5 Winners From Shift to Digital for Payments in the "New Normal"
The coronavirus pandemic has brought about a drastic change in consumers' payment behavior. Per a ResearchAndMarkets.com report, nearly 50% of global shoppers are using digital payments more than before amid the pandemic. In fact, majority of them plan to continue doing so,even after the pandemic.
Additionally, the ease of using e-wallets and contactless cards has boosted the digital payment market.
Contactless Payments – a New Normal
The coronavirus outbreak pushed consumers to use less cash and make more purchases online. Mastercard’s survey on 6,750 adults across 15 countries shows that nearly seven in 10 consumers across the globe expect to shift permanently to digital payment.
Globally, sales on e-commerce websites surged during the pandemic and these customers mainly use credit cards and digital wallets to pay online. For instance, in April and May buyers in the United Kingdom preferred debit cards and those in Italy opted for digital wallets like PayPal. Per MastercardSpendingPulse data, e-commerce spending in the United States rose 93% in May from a year ago.
Additionally, these digital payment modes offer secured cross-border payment options. The industry is constantly fueled by rapid increase in smartphone usage and rising demand for better customer experience. Thanks to the advancement and adoption of advanced technologies like blockchain, machine learning, and AI, digital payment companies can now make transactions more convenient and secure.
Recently, social media giant Facebook has also ventured in the digital payment. The company offers Facebook Pay that is designed to work across Facebook, Messenger, Instagram and WhatsApp. Several companies now advertise on social media and consumers can also directly purchase from those links, hence Facebook’s payment system can give a strong competition to others.
Evolving with changing times, PayPal has expanded from online checkout to mobile payments, to person-to-person money transfers, which is helping increase its active user count.
Mergers Boosting the Space
Several mergers and acquisitions in the digital payment industry have given it a further boost. In January 2020, Visa paid $5.3 billion to purchasePlaid that will help consumers connect to their financial accounts with their Visa apps. This helps Visa stay updated and offer relevant services in the fintech space for both financial institutions and consumers.
Visa now plans to acquire Earthport, a cross-border payment services company. The acquisition will help Visa’s clients to allow individuals and organizations to send or receive money through bank accounts worldwide.
Late in June 2020, Mastercard announced plans to buy real-time financial data aggregation service Finicity for $825 million. The acquisition will help Mastercard in open banking activities. Finicity’s financial data will be used to connect merchants, consumers, partners, and fintechs in the card company’s ecosystem.
5 Stocks to Buy
The digital payment market that was worth $38 billion in 2018 is expected to reach $86.76 billion by 2023, at a CAGR of 18%. Given the additional boost that the coronavirus pandemic has offered to the digital payment space, it is prudent to invest in these five stocks that are sure to enjoy the boom. These stocks belong to the Zacks Financial Transaction Services industry.
Qiwi plc QIWI operates electronic online payment systems. The company’s expected earnings growth rate for the current year is 3.5%. The Zacks Consensus Estimate for its current-year earnings has climbed 5.9% over the past 60 days. Qiwi sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Envestnet, Inc. ENV provides intelligent systems for wealth management and financial wellness. The company’s expected earnings growth rate for the current quarter is 2.2%. The Zacks Consensus Estimate for its current-year earnings has climbed 1.5% over the past 60 days. Envestnet sports a Zacks Rank #1.
Diebold Nixdorf, Incorporated DBD provides connected commerce solutions to financial institutions and retailers. The company’s expected earnings growth rate for the next quarter is more than 100%. The Zacks Consensus Estimate for its current-year earnings has climbed more than 100% over the past 60 days. Diebold Nixdorf carries a Zacks Rank #2 (Buy).
FLEETCOR Technologies, Inc. FLT operates as a business payments company that simplifies the way businesses manage and pay expenses. The company’s expected earnings growth rate for the next year is 19.3%. The Zacks Consensus Estimate for its current-year earnings has risen 1.3% over the past 60 days. FLEETCOR carries a Zacks Rank #2.
The Western Union Company WU provides money movement and payment services. The company’s expected earnings growth rate for the next year is 13.7%. The Zacks Consensus Estimate for its current-year earnings has climbed 0.6 % over the past 60 days. Western Union carries a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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The Western Union Company (WU): Free Stock Analysis Report
Diebold Nixdorf, Incorporated (DBD): Free Stock Analysis Report
Envestnet, Inc (ENV): Free Stock Analysis Report
FleetCor Technologies, Inc. (FLT): Free Stock Analysis Report
QIWI PLC (QIWI): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.