In this article, we will explore the 10 best digital currency and payments stocks to invest in.
The Digital Payment Revolution: Growth Trends and Insights
The digital currency and payments sector is rapidly evolving, driven by technological advancements and changing consumer expectations. Digital money continues to reshape how transactions are conducted, making them faster, cheaper, and more accessible. According to a report by The Business Research Company, the global digital payments market was valued at $115.93 billion in 2023. The market is expected to expand at a compound annual growth rate (CAGR) of 9.3% during 2024-2028 to reach a value of $180.26 billion by the end of the forecast period.
The rise of e-commerce and technology-driven initiatives is significantly boosting the digital payments market. Consumers are increasingly choosing non-cash payment methods because they are easier and more convenient for transactions. This trend is expected to lead to a growth in low-cost payment terminals and methods like QR codes in the near future.
A major driver behind this shift is the younger generations, particularly millennials and Generation Z, who are quick to adopt digital payment services. Online banking has become a popular choice among young users, who demand personalized and flexible experiences. As businesses adapt to these expectations, enhancing customer experience has become crucial for success in the competitive digital payment landscape.
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The McKinsey Digital Payments Survey 2024 reveals that the use of digital payments is steadily increasing in both the United States and Europe. Approximately 9 in 10 consumers in these regions have made at least one digital payment in the past year, with the US reaching a record high of 92%. In the US, in-app and in-store digital payments are growing rapidly. In-app purchases now account for 60% of digital payment usage, up by 8 percentage points since 2019. Additionally, the adoption of digital wallets for in-store transactions has risen from 19% in 2019 to 28% in 2024. This shift represents a significant market, with around $10 trillion spent annually by consumers across the United States and Europe.
Notably, the survey also found that about one in five users often leave their physical wallets at home, opting for digital payment methods instead. In-store digital wallet usage is similar between the US and several European countries. This also includes traditionally cash-heavy nations like Germany and Italy, where about a quarter of respondents reported using digital wallets for in-store purchases in the past year. This trend indicates a broader acceptance of digital payments among consumers across various markets.
With this background in mind, let’s take a look at the 10 best digital currency and payments stocks to invest in.
A businesswoman using a digital tablet, making a payment using the company’s payment processing technology.
Methodology
To compile our list of the 10 best digital currency and payments stocks to invest in, we consulted various online resources and also reviewed our own rankings. This exercise provided us with a list of the best digital money stocks. From an initial pool of more than 20 digital currency and payments stocks, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 best digital currency and payments stocks to invest in are ranked in ascending order based on the number of hedge funds holding stakes in them.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Digital Currency and Payments Stocks To Invest In
10. Affirm Holdings Inc. (NASDAQ:AFRM)
Number of Hedge Fund Holders: 45
Affirm Holdings Inc. (NASDAQ:AFRM) is a leading financial technology firm specializing in buy now, pay later (BNPL) services. As one of the largest BNPL lenders in the US, the company offers flexible loan options. Affirm Holdings Inc. (NASDAQ:AFRM) also allows consumers to pay upfront for certain transactions, particularly with its Affirm Card debit card product.
In the first quarter of fiscal 2025, the company reported impressive growth, with total revenue reaching $698 million, a 41% increase year-over-year. This growth was driven by a 35% rise in Gross Merchandise Volume (GMV), which hit $7.6 billion. Notably, GMV from Affirm Holdings Inc.’s (NASDAQ:AFRM) top five merchants grew by 41%, indicating strong partnerships and increasing market share. The Direct-to-Consumer segment saw even more significant growth, with GMV rising 44% year over year to $2.1 billion. The Affirm Card alone generated $607 million in GMV, reflecting a 171% increase compared to the same quarter last year. The active cardholder count also surged by 19% quarter-over-quarter, surpassing 1.4 million.
Affirm Holdings Inc.’s (NASDAQ:AFRM) expansion strategy is noteworthy. In September 2024, the company announced that its buy now, pay later service has become available for Apple Pay users in the United States. Eligible users will be able to split their purchases into biweekly or monthly payments when checking out with Apple Pay on iPhones and iPads running iOS 18 or later. Additionally, on November 3, Affirm Holdings Inc. (NASDAQ:AFRM) expanded its services to the UK after processing over $75 billion in transactions across the US and Canada in the past five years. This launch aims to enhance the company’s reach and provide flexible payment options to a broader audience, contributing to its growing network of 50 million consumers and over 300,000 merchants worldwide.
