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B2B Adopts Digital Payments Amid Coronavirus: Stocks to Gain

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One pertinent change brought about by the coronavirus is the tremendous use of technology with varying degrees across different industries.

The payments industry in particular was already undergoing a massive shift to the digital from its physical mode. Evidently, it saw an accelerated use of technology by customers and businesses.

A marked development was witnessed on the adoption of digital payment methods by small businesses which in the pre-COVID-19 era, had relied on age-old payment methods via physical or bank channels, which were mostly and full of hassles.

Shift to Digital Payments

Per a Mastercard study of small business owners across North America, 76% respondents confirm that the pandemic prompted them to go online with 82% businesses changing the ways of sending and receiving  payments. Citing difficulty with cash flow and payment collection, 50% added a new digital service for collecting funds while one in four transitioned to e-invoicing. With 68% complaining that the use of cash and check deposits are time consuming, small business entrepreneurs saved the long hours by resorting to cashless options more frequently during the pandemic.

Online card payments saw the maximum surge at 60% while the use of cash (34%) and checks (24%) decreased more than any other payment type amid the  COVID-19 crisis.

Business to Business Payments Gather Steam

Given the financial and operational stress due to the sluggish business activities caused by the coronavirus outbreak, small businesses are suffering fund crunch associated with late payments and slow processing for cash and checks. At a time when solid liquidity is the need of the hour, a single payment delay is enough to topple the operations of small businesses. This glitch prompted many small-time players to turn to digital services for expediting their payment mechanism.

A  Mastercard survey highlighted that owing to better speed, security and transparency, more than half (57%) of small business players are increasingly opting for digital services regarding business-to-business (B2B) payments since the onset of the pandemic. Also, nearly two-thirds (64%) of small businesses are actively trying to dissuade  clients from using cash and checks.

Digital Payments Here to Stay

The trend of digital payments is here to stay even after the ongoing pandemic subsides. This can be gauged from the favorable sentiment building around the digital platforms and with growing customer satisfaction. 70% of small business firms are willing to invest in the technology required to advance their payment systems while 73% proprietors consider digital channels to be the new normal for their businesses going forward.

Business to Business Digital Payments: A Huge Market

Global B2B payments market value was $125 trillion in 2019. According to ResearchAndMarkets.com, the global digital B2B payments market observed stable growth in the past few years and the market is further expected to rise at a staggering rate during the 2020-2024 forecast period.

Growth in the global digital B2B payments market will be bolstered by a host of drivers like expanding real-time payments, increasing adoption of cloud-based solutions, escalating smartphone penetration, emerging B2B e-commerce industry, swelling business process automation, rising urbanization, growing cross-border payments, etc.

Stocks in Focus

Based on these evolving trends, we zero in on a few stocks that have been catering to small businesses and will hopefully gain traction from the momentum. Each of these stocks currently carries a Zacks Rank # (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Visa Inc. (V - Free Report) launched its Visa B2B connect last year, which is a fast, safe and more efficient network, designed specifically to overcome the obstacles in the cross-border corporate payments space. Visa B2B Connect network has a goal to expand to more than 100 countries in 2020  from 30 at launch in June 2019.

The stock’s bottom line surpassed estimates in three of the trailing four quarters (meeting the consensus mark in one), the average beat being 2.42%.

Mastercard Inc. (MA - Free Report) is modernizing the business-to-business (B2B) payment ecosystem with Mastercard Track, launched in 2018 as a trade platform to address identity, compliance and payment management needs. It helps supplier and buyer partners tackle the systemic challenges of business-to-business payments, reinventing how businesses send and receive funds so that B2B payments can keep pace with innovation and liberate enterprises from the flaws in the system.

Earnings of the stock surpassed estimates in each of the last four quarters, the average being 9.11%.

Global Payments Inc. (GPN - Free Report) acquired Total System Services last year. This combined entity will provide payment services for 3.5 million small to medium-sized merchants around the world and more than 1,300 financial institutions across 100 countries roughly.
Earnings of the stock surpassed estimates in each of the last four quarters, the average being 5.79%.

Zacks’ Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.

The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.

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In-Depth Zacks Research for the Tickers Above


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Mastercard Incorporated (MA) - free report >>

Visa Inc. (V) - free report >>

Global Payments Inc. (GPN) - free report >>