The digital payments industry continues to evolve, driven by the growing adoption of cashless transactions, expanding e-commerce activity and increasing demand for integrated financial services. While these trends create growth opportunities for payment providers, intensifying competition, evolving consumer spending patterns and regulatory pressures are shaping their long-term prospects.

Visa Inc. (V Quick QuoteV - Free Report) and Block, Inc. (XYZ Quick QuoteXYZ - Free Report) are two prominent participants in the digital payments ecosystem, but their business models differ considerably. Visa operates a global payment network, benefiting from transaction volumes, cross-border spending and value-added services. In contrast, Block focuses on merchant payment solutions and consumer financial services through its Square and Cash App ecosystems. Their distinct revenue models, growth strategies and profitability profiles make them relevant candidates for comparison as investors assess the sustainability of digital payments growth.

Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better bet now.

The Case for Visa

Visa's expanding global payments network, rising transaction volumes and growing cross-border spending remain central to its growth prospects. In the fourth quarter of fiscal 2026, payments volume increased 9% year over year, while processed transactions rose 10%. Cross-border volume, excluding intra-Europe transactions, climbed 14%, supported by a 13% increase in travel-related spending and 17% growth in e-commerce. Continued expansion in digital payments acceptance, tokenization and commercial spending provides opportunities to sustain transaction-driven revenue growth.

V’s value-added services (VAS), which include fraud prevention, cybersecurity, advisory and issuer-processing solutions, provide another growth avenue beyond transaction processing. Its commercial and money-movement solutions also create opportunities to expand beyond traditional consumer card payments. Visa Direct processed more than 15 billion transactions during the year, representing approximately $1.5 trillion in payment volume. The expansion of Visa Direct, alongside Pismo's banking and issuer-processing capabilities, strengthens V's presence in business payments and financial infrastructure. It beat earnings in each of the past four quarters with an average surprise of 3.1%.

Visa Inc. Price, Consensus and EPS Surprise

Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote

V is also extending its capabilities into stablecoins and AI-enabled commerce. Its stablecoin settlement business surpassed $25 billion in annualized volume, while Visa Intelligent Commerce is being developed to support secure transactions initiated by AI agents. Recent initiatives include a pilot with BILL and Billtrust for automated business invoice payments and new commercial fraud prevention tools. These developments could diversify Visa's transaction flows and expand its role in emerging payment technologies.

Another important growth avenue lies in geographic expansion and deeper relationships with financial institutions. V also received regulatory approval to begin preparations for domestic payment processing in mainland China. The company is also expanding digital acceptance through Tap to Phone and strengthening its network of banking and fintech partners.

V’s strong cash position enables substantial share buybacks and dividend payouts and supports inorganic growth and financial stability. With $12.9 billion in cash and cash equivalents, the company maintains a solid capital position. Visa returned $5.2 billion to its shareholders through share repurchases and dividends in the fiscal fourth quarter.

However, escalating operating expenses and higher rebates and client incentives will likely impact its growth potential. In the fourth quarter of fiscal 2026, adjusted operating expenses rose 12.2% year over year due to higher personnel and marketing expenses. Moreover, regulatory and legal pressures surrounding interchange fees and payment network practices could constrain V's pricing flexibility and profitability.

The Case for Block

Block is pursuing growth through its two main ecosystems: Square, which serves businesses with payment processing, software and financial services, and Cash App, which provides consumer payment and financial products. In the second quarter of 2026, Square's gross payment volume (GPV) increased 13% year over year, with U.S. growth accelerating to 10%. International GPV rose 25% year over year on a constant-currency basis. Expanded field sales, independent sales organization (ISO) partnerships, self-onboarding and a broader software offering are central to Square's growth strategy, particularly among food and beverage businesses and larger sellers. Its recently launched AI-powered Square Kiosk, featuring conversational ordering and integrated payments, further strengthens its offerings for quick-service restaurants.