Given its strong performance metrics and strategic initiatives, Affirm Holdings Inc. (NASDAQ:AFRM) presents a compelling investment opportunity in the digital currency and payments sector. AFRM is one of the best digital money stocks to invest in.
9. Ally Financial Inc. (NYSE:ALLY)
Number of Hedge Fund Holders: 56
Ally Financial Inc. (NYSE:ALLY) is a prominent player in the digital financial services sector, offering a wide range of products such as auto financing, banking, and insurance. The company has established itself as a leader with an all-digital bank model that caters to consumers, businesses, and automotive dealers.
In the third quarter of 2024, Ally Financial Inc. (NYSE:ALLY) in its Auto segment processed 3.6 million consumer applications and generated $9.4 billion in auto originations. Despite elevated retail auto net charge-offs of 2.24%, Ally Financial Inc.’s (NYSE:ALLY) proactive measures are expected to reduce losses over time, showcasing its commitment to risk management. The company’s Ally Bank continues to thrive, boasting $141 billion in retail deposits, with 92% being FDIC-insured. The bank has achieved 62 consecutive quarters of customer growth, now serving 3.3 million retail depositors. This stability enhances Ally Financial Inc.’s (NYSE:ALLY) position for margin expansion in the coming years.
Looking ahead, Ally Financial Inc. (NYSE:ALLY) is focused on diversifying its revenue streams, particularly within insurance and auto finance. The company anticipates generating $1.5 billion in written premiums this year, driven by new partnerships and synergies with its auto finance business. Additionally, Ally Financial Inc.’s (NYSE:ALLY) online vehicle auction platform, Smart Auction, is enhancing its monetization efforts. Given these fundamentals and strategic initiatives, Ally Financial Inc. (NYSE:ALLY) presents a compelling investment opportunity in the digital currency and payments sector.
8. Fidelity National Information Services Inc. (NYSE:FIS)
Number of Hedge Fund Holders: 56
Fidelity National Information Services Inc. (NYSE:FIS) is a leading global provider of financial technology solutions, catering to financial institutions, businesses, and developers globally. The company is well-regarded for its innovative offerings in the fintech sector. FIS is one of the best digital currency and payments stocks to invest in.
On July 6, 2023, Fidelity National Information Services Inc. (NYSE:FIS) accelerated its separation plan to form two focused companies, enhancing strategic flexibility. This included selling a 55% stake in its Worldpay Merchant Solutions business, a transaction completed on January 31, 2024. Such strategic moves position Fidelity National Information Services Inc. (NYSE:FIS) to concentrate on its core competencies and drive growth. In November 2024, Fidelity National Information Services Inc. (NYSE:FIS) acquired Dragonfly Financial Technologies, which specializes in digital business banking and cash management. This acquisition is expected to bolster FIS’s digital offerings and create cross-sell opportunities, particularly with banks that are already part of its extensive network.
The company has reported strong demand for its core banking and digital solutions, signing more core engagements in the first three quarters of 2024 than in all of 2023. Digital sales momentum is also impressive, with new sales nearly doubling year-over-year. Given its strategic acquisitions, strong sales growth across core banking and digital solutions, and solid performance, Fidelity National Information Services Inc. (NYSE:FIS) presents an attractive investment opportunity in the digital currency and payments sector.
7. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 62
American Express Company (NYSE:AXP) is a leading global payments company that is known for its integrated platform that includes card-issuing, merchant-acquiring, and card network services. The company caters to a wide range of clients, from individual consumers to large corporations, making it a significant player in the payments industry.
In the third quarter of 2024, American Express Company (NYSE:AXP) achieved record revenues of $16.6 billion, marking an 8% increase compared to the previous year. The net income also rose to $2.51 billion, or $3.49 per share, up from $2.45 billion or $3.30 per share a year earlier. This financial performance highlights the company’s robust growth trajectory and effective management strategies. A key driver of this success is the increase in Card Member spending, which grew by 6% in the same quarter. Additionally, revenue from card fees surged by 18%, demonstrating the company’s ability to attract and retain premium card members. American Express Company (NYSE:AXP) welcomed 3.3 million new premium card acquisitions, maintaining high retention rates and strong credit performance.
The company has been actively refreshing its product offerings to meet evolving consumer needs. Since the start of 2024, American Express Company (NYSE:AXP) has completed 40 product refreshes, including the launch of a new US Consumer Gold Card tailored for Millennial and Gen-Z consumers, who represent 80% of new accounts for this product. These product enhancements focus on popular categories like dining, which has seen a 7% increase in spending year-over-year.
