In this piece, we will take a look at the 7 best digital currency and payments stocks to buy now.
Digital currencies, particularly Central Bank Digital Currencies (CBDCs), are revolutionizing the way payment systems operate, drawing significant interest from governments and institutions worldwide. Unlike traditional currencies, CBDCs are digital versions of a nation’s currency issued and regulated by central banks, offering the potential to enhance the efficiency of payment transactions, reduce costs, and accelerate settlement times. These digital currencies utilize distributed ledger technology or a central database, ensuring that every transaction is recorded, providing a transparent and secure system. Over the past decade, CBDCs have gained traction as a solution to improve cross-border payments, a key area where traditional banking systems often fall short due to high costs, lengthy processing times, and complex intermediaries. CBDCs aim to streamline these processes by reducing payment chains and facilitating faster, more efficient transactions between countries. For example, countries like the Bahamas and China have already launched their own CBDCs, with several others, including the United States, actively piloting or researching their implementation.
These initiatives are not only focused on enhancing wholesale cross-border interbank transactions but also on retail CBDCs, which could significantly improve financial inclusion by making financial services more accessible to the general public. However, the adoption of CBDCs is not without challenges. There are concerns about the potential impact on the stability of financial systems, particularly regarding the roles of financial intermediaries, which could be drastically altered or diminished. Additionally, issues related to privacy, security, and the need for robust regulatory frameworks remain critical as governments explore the broader implementation of CBDCs. As global interest in digital currencies continues to grow, CBDCs are positioned to play a pivotal role in reshaping the global payments landscape, offering a promising future for faster, more efficient, and inclusive financial systems. McKinsey’s 2023 Digital Payments Consumer Survey reveals that digital payments have become deeply ingrained in consumer behavior, with over 90% of respondents using digital payment methods within the past year. The survey shows that online purchasing remains the most popular form of digital payment, while in-app and in-store payments are growing, particularly among younger consumers. Notably, the trend toward consolidating digital wallets has intensified, with a significant drop in the number of consumers using multiple wallets. Security and trust are critical factors in wallet selection, with many consumers now favoring providers with robust security measures.
The global digital payment market is poised for remarkable growth, with projections indicating it will reach $361.3 billion by 2030, expanding at a compound annual growth rate (CAGR) of 21.1% from 2024 to 2030 (according to industry data by Research and Markets). This rapid expansion is largely fueled by the increasing shift toward non-cash transactions, driven by both consumer preference and the technological advancements occurring within the financial technology (fintech) sector. As consumer behaviors evolve, fintech companies and traditional banks are under pressure to enhance and innovate their digital services to keep up with these changes. The market is also seeing significant contributions from the adoption of biometric authentication methods, such as facial recognition and fingerprint scanning. According to Payments Industry Intelligence, these advanced security measures are expected to protect an estimated $2.5 trillion in mobile payment transactions by 2024, underscoring the critical role of security in the digital payments landscape.
Within this growing market, several segments are expected to maintain or achieve dominance due to various factors. The payment processing segment, for example, is anticipated to retain its leadership position throughout the forecast period. This is largely due to the widespread introduction and expansion of payment networks like Mastercard, Visa, and Rupay across multiple countries, which are helping to drive growth in this area. Additionally, the point-of-sale (POS) segment, which dominated the market in 2023, is projected to experience substantial growth. This growth is being driven by the increasing preference for digital wallets, particularly for e-commerce transactions and online purchases, as consumers seek more convenient and secure payment options. On-premise deployment of digital payment solutions continues to be a popular choice, especially among large enterprises that require secure and efficient transaction processing. These companies are increasingly adopting digital payment systems to streamline their operations, enhance the visibility of transactions, and improve the overall customer experience by reducing the time required to complete payments.
Geographically, the Asia-Pacific region is expected to witness significant growth from 2024 to 2030, with a notable increase in the adoption of digital payment solutions in emerging economies such as China and India. This regional growth is likely to create new opportunities in the market as these economies continue to embrace digital technologies and move away from traditional cash-based transactions. The banking, financial services, and insurance (BFSI) sector, in particular, is expected to play a crucial role in driving the market’s expansion, as the continued digitalization of banks and financial institutions enhances the adoption of digital payment methods. This trend is not only fostering growth within the region but is also contributing to the global shift towards a more digitally-driven economy.
For investors looking to capitalize on this rapidly expanding sector, the article offers insights into some of the top-performing stocks in the digital currency and payments space.
A closeup of virtual and physical Mastercard cards demonstrating the company’s innovative payment platform.
