The financial industry is changing rapidly, and successful disruptors are going to make a lot of money for some investors. Payments, investments, transfers and loans are all becoming cheaper and more efficient. Blockchain and other innovative technological developments are rapidly changing the way people interact financially. These three actions help to push the whole world towards new behaviors and capacities.
Square (NYSE: SQ) spearheading change in small business payments, cash transfers and investments. Square initially entered the market as a hardware and software solution that enables providers to accept card payments in a mobile and efficient format. It has grown for use by businesses of all sizes in a variety of industries, but it has a particularly strong presence among bars, restaurants, and retailers. Over the years, its suite of services has grown to add value and additional information to users.
Square has also successfully entered the world of consumer credit with the Cash App. Cash App is a direct competitor of PayPal funds‘ (NASDAQ: PYPL) Venmo, because it allows individuals to send and receive cash. Users can also spend and invest their account balances. Cash App offers debit cards with a rewards system, which is rare. Investment options include a wide range of stocks, exchange-traded funds, mutual funds, and cryptocurrencies. These services have proven to be so popular that Cash App quickly reached over 30 million users and is generating profits for Square. This is rare for a rapidly growing business segment, but Square is reaping the rewards of this quality service.
Square still has plenty of room to grow in its financial services for businesses and consumers. It’s already in a great position due to its widespread adoption across different use cases, and it’s actively moving into new categories. Square recently announced a deal to buy Afterpay for $ 29 billion in shares. This enhances the company’s “buy now, pay later” capabilities, which apply to both its consumer and commercial offering.
Square is becoming deeply entrenched in the business of saving, spending, transferring, and investing, both for young consumers and business owners. This user base will grow richer over time, and the burgeoning financial powerhouse will undoubtedly intend to expand into adjacent services for continued growth. There are many more opportunities ahead for Square, which is at the forefront of changing financial behavior.
PayPal has also established itself as a disruptive force in the financial industry. The company established itself as one of the first successful digital payment and transfer platforms, and it increased its presence in this area with the acquisition of Venmo in 2014. PayPal has been around for some time and has not. is not as technologically advanced as some of the smaller innovators in the industry. Nonetheless, he still has a huge presence in the changing world of finance, and he has shown a willingness to acquire attractive opportunities to retain his technological leadership.
PayPal processed $ 285 billion in payment volumes in the first quarter of 2021. That represented more than 60% growth, as the company added nearly 15 million new accounts. It simultaneously achieves monster growth figures while being a historical leader in its target market, which is a rare combination.
PayPal also offers loan services and debit cards, expanding its range of financial interactions with consumers and businesses. The data generated by these activities is extremely valuable. This information, combined with the size of the business, will help PayPal maintain its competitive position as financial technology continues to develop for the foreseeable future.
MasterCard (NYSE: MA) might be a surprising inclusion on this list, but it has a slyly innovative side that complements its well-known heritage business. Like its competitor Visa, Mastercard enjoys seeking out partnerships and acquisitions that keep its established payment processing business up to date. Card payments have been forced to become cheaper and more efficient. This pressure is going nowhere as blockchain and other technological advancements are improving the way money changes hands between consumers and businesses.
In particular, Mastercard acquired a company called Finicity last year, improving its ability to access and analyze banking information. This is an important step for a payment processor looking to adapt to the growing number of digital and contactless payments as people move away from card payments. Many investors have likened this to Visa’s attempted acquisition of Stripe, which was banned by antitrust regulators.
Like PayPal, Mastercard has an established business that generates large cash profits. It uses these resources to position itself to thrive as payments and transfers evolve. It might not offer the same growth as Square, but it’s also available at much cheaper valuations than most other disruptive fintech stocks.
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