AXP is one of the best digital money stocks to buy. Given these positive trends in financial performance, innovative strategies, and strong market positioning, American Express Company (NYSE:AXP) presents a compelling investment opportunity in the digital currency and payments sector.
GreensKeeper Asset Management stated the following regarding American Express Company (NYSE:AXP) in its Q3 2024 investor letter:
“American Express Company (NYSE:AXP) was our second-largest contributor this quarter, with a return of +17.1%. AXP continues to invest in its customers beyond traditional credit card rewards, recently enhancing its Global Dining Access to provide Platinum cardholders with exclusive reservations at premier restaurants worldwide. This focus on unique experiences has attracted a younger demographic, with millennials and Gen Z driving most of the customer acquisition and card spending growth in recent quarters. Exclusive events are more challenging to replicate than standard point reward systems, presenting a challenge for competing card issuers that lack AXP’s scale and concentrated base of affluent consumers. AXP has fine-tuned its offerings over decades to strengthen its network effect and shows no signs of slowing down.”
6. Block Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 64
Block Inc. (NYSE:SQ), previously known as Square Inc., is a prominent technology company focused on financial services. Its ecosystem includes Square, Cash App, TIDAL, and TBD, all designed to enhance access to the economy for various users. Square simplifies commerce for sellers with integrated solutions, while Cash App allows users to easily send, spend, and invest their money in stocks or even Bitcoin. Block Inc. (NYSE:SQ) is one of the best digital money stocks to invest in.
In the third quarter of 2024, Block Inc. (NYSE:SQ) reported impressive financial results. Gross profit grew by 19% year-over-year, reaching $2.25 billion. Square contributed $932 million to this figure, up 16%, while Cash App significantly increased its gross profit by 21%, totaling $1.31 billion. This growth reflects the company’s strong market position and effective strategies for expanding its services.
The company is also innovating with new features for sellers, including an enhanced point-of-sale experience for restaurants and a unified app for sellers expected to launch broadly in 2025. Additionally, Block Inc. (NYSE:SQ) is on track to transform 24 million Cash App Cards into a better alternative to credit cards when the company introduces Afterpay on Cash App Cards. Given these strategic moves and the robust financial performance demonstrated in Q3 2024, Block Inc. (NYSE:SQ) presents a compelling opportunity for investors looking at digital currency and payments stocks.
5. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 66
Global Payments Inc. (NYSE:GPN) is a leading American financial technology company that provides payment solutions to merchants, issuers, and consumers worldwide. The company specializes in point-of-sale technology, software solutions, and processing payments through various channels, including credit and debit cards, as well as digital and contactless payments.
At its 2024 Investor Conference in September, Global Payments Inc. (NYSE:GPN) outlined its strategic focus on becoming the preferred partner for commerce solutions globally. The company aims to unify its Merchant Solutions under the Genius brand and expand these offerings internationally. This strategy targets small and medium-sized businesses (SMBs), providing them with comprehensive software and commerce enablement tools to help them grow. Additionally, Global Payments Inc. (NYSE:GPN) is enhancing its Issuer Solutions through cloud modernization and cross-selling initiatives. The company anticipates that operational transformations will unlock more than $500 million in adjusted run-rate operating income benefits by the first half of 2027. This focus on efficiency and innovation positions Global Payments Inc. (NYSE:GPN) for sustainable growth.
The company has entered into a definitive agreement to sell AdvancedMD, highlighting its commitment to optimizing its portfolio. Additionally, during the third quarter, Global Payments Inc. (NYSE:GPN) launched its point-of-sale (POS) solutions in Germany. The company aims to expand its point-of-sale (POS) solutions into new markets outside of the US, including key additional international markets like Mexico, Ireland, Poland, Austria, and Romania. Given its strategic initiatives and focus on innovation, Global Payments Inc. (NYSE:GPN) represents a compelling investment opportunity in the digital payments space.
4. Fiserv Inc. (NYSE:FI)
Number of Hedge Fund Holders: 71
Fiserv Inc. (NYSE:FI) is a prominent global fintech company that specializes in payment processing and financial services management. It offers a wide range of solutions, including account processing, digital banking, card issuer processing, network services, payments, e-commerce, and merchant acquiring and processing. Fiserv Inc. (NYSE:FI) is a key player in the financial technology landscape. In the third quarter of 2024, the company reported a 7% increase in GAAP revenue, reaching $5.22 billion. This growth was driven by a 9% rise in the Merchant Solutions segment and a 5% increase in Financial Solutions.