Cash App provides another avenue for growth through greater adoption of banking, lending and commerce products. Its gross profit increased 31% year over year in the second quarter, while consumer lending origination volume climbed 59%. Block is expanding Cash App Borrow, Afterpay and Cash App Card capabilities to encourage customers to use more services within the platform. The partnership with Workday also enables eligible employees to direct their paychecks into Cash App more easily, potentially supporting deposit inflows, customer engagement and recurring financial activity. It beat earnings in two of the past four quarters, missed once and met once, with an average surprise of 7.3%.

Block, Inc. Price, Consensus and EPS Surprise

Block, Inc. price-consensus-eps-surprise-chart | Block, Inc. Quote

The integration of Square and Cash App through Neighborhoods represents another strategic initiative. The platform connects local merchants with Cash App customers through business discovery, rewards and repeat-purchase incentives. In August 2026, Neighborhoods added 30,000 sellers, expanding its network nearly tenfold from June. By connecting consumer spending with merchant services, XYZ has an opportunity to improve customer retention, generate additional payment activity and strengthen the relationship between its two ecosystems.

Block is also investing in artificial intelligence and banking infrastructure to improve efficiency and broaden its financial services capabilities. Its AI initiatives, including Managerbot, Moneybot and Buzz, are designed to automate business workflows and accelerate product development. Meanwhile, Square Financial Services is expanding deposit-taking and payment-acquiring capabilities, which could reduce external funding requirements and improve processing economics over time. XYZ raised its 2026 gross profit outlook to $12.51 billion, representing 21% annual growth, and expects a 28% adjusted operating income margin. These initiatives support its efforts to combine product expansion with greater operating efficiency, although lending-related credit risks and competitive pressures remain important considerations.

The company exited the second quarter of 2026 with cash and cash equivalents of $6.4 billion. It returned $700.9 million to its shareholders by repurchasing approximately 11.6 million shares of common stock in the first half of 2026. Its long-term debt-to-capital of 20.6% is lower than V’s 34.9%.

How Do Estimates Compare for V & XYZ?

The Zacks Consensus Estimate indicates stronger earnings growth prospects for XYZ compared with V. The consensus estimate for V’s fiscal 2027 earnings indicates a 13% increase from a year ago, while the same for revenues suggests 10.4% growth.

On the other hand, the Zacks Consensus Estimate for XYZ's 2026 EPS indicates a 70.9% year-over-year improvement, and the same for revenues signals a 7.9% rise. The consensus estimate for XYZ’s 2027 earnings indicates another 28.9% growth.

Price Performance Comparison

In the year-to-date period, V’s shares have gained 14.2%, while XYZ has risen 15.5%. The S&P 500 increased 12% during this time.

Price Performance – V, XYZ & S&P 500

Image Source: Zacks Investment Research

Valuation: V vs. XYZ

On a price-to-sales basis, Visa sits at 14X forward revenues, significantly above Block’s multiple of 1.59X. XYZ's significantly lower P/S multiple suggests a more modest valuation, potentially offering greater upside if its growth initiatives translate into sustained profitability. Also, Block currently carries a Value Score of B, while Visa carries a Value Score of D.

Image Source: Zacks Investment Research

Price Target

Visa currently trades below its average analyst price target of $430.89, implying a 7.2% potential upside from current levels. Block also trades below its average analyst price target of $97.98, implying an attractive 30.9% potential upside from current levels.

Conclusion

Both Visa and Block are well-positioned to benefit from the expanding digital payments market. Visa’s extensive global network, growing value-added services and strong financial position support its long-term growth prospects. However, rising expenses and regulatory pressures remain concerns.

Block appears to offer greater upside potential, supported by its expanding Square and Cash App ecosystems, accelerating earnings growth prospects and strategic investments in AI and financial services. Its more attractive valuation and higher implied upside based on analyst price targets further strengthen its investment appeal, making XYZ the better pick at present, even though both companies currently carry a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.