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4 Stocks to Watch As E-commerce Leads Digital Payments Boom

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Digital payment has become a much-preferred option around the world. This is because digital payments offer hassle-free, cashless transactions that can be completed in a few simple steps. Consumers don’t have to carry cash in their wallets and a smartphone suffices to complete transactions with ease.

In any case, the adoption of digital payments had already been on the rise, also thanks to the rising preference for e-commerce. But the outbreak of the COVID-19 pandemic last year provided further acceleration. As people across the globe were stuck at home to avoid the risk of exposure to the virus and brick-and-mortar stores were shut, e-commerce sales saw a surge which in turn, boosted digital payments as a safe method of a transaction as it doesn’t involve coming in contact with cash.

Digital Payments Boom to Continue, Boosted by E-commerce

Even as the vaccination drive picks up across major global economies, leading to the gradual reopening of businesses and activities, both e-commerce and digital payments are poised to grow, thanks to the many conveniences they provide. Notably, as cited in a Chain Store Age article, data from Finaria showed that the number of e-commerce users across the globe in 2021 is set to grow 10% year over year, to reach 3.8 billion. Moreover, the article stated that by 2025, worldwide e-commerce users are expected to reach 4.9 billion.

Such a positive development is sure to provide a significant boost to the adoption of digital payments across the globe as a convenient way to pay for online purchases. Reflective of this, a report by Mordor Intelligence predicted that the transaction value of global digital payments is estimated to be worth $11.29 trillion by 2026, aided by the growing preference of e-commerce across various economies, at a CAGR of 11.21% from 2021 to 2026.

U.S. E-commerce Sales Soar in 2020

The United States has not been far behind when it comes to e-commerce sales. In fact, the U.S. Department of Commerce reported that in 2020, online sales were up 32.4% over 2019, as Americans spent $791.7 billion online, as mentioned in a CNBC article. Moreover, owing to its convenience, digital payment is increasingly becoming a preferred option among Americans, especially when it comes to online purchases.

Markedly, a report from Statista showed that in the United States in 2020, digital or mobile wallets was one of the popular methods of e-commerce payments along with credit cards, accounting for about 30% of the total payment count while cash-on-delivery accounted for only 1%. However, the U.S. economy is now gradually reopening but even then, the preference for digital payments looks set to continue. Notably, per another report by Statista, total transaction value in the digital payments segment in the United States is expected to witness a CAGR of 13.38% from 2021 to 2025.

4 Stocks to Keep an Eye On

Digital payments look poised to grow in the future as consumers continue to adopt this hassle-free form of payment, boosted further by the rising preference for e-commerce. This makes it a good time then to look at names that can benefit from this uptrend going forward. Notably, we have selected four such stocks that carry a Zacks Rank #1 (Strong Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Apple Inc. (AAPL - Free Report) launched its digital payment service called Apple Pay, allowing users to make contactless and secure purchases in stores, in apps and on the web. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 10.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 50.3%.

Alphabet Inc.’s (GOOGL - Free Report) Google has its digital payment platform, namely Google Pay, which allows users to make payments from their smartphones, tablets or even smartwatches. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 23.1% over the past 60 days. The company’s expected earnings growth rate for the current year is nearly 45%.

Amazon.com, Inc. (AMZN - Free Report) engages in the retail sale of consumer products and subscriptions and the company also launched its online payment service called Amazon Pay. Amazon currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 16.7%.

PayPal Holdings, Inc. (PYPL - Free Report) operates as a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 0.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 18%.

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