Payment Revolution Continues to Boost Fintech: 5 Top Picks
The coronavirus pandemic has reshaped the fintech space, boosting digital payment and online banking across the globe. The mass population has shifted from currency notes to tap-and-pay modes, as it lowered the risk of virus transmission. From e-commerce giants to minuscule brick and mortar retailers, the need for digital payment systems is growing constantly.
Digital payments have been popularized as they allow consumers to quickly, conveniently, and inexpensively send money across the globe. Additionally, areas like business-to-business payments are bringing a revolution in payment methods. Companies like AvidXChange, MineralTree, and Billtrust target invoicing and payment processing. With the help of artificial intelligence (AI), fintech companies are helping even small-scale businesses to automate and remove labor-intensive paperwork. Rather than having employees manually process every invoice/payment, AI-based automated systems are handling these functions or routines all at once, and letting the staff take care of problematic transactions and concentrate on customer-centric approaches.
Trends like cryptocurrency, online and mobile banking, online and peer-to-peer lending, person-to-person payments, financial software, and services will continue to boost the fintech space, even if the economy goes back to the pre-pandemic stage. And, why not? Mobile applications such as Amazon Pay, Square, and PayPal are replacing bank cards (both credit and debit cards), while cryptocurrencies are gaining importance and may become a usual means of payment like fiat money.
Additionally, technological advancements have mitigated issues like cybersecurity with respect to digital financial transactions. While AI helps in detecting fraud, clearing and settlement, digital identity, and payments, cloud computing aids in removing paper-based systems in business-to-business payments.
The fintech space is also getting a boost from new startups, IPOs, and mergers. Robinhood, which went public this July, had gained more than 50% within a month. Another fintech startup, Toast, an all-in-one point-of-sale and restaurant management & payment platform for the food service and hospitality space, seeks to raise $18 billion in IPO by selling 21.7 million shares priced between $34 and $36 each.
Earlier in September, fintech startup Pagaya Technologies Ltd., announced that is going public through a merger with a special-purpose acquisition company, EJF Acquisition Corp., with the deal valued at about $9 billion.
Overall, fintech companies are evolving constantly, from compromising transaction fees to draw in merchants to payment ecosystems, to building out easy two-sided platforms for merchants and consumers. Per a Market Data Forecast report, fintech services have a global adoption rate of 25%, which includes banking and payments, financial management, financing and insurance. In fact, the global fintech market is expected to reach $324 billion by 2026, at a CAGR of 23.4% between 2021 and 2026.
5 Top Fintech Picks
The explosion of fintech is not surprising, all the more, the tech-savvy millennial is driving the massive change in banking and financials. They are not only adopting mobile banking and tap-and-pay services but also forcing brick-and-mortar banks to become tech-enabled to make transactions easier. Given the change in trends and fintech’s positive outlook, we have shortlisted five stocks that can make the most.
MercadoLibre, Inc. MELI operates online commerce platforms. Its Mercado Pago payments platform also processes payments outside MercadoLibre’s e-commerce platform.The company's expected earnings growth rate for the current year is more than 100% compared with the Zacks Internet - Commerce industry’s projected earnings growth of 13.5%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised more than 100% upward over the past 60 days.
MercadoLibre currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Visa Inc. V operates as a payment technology company. It offers VisaNet, a transaction processing network that enables authorization, clearing, and settlement of payment transactions. In August, the company purchased $150,000 worth CryptoPunk 7610, non-fungible token (NFT) commerce from Larva Labs. Visa believes that these NFTs will play an important role in the future of retail, social media, entertainment, and commerce.
The company that belongs to the Zacks Financial Transaction Services industry has a projected earnings growth of 15.5% for the current year. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 3.6% upward over the past 60 days. Visa currently holds a Zacks Rank #2 (Buy).
Green Dot Corporation GDOT operates as a financial technology and bank holding company. It offers a banking-as-a-service (BaaS) platform used by giants like Apple, Uber, and Stash. This Zacks Rank #2 company that belongs to the Zacks Financial Transaction Services industry has a projected earnings growth of 6.2% for the current year. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 5.2% upward over the past 60 days.
Global Payments Inc. GPN provides payment technology and software solutions for card, electronic, check, and digital-based payments. The company's expected earnings growth rate for the current year is nearly 28% compared with the Zacks Financial Transaction Services industry’s projected earnings growth of 19.3%. The Zacks Consensus Estimate for this Zacks Rank #2 company’s current-year earnings has been revised nearly 2% upward over the past 60 days.
LendingClub Corporation LC provides a range of financial products and services through a technology-driven platform. The company boasts more than 3.5 million members, deep data capabilities, and an efficient operating platform. In the second quarter of 2021, LendingClub’s revenues more than tripled to $204.38 million.
The company's expected earnings growth rate for the current year is 92.2% compared with the Zacks Financial - Miscellaneous Services industry’s projected earnings growth of 20.5%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.8% upward over the past 60 days. LendingClub currently carries a Zacks Rank #2.
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Visa Inc. (V) : Free Stock Analysis Report
Global Payments Inc. (GPN) : Free Stock Analysis Report
Green Dot Corporation (GDOT) : Free Stock Analysis Report
MercadoLibre, Inc. (MELI) : Free Stock Analysis Report
LendingClub Corporation (LC) : Free Stock Analysis Report
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