Digital and contactless payment options have been around for more than a decade. But the COVID-19 pandemic has accelerated the adoption of digital payments because associated lockdown conditions have forced consumers broadly to rely on online transactions for e-commerce, payment networks, online lending, money transfers, business-to-business payments, personal finance, and banking…
Last year was a difficult one for the financial sector in general, but the fintech (short for financial technology) industry did relatively well. The industry is fast transforming the U.S. financial sector and has exploded in terms of growth with the evolution of digital payment-processing solutions. Consequently, prominent players such as PayPal Holdings, Inc. (PYPL – Get Rating) and Square, Inc. (SQ – Get Rating) have been rewarded handsomely by investors.
The increasing dependence on fintech companies has helped their stocks outperform the market significantly. This can be seen in ARK Fintech Innovation ETF’s (ARKF) more than 100% gains over the past year, versus SPDR S&P 500 ETF Trust’s (SPY) 14% returns. PYPL and SQ returned 113.1% and 227.6%, respectively, over the same period.
The behavioral changes among consumers induced by the pandemic are likely here to stay and should continue to propel fintech’s growth this year and beyond. PYPL and SQ have had an incredible run and are poised to gain this year.
However, we think some lesser-known players, such as Fiserv, Inc. (FISV – Get Rating), Global Payments Inc. (GPN – Get Rating) and StoneCo Ltd. (STNE – Get Rating) could prove to be more profitable investments this year because they have more room to grow their earnings.
Fiserv, Inc. (FISV – Get Rating)
FISV is a global leader in payments and financial services technology. The company provides services that include account processing and digital banking solutions, card issuer processing and network services, payments, e-commerce, merchant acquiring and processing. FISV also offers Clover, a cloud-based point-of-sale solution. It operates through four segments – Merchant Acceptance, Financial Technology, Payments and Network, and Corporate and Other
FISV recently launched a service to facilitate paycheck protection loan applications and service loans made through the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP). The company has also announced a new agreement with Capital One that will…
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