Fiserv Inc. (NYSE:FI) is focused on innovation to enhance its offerings. In October 2024, it partnered with DoorDash to implement an embedded finance application that provides delivery contractors with various financial services through a single app. This move allows Fiserv’s (NYSE:FI) to address the needs of gig economy workers. Additionally, the company has made strides in real-time payments. In September, Fiserv Inc. (NYSE:FI) completed a proof of concept with Walmart for Pay by Bank transactions over its NOW Network. This capability allows merchants to offer consumers more payment options and enhances transaction efficiency.
On October 31, 2024, Fiserv Inc. (NYSE:FI) announced that it is expanding its Clover platform to support small businesses with tailored “all-in-one” solutions that combine hardware and software for better operational efficiency. This strategic move is focused on addressing the unique needs of individual businesses, providing restaurants, retailers, and service-based businesses with innovative tools to streamline their operations. With its robust financial performance and commitment to innovation, Fiserv Inc. (NYSE:FI) is well-positioned for future growth. These factors make it an attractive investment opportunity in the digital payments sector, as it continues to evolve and meet the changing needs of its clients and consumers.
3. PayPal Holdings Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 90
PayPal Holdings Inc. (NASDAQ:PYPL) is a leading financial technology company that operates a robust online payment system and facilitates online money transfers across approximately 200 markets. It enables digital and mobile payments for consumers and merchants, making transactions easier and more secure. PayPal Holdings Inc. (NASDAQ:PYPL) is one of the best digital money stocks to invest in.
In the third quarter of 2024, PayPal Holdings Inc. (NASDAQ:PYPL) reported impressive financial results. Net revenues rose by 6% to $7.8 billion, while total payment volume increased by 9% to $422.6 billion. The company also saw a significant rise in GAAP operating income, which grew by 19% to $1.4 billion. These results indicate strong operational performance and effective management strategies.
Innovation is at the core of PayPal’s (NASDAQ:PYPL) growth strategy. The company has introduced new mobile checkout experiences designed to enhance conversion rates significantly. Over the past few quarters, the company completed testing over the past few quarters and is now rolling out new experiences to customers on both desktop and mobile. The new product experiences can lead to conversion lifts of over 100 basis points for vaulted checkouts and up to 400 basis points for one-time checkouts. Additionally, PayPal’s (NASDAQ:PYPL) “Buy Now, Pay Later” service has seen a usage increase of 15% to 20%.
With its focus on innovation and strong financial performance, PayPal Holdings Inc. (NASDAQ:PYPL) is well-positioned for future growth. These factors make PYPL an attractive investment opportunity in the digital payments sector.
Artisan Partners stated the following regarding PayPal Holdings Inc. (NASDAQ:PYPL) in its Q3 2024 investor letter:
“Our top contributor was PayPal Holdings Inc. (NASDAQ:PYPL), a financial technology company that enables digital and mobile payments between consumers and merchants. PayPal was a recent new purchase added to the portfolio in Q2. Better growth in payment volumes and transaction margins during PayPal’s latest quarter offered evidence that the new management team’s efforts are gaining traction. Notably, payment service provider Braintree returned to providing positive transaction margin, branded checkout contributed strongly to payment volume growth, and monetization at Venmo showed progress. Post-COVID, PayPal’s shares had been pressured by intensifying competition, the threat of which was seemingly exacerbated by prior management missteps. Shares traded for under 14X next year’s expected earnings at the time of our initial purchase. This was an attractive entry point to purchase a stake in a business with above-average—and improving—unit economics, a strong balance sheet and consistent free cash flow. Competent new management is already leaning on the company’s strong financial position to maximize the value of these assets.”
2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 131
Mastercard Incorporated (NYSE:MA) is a prominent American payment technology company that operates in over 200 countries. It offers a variety of services, including payment processing and related solutions, designed to make transactions secure and accessible for consumers, businesses, and governments. Mastercard Incorporated (NYSE:MA) is one of the best digital payments stocks to invest in. In the third quarter of 2024, the company reported strong financial results, with net revenue reaching $7.37 billion, a 13% increase from the previous year. This growth was driven by an expanding payment network and a rise in value-added services.
Mastercard Incorporated (NYSE:MA) continues to focus on innovation and strategic acquisitions to enhance its service offerings. The planned acquisitions of Recorded Future and Minna Technologies aim to boost its capabilities in AI-powered threat intelligence and subscription management. These initiatives are expected to strengthen Mastercard’s (NYSE:MA) position in the competitive payments landscape.
