Mobile payments systems are one of the hottest-growing sectors for 2020. They are changing the competitive landscape of e-commerce, online lending, money transfers, business-to-business payments, and banking.

One of the most significant ways these systems have been disruptive is in the way they have benefited small business. I remember when “Small Business Saturday” was introduced. Consumers flocked to the big box stores on Black Friday, but the next day was an opportunity to give local businesses a boost heading into the holiday season.

However, before mobile payments systems were available, small businesses were still at a disadvantage. This was one of the points Eric Rhiney, Assistant Professor of Management at Webster University, made in an email to InvestorPlace. We asked Rhiney how the ease of mobile payments is changing retail. He said:

Prior to this (mobile payments solutions), individuals and small businesses (ISMs) relied on customers to pay using cash or checks – a huge pain point for customers, which resulted in a smaller number of transactions and lower average transaction value as compared to larger competitors using credit card payment systems.

But that is changing, and according to Rhiney, it doesn’t appear that it will be stopping anytime soon:

P2PM payment systems will continue to experience exponential growth. As a result, there is a higher likelihood that customers return more often to small/individual retailers (i.e. increased loyalty) and these retailers will experience better average transactions per customer.

However, I’ll admit, if these companies were just engaged in a battle for e-commerce supremacy, I wouldn’t find the sector particularly interesting. One thing I like to look for is companies that are always looking to the future.

Fortunately for investors, there are a range of companies to choose from. Here are three payments stocks to buy in 2020.

PayPal (PYPL)

The first stock I want you to look at is PayPal (NASDAQ:PYPL). Fintech companies continue to dive further into services once dominated by traditional banks.

I recently wrote about how PayPal is disrupting traditional banking. With consumers making virtually nothing in interest, the “where” of saving is less significant than the act itself. And while PayPal allows peer-to-peer movement of money, the company has added Venmo, which is rapidly becoming a go-to source for teenagers and young adults to move money.

Plus many small businesses can find it hard to get a loan through traditional banks. PayPal offers PayPal Working Capital. This program bases approval on an algorithm that tracks your revenue through PayPal. It’s anonymous and fast. Furthermore, it makes it easy for businesses to get small, short-term business loans without an elaborate application process.

And PayPal already looks to be sizing up the potential that is coming with blockchain. In 2019, the company invested in Cambridge Blockchain. This was the company’s first foray into the technology. This is significant because it keeps PayPal in front of a technology that promises to be the new standard for e-commerce and banking.

There are many that might like Square (NYSE:SQ) in this space. While I said that I appreciate companies that are branching out, I think Square might have its hands in a bit too many pies at the moment for my liking.

PYPL stock is up over 10% in 2020 and has posted a gain of over 26% in the last 12 months.

MasterCard (MA)

Speaking of blockchain, this emerging technology is one of the reasons for investors to take a good look at MasterCard (NYSE:MA). At the end of 2018, MasterCard ranked third in the number of blockchain patents it had filed to support its own secure and scalable blockchain solution.

Late last year, MasterCard announced a partnership with R3, an enterprise blockchain technology company, to develop a new cross-border payment system. The company has sent its own application programming interface (API) to financial institutions and merchants to test market. Once the technology rolls out to consumers, transactions will be able to clear in real-time, removing the need for a prolonged reconciliation process

And MasterCard is not just embracing blockchain to give consumers faster transactions. The company is committed to using blockchain technology to provide its customers with secure and convenient solutions. To emphasize this, the committee said in a patent filing, “… there is a need for a technological solution to enable the conveyance of payment credentials to a point of sale device that requires minimal participation by the consumer, while still maintaining a high level of security, particularly against skimming.”

MA stock is up over 12% in 2020 and is up over 52% in the last 12 months.

Apple (APPL)

When investors think of Apple (NASDAQ:AAPL), they are usually thinking about its iconic iPhone. And that’s a good reason to invest in Apple. But the iPhone also facilitates an ecosystem for the company’s mobile payment system, Apple Pay.

InvestorPlace’s Luke Lango wrote about the stock earlier this year saying that Apple Pay revenue and transactions more than doubled on a year-over-year basis. Apple Pay’s transaction volume, which topped the 3 billion mark, is growing at a rate that is roughly six times the growth rate of all U.S. e-commerce sales. And with the launch of the Apple Card, the company is moving deeper into the mobile payments space. The card offers 3% cash back that pays users daily.

Apple Pay is, of course, only one of several revenue streams for Apple. If you can ignore the valuation concerns, it’s hard to imagine that Apple’s stock won’t continue to push above its current level.

As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.