Over the past decade, online shopping, fast money transfers, and cross-border transactions have all contributed to the fintech boom. However, the pandemic has driven the digital payments space, mainly pushing towards a cashless society. From small grocery stores to delicatessens (or delicatessens) and gas stations, the megatrend of tap-and-pay has driven fintech stocks up.
At the start of the pandemic, a PaymentsJournal survey showed that 51% of U.S. shoppers started using mobile / digital wallets and other tap-to-go credit / debit card facilities. The survey also showed that others were likely to adopt digital payment methods as the pandemic threatened cash transactions. The use of QR codes has gained ground in several mature markets, including the United States. Large retailers like CVS, 7-Eleven, Whole Foods, Starbucks & Target accept transactions based on QR codes. More importantly, these codes provide a low cost merchant acceptance platform that has helped small retailers immensely. Plus, it helps identify untaxed sellers.
The global financial technology (fintech) market is expected to reach an approximate market value of $ 324 billion by 2026, at a CAGR of 23.4%, according to a Market Data Forecast report. Specifically, according to a MarketsAndMarkets report, the size of the global contactless payments market is expected to grow from $ 10.3 billion in 2020 to $ 18.0 billion by 2025, at a CAGR of 11.7%. And ease of use, low cost of deployment and mobility will be the main benefits that will drive growth and adoption.
There are several other components to the fintech canopy such as cryptocurrency, online and mobile banking, online and peer-to-peer lending, person-to-person payments, software and financial services. But digital payment is one of the most attractive new normal trends that customers have embraced and will continue to use even in the future. Better authentication controls, centralized customs clearance and networks will make payment technologies inexpensive and lead to massive acceptance of this rapidly growing payment technology.
Offers Boost the FinTech space
Mergers, acquisitions and financings continue to support the fintech space. Recently, Square, Inc. SQ has reached a deal to acquire Australia-based “buy now, pay later” provider Afterpay for a $ 29 billion stock deal. Afterpay allows retailers to offer the option of paying for products in four interest-free installments if customers pay on time. The acquisition which was announced on August 2 and is expected to close in the first quarter of 2022 and is a tough competition to compete with PayPal’s Venmo.
The digital payment space in the global market is also growing rapidly. Recently, Indian digital payments giant Paytm made an initial public offering, planning to raise up to $ 2.2 billion. The company is already backed by Ant Financial, Berkshire Hathaway, SoftBank and others and competes with Google Pay in India.
5 stocks to watch
The emergence of online / digital wallets and smart card readers (enabling tap-and-pay services) has helped people go cashless and even existing credit and debit cards are using technology to deliver faster and more reliable services for everyday use. Based on these positive elements, we have selected five fintech stocks that investors should watch out for.
Global Payments Inc. GPN provides payment technologies and software solutions for card, electronic, check and digital payments. The company reported second quarter 2021 earnings of $ 2.04 per share on Aug. 2, down from $ 1.31 in the same quarter last year.
The company’s expected profit growth rate for the current year is 27.5% compared to Zacks’ financial transaction services industry’s projected profit growth of 24%. Zacks’ consensus estimate for the company’s current year earnings has been revised up 1.8% in the past 60 days. Global Payments currently holds a Zacks Rank # 2 (Buy). You can see The full list of today’s Zacks # 1 Rank (Fort Buy) stocks here.
Shift4 Payments, Inc. FOUR provides integrated payment processing and technology solutions. The company reported profit of 22 cents for the second quarter of 2021 and raised its annual forecast to $ 175-180 million. This Zacks Rank # 2 company’s expected profit growth rate for the current year is over 100% compared to the projected 24% profit growth for Zacks’ financial transaction services industry. Zacks’ consensus estimate for the company’s current year earnings has been revised 60% upward in the past 60 days.
Western Union company WU provides money movement and payment services. The company reported earnings of 48 cents per share in the second quarter of 2021, beating Zacks’ consensus estimate by 2.13%. He reiterated his financial outlook for revenue growth for 2021 and his remaining measures on an adjusted basis. Zacks-owned financial transaction services company has a projected profit growth rate of 11.2%. Zacks’ consensus estimate for the company’s current year earnings has been revised nearly 1% up in the past 60 days. Western Union currently holds a Zacks Rank # 2.
PayPal Holdings, Inc. PYPL operates as a technology platform and a digital payment company. The company reported $ 1.15 per share in second quarter 2021 earnings, beating Zacks’ consensus estimate by 1.8%. The company’s expected profit growth rate for the current year is 21.9% compared to the Zacks Internet – Software industry’s projected profit growth of 2.8%. Zacks’ consensus estimate for the company’s current year earnings has been revised up 4.1% over the past 60 days. PayPal currently carries a Zacks Rank # 3 (Hold).
Square creates tools that allow sellers to accept card payments; also provides reports and analysis, as well as a next day settlement. The expected profit growth rate of this Zacks Rank # 3 company for the current year is over 100% compared to the projected profit growth of the Internet – Zacks Software industry of 2.8%. Zacks’ consensus estimate for the company’s current year earnings has been revised up 18.7% in the past 60 days.
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The Western Union Company (WU): Free Stock Analysis Report
Global Payments Inc. (GPN): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Square, Inc. (SQ): Free Stock Analysis Report
Shift4 Payments, Inc. (FOUR): Free Inventory Analysis Report
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