TECH - 5 Financial Transaction Stocks to Watch Amid a Growing Digital Era | Benzinga
The Financial Transaction Services industry is likely to be aided by the widespread adoption of digital means. To capitalize on the trend, the industry players remain equipped with efficient digital solutions suite built on collaborations and technology investments. Consumer spending habits remain favorable, which may boost transaction volumes. An uptick in cross-border volumes results from a growing international workforce and international trade. Possible interest rate cuts in 2024 are expected to make way for rebounding merger and acquisition (M&A) deals. Companies like Visa Inc. (NYSE: V), Mastercard Incorporated (NYSE: MA), Fiserv, Inc. (NYSE: FI), Fidelity National Information Services, Inc. (NYSE: FIS) and Global Payments Inc. (NYSE: GPN) are placed well to gain from the industry's encouraging growth prospects.
About the Industry
The Zacks Financial Transaction Services industry is part of the Financial Technology or the FinTech space, which includes companies with varying natures of businesses. The industry comprises card and payment processing and other solutions providers, ATM services and money remittance service providers and providers of investment solutions to financial advisors. The players in this segment operate their unique and proprietary global payments network that links issuers and acquirers around the globe to facilitate the switching of transactions, permitting account holders to use their products at millions of acceptance locations. Monetary transactions are effectuated through these networks, offering a convenient, quick and secure payment method in several currencies across the globe. The industry is benefiting from the ongoing digitization movement triggered by the pandemic.
4 Trends Influencing the Financial Transaction Services Industry's Future
A Rapidly Expanding Digital Era: The widespread adoption of digital means across every sphere of life provides a perfect ground for industry participants to capitalize on through an enhanced digital solutions suite. They pursue significant technology investments to come up with several flexible digital payment options such as cryptocurrency, biometrics, QR codes and buy now, pay later solutions. Additions of such lucrative solutions, that promise to ease everyday digital payments, within one's portfolio inevitably attract a higher number of customers and diversify the revenue streams of the companies. Apart from building a solid payment solutions suite, the industry participants also remain equipped with effective fraud prevention solutions to counter sophisticated forms of cybercrimes.
Favorable Consumer Spending: Consumers' affinity to spend more results in increased utilization of product and services suite of the industry participants. Therefore, the resultant benefit of increased consumer spending is reaped by them in the form of processing higher transaction volumes and subsequently earning higher revenues. Per Fitch Ratings, consumer spending was resilient across the United States in 2023, and strong wage gains, moderated inflation level and favorable consumer sentiment positively impacted the metric. The continued positive sentiment and excess savings made by consumers made Fitch revise the 2024 forecast for annual real consumer spending from 0.6% to 1.3%.
Solid Cross-Border Volumes: Financial transaction service stocks, having ...