The company is also making strides in contactless payment technology, with tap-on-phone solutions now available in over 110 markets. The number of tap-on-phone locations has almost doubled since the beginning of 2024, showcasing Mastercard’s (NYSE:MA) commitment to expanding payment accessibility.
On November 13, Mastercard Incorporated (NYSE:MA) announced its plans for transforming online shopping by 2030. The goal is to eliminate the need for physical card numbers and passwords, focusing instead on secure biometric authentication. This forward-thinking strategy positions Mastercard Incorporated (NYSE:MA) as a leader in the evolving digital payment space. With its strong financial performance, innovative strategies, and commitment to enhancing security and accessibility, Mastercard Incorporated (NYSE:MA) represents a compelling investment opportunity in the digital payments sector.
1. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 165
Visa Inc. (NYSE:V) is a leading global digital payments company that facilitates electronic transactions across more than 200 countries. It operates primarily through Visa-branded credit, debit, and prepaid cards, providing essential infrastructure for financial institutions and merchants without directly issuing cards or extending credit. Visa Inc. (NYSE:V) is one of the best digital money stocks to buy.
On September 26, 2024, the company announced its plan to acquire Featurespace, a firm specializing in real-time AI technology for fraud prevention. This acquisition aims to enhance Visa Inc.’s (NYSE:V) capabilities in combating payment fraud and is expected to close in fiscal 2025, pending regulatory approvals. Such strategic moves underline Visa Inc.’s (NYSE:V) commitment to innovation and security in the rapidly evolving digital payments landscape.
Financially, the company has shown robust performance. In the fourth quarter of fiscal 2024, Visa Inc. (NYSE:V) reported net revenues of $9.6 billion, marking a 12% increase year-over-year. Additionally, GAAP net income rose by 14% to $5.3 billion. This strong performance was driven by increased payment volumes and transactions. Visa Inc. (NYSE:V) also returned significant value to shareholders, repurchasing approximately 62 million shares in its fiscal year 2024 for $16.7 billion, indicating confidence in its financial health.
Additionally, the company has a strong focus on innovation as it aims to expand its capabilities to non-card payments. During its fiscal fourth quarter of 2024, Visa Inc. (NYSE:V) introduced the Visa A2A service, which aims to simplify account-to-account payments, targeting bill payments in the UK with a launch planned for 2025. This initiative reflects Visa Inc.’s (NYSE:V) strategy to diversify its offerings beyond traditional card payments and tap into new revenue streams.
With a strong brand presence and ongoing innovations in payment technology, Visa Inc. (NYSE:V) is well-positioned for future growth. As of the third quarter of 2024, Visa Inc. (NYSE:V) was held by 165 hedge funds, according to Insider Monkey’s database. Mar Vista Investment Partners, LLC stated the following regarding Visa Inc. (NYSE:V) in its “Mar Vista Focus strategy” third quarter 2024 investor letter:
“After lagging the broader markets over the last one, three, and five years, we believe Visa Inc.’s (NYSE:V) stock now reflects a more conservative and realistic expectation for future cash flow growth. The electronic transaction toll-taker has long enjoyed a highly defensible network effect that connects global buyers and sellers and scale advantages that keep upstart competitors from disrupting the industry’s economics. At the same time, Visa directly benefits from the secular trend of replacing cash with e-payments. Penetration rates and transaction volumes in developed markets will inevitably slow over the next five years yet we expect Visa revenues to grow 8-10% over our investment horizon. Key value drivers remain global consumer spending growth, e-transaction penetration, “new flows” expansion in areas like business-to-business transactions, and lastly, value-added client service growth.
Visa’s dominant position is reflected in its nearly pristine financials: 68% operating margins, greater than 70% incremental operating margins and only 3-4% capital expenditures as a percent of sales. Awash in excess capital, Visa is one of the more aggressive purchasers of its own stock. Shares outstanding over the last fifteen years have declined by one-third and we expect the company to continue to repurchase 2-3% of shares outstanding annually. Since the 2016 acquisition of Visa Europe, total returns on capital have expanded from 25% to 50% and we expect the metric to approach 100% over the next five years as net operating profits expand roughly 60% on a flat capital base. Overall, Visa should compound per share intrinsic value at 10-13% over the next five years.”
Overall, V ranks first among the 10 best digital currency and payments stocks to invest in. While we acknowledge the potential of chemical companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than V but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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