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About the Industry
The Zacks Financial Transaction Services industry is part of the Financial Technology or the FinTech space, including companies with diverse natures of businesses. The industry comprises card and payment processing and other solutions providers, ATM services and money remittance service providers, as well as 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 done 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 Key Trends That Shape the Fate of Financial Transaction Services Space
Digital Payment Innovation: The rapid global adoption of contactless payment methods is steadily making traditional cash and check transactions less relevant. To keep pace, leading players in the financial transaction services sector are rolling out cutting-edge solutions, including cryptocurrencies, biometric verification, QR code payments and BNPL offerings. These innovations not only expand market penetration but also create new revenue streams while enhancing user convenience. To remain competitive, companies are channeling significant resources into advanced technologies. However, this digital surge also heightens vulnerability to cyber risks such as financial fraud and data breaches, making the establishment of secure infrastructures and strong fraud prevention systems a critical strategic imperative.
Unlocking Growth in Cross-Border Payments: The financial transaction services industry is positioned to benefit from the steady rise in global trade, increasing international travel and stronger demand for remittance solutions. Companies offering advanced cross-border platforms are particularly advantaged, as these systems enable seamless international transactions and efficient currency management. Such capabilities are essential for businesses handling payments from overseas clients and making timely disbursements to international suppliers. Additionally, the continued expansion of the global workforce is fueling the need for scalable remittance frameworks.
Consumer Spending as a Growth Catalyst: Resilient consumer spending has bolstered financial transaction service providers, driving transaction growth and boosting revenues. The ongoing expansion of e-commerce, supported by broader Internet penetration and widespread smartphone use, will likely sustain strong consumer spending in the days ahead. Per J.P. Morgan Research’s Economics team, overall consumer spending is expected to grow 2.3% on a year-over-year basis in 2025. Nonetheless, persistent inflationary pressures and tariff measures introduced under the Trump administration may weigh on consumer purchasing power, potentially constraining spending activity in the future.
M&A Driving Strategic Expansion: To build fully integrated digital financial ecosystems, companies in this space are increasingly pursuing M&As alongside heavy investments in technology. Such strategies help broaden service offerings, diversify markets, strengthen customer bases and expand global reach. With the Federal Reserve signaling potential rate cuts in 2025, borrowing costs are expected to decline further. This will likely encourage firms to pursue financing for M&A activity, enabling growth opportunities while conserving liquidity.
Zacks Industry Rank Instills Optimism
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. The Zacks Financial Transaction Services industry is housed within the broader Zacks Business Services sector. It currently carries a Zacks Industry Rank #57, which places it in the top 23% of 245 Zacks industries.
Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one. The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate.
Before we present a few stocks that you may want to buy or retain in your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms Sector, S&P 500
The Zacks Financial Transaction Services industry outperformed its sector and the Zacks S&P 500 composite in the past year.
In the said time frame, the industry has grown 20.8% compared with the Business Services sector’s gain of 9.3%. The S&P 500 has rallied 16.6% in the same time frame.
Industry's Current Valuation
On the basis of the forward 12-month Price/Earnings ratio, commonly used for valuing financial transaction services stocks, the industry is currently trading at 22.24X compared with the S&P 500’s 22.84X and the sector’s 21.95X.
In the past five years, the industry traded as high as 37.08X, as low as 18.87X and at the median of 23.01X.
5 Stocks to Keep a Close Eye on
We are presenting five stocks from the Financial Transaction Services industry that currently carry a Zacks Rank #2 (Buy) or Zacks Rank #3 (Hold). Considering the current industry scenario, it might be prudent for investors to buy or retain these stocks in their portfolio as these are well-placed to generate growth in the long term.
PayPal: Based in California, PayPal differentiates itself through secure, simple and affordable digital payment solutions, backed by strong risk management and tokenization to prevent fraud. This Zacks Rank #2 company’s two-sided platform connects merchants and consumers, enhancing engagement, offering data insights and fostering trusted relationships. Strategic partnerships with Visa, Mastercard, major banks and tech giants like Google, Facebook, and Alibaba have expanded its global reach and strengthened its offerings.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for PayPal’s 2025 earnings is pegged at $5.22 per share, indicating an improvement of 12.3% from the year-ago figure. PYPL’s earnings beat estimates in each of the last four quarters, the average surprise being 9.94%.
Headquartered in Portland, ME, WEX is being aided by an extensive fuel network and service providers, improved transaction volumes, product excellence, marketing prowess, sales force productivity and other strategic revenue generation efforts. This Zacks Rank #2 company's revenue stability is underpinned by its high-quality products and services, along with long-term strategic relationships, multi-year contracts and high contract renewal rates. Acquisitions are a key growth catalyst for WEX.
The Zacks Consensus Estimate for WEX’s 2025 earnings is pegged at $15.63 per share, indicating an 2.3% rise from the year-ago figure. WEX’s earnings beat estimates in three of the last four quarters and missed the mark once, the average surprise being 2.39%.
Visa: Visa, headquartered in San Francisco, is a prominent global leader in digital payments. This Zacks Rank #3 company continues to broaden its presence through strategic partnerships, renewals of existing agreements and selective acquisitions. Strong performance across Latin America, Canada and the United States has been a key driver of its overall growth. In the third quarter of fiscal 2025, cross-border volumes rose 12% year over year.
The Zacks Consensus Estimate for Visa’s fiscal 2025 earnings is pegged at $11.43 per share, indicating an 13.7% rise from the year-ago figure. V’s earnings beat estimates in each of the last four quarters, the average surprise being 3.90%.
Based in Purchase, NY, the company continues to strengthen its position in the global payments ecosystem through partnerships with financial institutions and significant strategic investments. Its cross-border payments platform, Mastercard Move, facilitates secure and seamless international money transfers across more than 200 countries and supports more than 150 currencies. This Zacks Rank #3 company has further reinforced its operational capabilities through notable acquisitions.
The Zacks Consensus Estimate for Mastercard’s 2025 earnings is pegged at $16.31 per share, indicating an 11.7% rise from the year-ago figure. MA’s earnings beat estimates in each of the last four quarters, the average surprise being 3.76%.
Fiserv: Headquartered in Wisconsin, Fiserv provides a comprehensive portfolio of solutions spanning payment processing, core banking platforms and digital banking services. Its business model is anchored in steady recurring revenues and robust incremental margins, supported by its large-scale processing infrastructure. This Zacks Rank #3 company emphasizes delivering strong performance by expanding its client base, strengthening existing partnerships and offering value-driven innovations.
The Zacks Consensus Estimate for Fiserv’s 2025 earnings is pegged at $10.21 per share, indicating a 16% rise from the year-ago figure. FI’s earnings beat estimates in each of the last four quarters, the average surprise being 2.20%.
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This article originally published on Zacks Investment Research (zacks.com).
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