Millennials, the 18 to 34 age band, are making face-to-face payments their regular habit, especially in the United States. This has benefited financial transaction services as explosive growth of technology has paved way into an era of digital payments.
Millennials are Backing Away From Cash
Millennials are in the forefront of digital payments, which is clearly visible from all types of e-commerce behaviors that this tech-savvy group prefers, which includes shopping, money transfers, and payment activities.
According to annual Digital Payments research, millennials are backing away from cash transactions and are attracted to innovations in the digital payments industry. In fact, development in the digital payments space has given Gen Yers options on how they want to pay for their day-to-day needs.
The most intriguing fact is, 65% of millennials prefer paying for certain products or services via mobile payment applications compared to 42% of the general population. Such applications help in contactless payments via Android or Apple Pay.
Per a study conducted every three years by the Federal Reserve, core noncash payments, comprising debit card, credit card, ACH, and check payments, reached 174.2 billion in 2018, marking an increase of 30.6 billion from 2015.
Pay-and-Go Trend to Soar
According to the Federal Deposit Insurance Corp.’s 2018 report, around 6.5% of American households do not have a checking or savings account. This trend is much supported by the right balance between security and flexibility in digital payment platforms.
Smartphone developers have grabbed the opportunity from the trend of cashless transactions as banks introduce debit/credit cards, chip and PIN. Developers are focused on making transactions convenient and security a priority for their end users. In the past few years, facial recognition has become the most trustworthy payment method, while fingerprint scanning has become a necessity. Nevertheless, 76% of millennials find it secure, giving the pay-and-go trend a boost.
What’s more? Credit card companies are trying to advance their technology further and many have opted cryptocurrency platforms to stay in the trend making multibillion-dollar acquisitions to help credit-card companies survive as non-card payments gain importance.
On Jan 13, Visa announced plans to acquire Plaid, a back-end software company that helps applications connect to user accounts, for $5.3 billion. In 2019, Mastercard acquired Nets for $3.2 billion and Vocalink for almost $1 billion, to help the credit card giant move into the account-to-account payments space.
5 Stocks to Buy
With further development in the digital payment technology, tech-savvy millennials will surely bend more on digital payment. Given the development in this space, we have shortlisted five stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and are poised to return well on investments.
International Money Express, Inc. (IMXI – Free Report) operates as a money remittance services company. The company offers wire transfer and other processing services to customers through a network of sending and paying agents.
The company’s expected earnings growth rate for the current year is more than 100% compared with the Zacks Financial Transaction Services industry’s projected earnings growth of 9.2%. The Zacks Consensus Estimate for this Zacks Rank #1 company’s current-year earnings has been revised 3.7% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Global Payments Inc. (GPN – Free Report) provides payment technology and software solutions for card, electronic, check, and digital-based payments. The company serves various international card brands, including American Express, Discover Card, JCB, MasterCard, UnionPay International, and Visa; and non-traditional payment methods, globally.
Global Payments’ expected earnings growth rate for the current year is 18.9%. The Zacks Consensus Estimate for this Zacks Rank #2 company’s current-year earnings has been revised 1.2% upward over the past 90 days.
Fidelity National Information Services, Inc. (FIS – Free Report) operates as a financial services technology company. The company’s expected earnings growth rate for the current year is 5.4%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 0.2% upward over the past 60 days. Fidelity National Information Services carries a Zacks Rank #2.
FleetCor Technologies, Inc. (FLT – Free Report) provides offers fuel payment solutions to businesses and government entities that operate vehicle fleets, as well as to oil and leasing companies, and fuel marketers in North America, Latin America, Europe, and Australasia.
FleetCor’s expected earnings growth rate for the current year is 11.6%. The Zacks Consensus Estimate for this Zacks Rank #2 company’s current-year earnings has been revised 0.1% upward over the past 60 days.
Envestnet, Inc. (ENV – Free Report) provides an end-to-end open architecture wealth management platform. Its prime software Yodlee’s payment solutions enable disruptive financial applications and technology.
Envestnet’s expected earnings growth rate for the current year is 11.5%. The Zacks Consensus Estimate for this Zacks Rank #2 company’s current-year earnings has been revised 0.9% upward over the past 90 days.
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