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5 Stocks to Trend as Coronavirus Pushes Cash-Free Payment

Zacks Equity Research

Four months into the pandemic, the human race has made a cultural shift and adopted digitization. As work, education, socializing and entertainment are all restricted within the four walls of one’s home, even the timeless process of paying in currency now stands at risk.

Even two decades ago, cashless payment was a far-fetched idea. Now, even third-world countries like Nigeria have extensive access to technology and financial expertise to go cashless. This transition may require a few years if not another decade. However, the coronavirus pandemic seems to have accelerated the process.

Contactless Payment Pause Cash-Handling

In March, the World Health Organization (WHO) suggested that people should opt for cashless transactions to stem the spread of COVID-19, as the virus can contaminate currency notes. Even though WHO said later that this was misquoted, the idea got stuck with the population at large and people started migrating toward e-cash.

In fact, this lead to a massive shift, boosting online purchases and evidently helped sales spike at Amazon.com, Uber Eats and Walmart websites. This in turn has boosted the financial technology (fintech) firms at large. According to Venmo’s CEO Dan Schulman, the growth of new customers opening accounts each day is basically double of what it was before the coronavirus became a pandemic.

Even local merchants in the United States are no longer accepting cash because of health concerns. Some Chick-fil-A stores have already gone cashless and others are encouraging customers to use contactless payments through the company’s application. Per RTi Research’s coronavirus wave research data, 30% consumers are “very/extremely” worried about getting infected by coronavirus from cash.

What’s more? Payment-related infection worries go beyond cash. People are worried about ATM or POS signature screens or PIN pads and have also shown concerns about handing cards to staff at a drive-up pharmacy or bank window.

Visa recently reported second-quarter results for 2020 with earnings beating expectations. The fintech giant that focuses on growth of digital, cashless payments globally believes that the pandemic has spurred the cashless transaction trend which may yield positive results in the upcoming quarters.

Fintech Scores Beyond Money Transfer

While stores refuse to accept payment in currency for hygiene reasons, the fintech space, financial-oriented services and products will gain a far broader landscape than just money transaction. From stock trading applications to alternative lending marketplaces, to cryptocurrency and blockchain technology, the fintech industry has more to offer and is constantly developing every year.

In fact, in recent years with the growth of fintech, ancillaries to the field like financial cybersecurity companies that prevent money laundering and cybercrimes like CrowdStrike have also seen significant growth. Investors also resort to robo investment advisors like Betterment and Wealthfront to make portfolio decisions.

Stocks to Watch Out

The coronavirus health scare has lead to significant growth in cashless transaction and fintech usage, now that the majority population is making a cultural shift to digital currency. Hence, we have shortlisted five stocks to watch out as the fintech industry enjoys a booming period.

Tradeweb Markets Inc. TW builds and operates an electronic marketplace that facilitates trading of rates, credit, money markets and equities. The company’s expected earnings growth rate for the current year is 68.8% against the Zacks Financial - Investment Bank industry’s projected earnings decline of 27.1%. Tradeweb Markets flaunts a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Repay Holdings Corporation RPAY operates as a technology platform and digital payments company. The expected earnings growth rate for next year is 34.6% for the company compared with 26.3% for the Zacks Financial Transaction Services industry. Repay Holdings carries a Zacks Rank #2 (Buy).

MercadoLibre, Inc. MELI facilitates transactions on and off its marketplaces and allows merchants to process transactions via their websites and mobile application. The company’s expected earnings growth rate is 83.5% for the next quarter against the Zacks Internet - Commerce industry’s projected earnings decline of 11.1%. MercadoLibre carries a Zacks Rank #3 (Hold).

PayPal Holdings, Inc. PYPL operates as a technology platform and digital payments company. The company’s expected earnings growth rate for the current year is 7.4% compared with 2.1% for the Zacks Internet - Software industry. PayPal carries a Zacks Rank #3.

PaySign, Inc. PAYS, a Zacks Rank #3 company, provides prepaid card products and processing services. The company’s expected earnings growth rate for the current year is 85.7% against the Zacks Financial Transaction Services industry’s projected earnings decline of 12.4%.

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