The rapid shift from cash to digital transactions, driven by a push toward convenience and security, has led to meteoric growth in mobile payments. The space encompasses a broad spectrum of innovations, including payment infrastructure and software services, as well as virtual wallets and smartcards.
As the adoption of digital payments becomes increasingly commonplace, the mobile payments market is anticipated to experience meteoric growth in the long term. A higher Internet penetration rate and increased usage of smartphones contribute to the growing uptake of digital payments. Whether paying for lunch, groceries, or high-end products and services, mobile payments are transforming everyday transactions.
Owing to the long-term benefits that such investments provide, the industry players have come up with diversified contactless payment options such as mobile wallets, biometrics and QR codes. Such initiatives will enable the players to solidify their presence in the global digital payments market, boost their customer base and diversify income streams.
At this stage, we recommend five mobile payments stocks to buy and hold for the long term to strengthen your portfolio. These are: Mastercard Inc. MA, Visa Inc. V, PayPal Holdings Inc. PYPL, Capital One Financial Corp. COF and Green Dot Corp. GDOT. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks in the past six months.
Image Source: Zacks Investment Research
Mastercard’s acquisitions are helping it to grow addressable markets and drive new revenue streams. We expect MA’s net revenue to rise 16% year over year in 2025. The accelerated adoption of digital and contactless solutions is providing an opportunity for MA’s business to expedite its shift to the digital mode. Strong cash flow supports its growth initiatives.
Mastercard is aggressively adopting AI technologies to enhance security and customer experiences. MA is using AI in five different aspects of its operations — first, fraud detection and prevention, second, optimization of the payment processing services, third, customer experience personalization, fourth, deeper analysis of customer behavior using predictive AI analytics tools and finally the use of high-end AI technologies to enhance merchant services.
Mastercard has an expected revenue and earnings growth rate of 15.1% and 11.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% in the last 30 days.
