Why the optimism?
Well, it appears a number of factors are at play with digital payment stocks today. Of note, there’s been reports that Trustly, the Swedish digital payment firm, is thinking of pursuing a U.S. listing in addition to the company’s previously announced IPO in Stockholm. The company hopes this move will invite U.S. interest in its stock. Indeed, if today’s market action is any indication, Trustly shouldn’t have a problem in this regard.
Additionally, retail favorite Foot Locker (NYSE:FL) has announced a shift toward digital payments at its stores. The company is rolling out the FreedomPay edge commerce platform across all of its U.S. locations. This touchless technology will support digital payment apps including PayPal and Venmo. Accordingly, today’s rise in PayPal’s shares outpacing the broader market makes sense.
In addition to this company-specific news, there’s broader interest in these stocks due to another catalyst.
Digital Payments Stocks Higher on Growth Expectations
Today, a report released by IMARC group highlighted some pretty bullish expectations for digital payment stocks.
Specifically, the report noted that the global digital payments market is expected to grow at a compound annual growth rate (CAGR) of 20% over the next five years. This growth projection appears to have taken investors by surprise, in a good way.
Expectations are that the transition to digital payments from cash is going to accelerate post-pandemic. Increased reliability and safety of digital payments are reasons cited for this increase.
Additionally, as the internet of things (IOT) market continues to grow, expectations are that digital payments will continue to grab a larger slice of the growing pie in transaction volumes.
Indeed, today, PayPal and Square appear to be the two stocks on investors’ radar. Investors in larger credit card/payment processors Visa (NYSE:V) and Mastercard (NYSE:MA) are down slightly this morning.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.