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Fidelity's (FIS) Guaranteed Payments to Aid Merchant Solutions

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Fidelity National Information Services, Inc. FIS recently announced that it has launched the Guaranteed Payments solution. The integrated solution is expected to provide merchants with higher e-commerce transaction approval rates, thus relieving them from financial liabilities of chargebacks related to fraudulent purchases.

The financial technology provider claims to be the only one offering such a program to merchants. Per FIS, nine of 10 merchants lost revenues in 2021 due to fraud payments. Of the total online payments, fraud accounts for only around 1%, yet merchants have to reject 9% of total orders to avoid frauds. This induces a revenue loss of around $443 billion. The latest solution from the payments processor will likely help merchants increase revenues.

The move from FIS is expected to create a smooth path for increased alignment between preventing frauds and guaranteeing revenues. The program will leverage the data prowess of Worldpay and the Signifyd Commerce Network to deliver higher merchant approval rates and guaranteed chargeback protection. The solution comes at an opportune time when the e-commerce market is witnessing tremendous growth, globally. Fidelity expects the e-commerce market to expand 50% by 2024.

The Guaranteed Payments solution is expected to equip merchants with the ability to decrease false fraud declines through transaction intelligence and machine learning. This will likely help the clients provide better experience and improve customer retention, triggering higher top-line conversion. Such a lucrative product can pull more merchants on FIS’ platform and fortify its footprint in the market.

The new offering will likely lead to increased transaction volumes and improve FIS’ Merchant Solutions segment’s revenues, which took a hit last year from Omicron-led reduction in small- and medium-sized business and travel volumes. The Merchant Solutions unit contributed 32.4% to revenues in 2021.

Price Performance

Shares of Fidelity have decreased 5.8% in the past three months compared with the 12.3% fall of the industry.

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Zacks Rank & Key Picks

Fidelity currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader businessservices space are International Money Express, Inc. IMXI, Paysafe Limited PSFE and EVERTEC, Inc. EVTC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Headquartered in Miami, FL, International Money Express provides money remittance services. The Zacks Consensus Estimate for IMXI’s 2022 earnings indicates a 17.7% increase from the prior-year reported number.

Based in London, Paysafe is a digital commerce solution provider for different types of businesses. The Zacks Consensus Estimate for PSFE’s second-quarter earnings indicates a 175% increase from the prior-year reported number.

San Juan, Puerto Rico-based EVERTEC boasts a lucrative transaction processing business. The Zacks Consensus Estimate for EVERTEC’s 2023 bottom line indicates 5.6% growth from the prior-year reported number. EVTC’s earnings beat estimates in three of the last four quarters and met the mark once, the average surprise being 16.9%.

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Fidelity National Information Services, Inc. (FIS) : Free Stock Analysis Report
Evertec, Inc. (EVTC) : Free Stock Analysis Report
Paysafe Limited (PSFE) : Free Stock Analysis Report
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