and card networks with little incentive to make sweeping improvements. In the last 20 years, however, the pace of innovation has increased dramatically. The rise of the internet and ecommerce ushered in a new era of innovation. PayPal began in 1998 as a trusted way to buy things on a digital marketplace - eBay - and has grown to over 400 million accounts and over a trillion dollars processed in a year. In the last 10 years, mobile devices and mobile operating systems have exploded, allowing payments innovation to leapfrog card-based networks in different parts of the world. Globally, mobile commerce volume has more than tripled since 2018, to over $3.5T in 2021.

The payments industry is also rich with global diversity. Each country and region has its own unique culture around money, and therefore around payments. Therefore, there are few players that dominate globally - instead, there are dozens of regional giants that have come to prominence in the last decade, and hundreds more companies on the rise.

Eligible security criteria

All companies in the index are publicly traded securities that:

Derive a majority (greater than 50%) of its revenue or market value from new and emerging forms of payments infrastructure, technologies, workflows, use cases, and distribution
Have stated its primary business to be in products and services focused on the advancement of payments
At least one payment innovation launched and scaled over a 3 year period, where “innovation” is defined as:
- Notable improvement in solving for an existing use case
- Solving for a new use caseExpansion of a regional payment solution to other regions
- Significant technology advances that improve payments speed, operations, or reduce cost

In addition, we will use the following company fundamentals as criteria for filtering and selecting companies for the index.

Market Capitalization	Each security’s market capitalization must, on average, maintain no less than $250m USD during the 3 months prior to index inception, or during the quarterly rebalancing period.
Liquidity (ADDTV)	Each security must have a three-month ADDTV (average daily dollar trading volume) of at least $250m USD.
Float	At least 25% of a security’s total shares outstanding must be publicly available for trading (float shares).
Seasoning	Each security must have traded for at least three months on an index-eligible exchange prior to the Reconstitution reference date. Note: for securities that become public through a SPAC, the seasoning period will end 3 months from the “de-SPAC” date.

Additional eligibility requirements

Eligible security types generally include common stocks, ordinary shares and depositary shares.
One security per issuer is permitted.
If an issuer has multiple securities, the security with the highest three-month average daily dollar trading volume (ADDTV) will generally be considered for possible inclusion in the Index.
A security must be listed on an Index Eligible Global Exchange.
If, at reconstitution, Thematic becomes aware that an issuer or security will soon undergo a fundamental change that makes it ineligible, it will be removed from consideration. This includes entering into a definitive merger or acquisition agreement or other pending arrangement that would make it ineligible for Index inclusion, or a filing of bankruptcy or similar protection from creditors.

Index characteristics

Weighting

The Thematic Payments Innovation index is an equal weighted index, where each constituent contributes 1/n of the value of the index; n being the total number of constituents. We believe that the equal weighted methodology puts securities at the same level, across geographies and currencies, thus reducing bias. Equal weighted methodologies are more appropriate for growth securities.

Return

The index is inclusive of total returns - dividends and other returns will be reinvested into the index or held as “cash value” until the next rebalancing date. The index return does not account for fees or tax withholding.

Index calendar

Reconstitution	Schedule	The Advisory Board will select constituents each quarter, in March, June, September, and December.
	Reference dates	The Security Eligibility Criteria are applied using market data as of the end of February, May, August, and November respectively.
	Announcement dates	Index Reconstitution changes are announced in early March, June, September, and December.
	Effective dates	Index Reconstitution changes become effective at market open on the trading day after the third Friday in March, June, September, and December, respectively.
Rebalancing	Schedule	The Index is rebalanced quarterly in conjunction with the Index Reconstitution in March, June, September, and December.
	Reference dates	The rebalance uses market data as of the end of February, May, August, and November respectively.
	Announcement dates	Index Rebalance changes are announced in early March, June, September, and December.
	Effective dates	Index Rebalance changes become effective at market open on the trading day after the third Friday in March, June, September, and December, respectively.