Our Methodology
We started off our list by compiling a list of all companies that offer digital payments by sifting through ETFs, running screens on Finviz, and reading articles published online. We compiled a list of 15 stocks and selected the 7 that were the most popular among elite hedge funds. The hedge fund sentiment was sourced from Insider Monkey’s database of over 900 hedge funds and is dated as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. 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).
07. Discover Financial Services (NYSE:DFS)
Number of Hedge Fund Holders: 68
At number seven on our list of seven best digital currency and payments stocks to buy now stands Discover Financial Services (NYSE:DFS). Discover Financial Services (NYSE:DFS) is a robust player in the financial sector, showing strength across its Digital Banking and Payment Services segments. The company’s diverse portfolio, which includes Discover-branded credit cards, personal loans, and payment transaction processing services like PULSE and Diners Club, reflects a solid foundation for sustainable growth. Discover Financial Services (NYSE:DFS) Q2 2024 performance highlighted its ability to navigate challenges and seize strategic opportunities. A key milestone was the agreement to sell its private student loan portfolio to Carlyle and KKR affiliates, which aligns with its strategy to simplify operations and enhance focus on core businesses. This sale, along with a favorable litigation settlement, positively impacted financial results, leading to a 70% year-over-year increase in net income to $1.5 billion.
Despite the broader economic environment, Discover Financial Services (NYSE:DFS) credit performance remains resilient, with net interest margin expansion and disciplined credit management. The company’s proactive risk management and regulatory compliance measures, including settling merchant class actions related to card misclassification, underscore its commitment to resolving legacy issues and strengthening its operational footing. Moreover, the pending merger with Capital One is a significant development that could enhance Discover Financial Services (NYSE:DFS) competitive position by creating a more extensive network and greater operational scale. The merger, progressing smoothly with favorable regulatory signals, could unlock further value for shareholders. Overall, Discover Financial Services (NYSE:DFS) strategic initiatives, robust financial performance, and future prospects, particularly with the upcoming merger, position the company well for continued growth, making it an attractive investment opportunity in the financial services sector.
During Q2, 2024 the count of hedge funds holding positions in Discover Financial Services (NYSE:DFS) fell to 68 from 71 in the prior quarter, as reported by Insider Monkey’s database encompassing 912 hedge funds. These holdings collectively amount to around $3.41 billion. Glenn Greenberg’s Brave Warrior Capital emerged as the leading shareholder among these hedge funds during this timeframe.
06. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 59
Block, Inc. (NYSE:SQ) holds the sixth spot on our list of seven best digital currency and payments stocks to buy now. Block, Inc. (NYSE:SQ) demonstrated a strong financial performance in Q2 2024, which underscores the company’s potential for continued growth and profitability. The company’s reported earnings per share (EPS) of $0.93 exceeded expectations of $0.829, reflecting the strength of its business model and operational efficiency. The company’s gross profit reached $2.23 billion, marking a 20% year-over-year increase. Cash App, one of Block, Inc. (NYSE:SQ) primary business segments, contributed $1.3 billion in gross profit, a 23% year-over-year rise, showcasing its growing user base and increased engagement through products like Cash App Card, Cash App Borrow, and buy now, pay later services. Square, another key segment, also performed well, generating $923 million in gross profit, up 15% year-over-year, driven by strength in software, integrated payments, and banking services.
Block, Inc. (NYSE:SQ) ability to generate substantial free cash flow is another positive indicator of its financial health. The company reported $1.43 billion in adjusted free cash flow for the 12 months ending in June 2024, more than doubling from the prior year. This robust cash flow has enabled Block to initiate a significant $3 billion share repurchase program, signaling confidence in its future prospects and a commitment to returning value to shareholders. Furthermore, Block, Inc. (NYSE:SQ) strategic shift to a functional organizational structure is expected to enhance collaboration across its ecosystems, improving efficiency and agility in executing growth initiatives. The company’s focus on deepening customer engagement through innovative financial products and expanding its market presence positions it well for sustained growth.
With a clear path toward achieving its long-term financial goals, including the Rule of 40 by 2026, Block, Inc. (NYSE:SQ) strong fundamentals and strategic initiatives make it a compelling investment opportunity in the digital payments and financial technology sector.
During Q2, 2024 the count of hedge funds holding positions in Block, Inc. (NYSE:SQ) fell to 59 from 65 in the prior quarter. These holdings collectively amounted to around $2.68 billion. Catherine D. Wood’s ARK Investment Management emerged as the leading shareholder among these hedge funds during this timeframe.
Baron FinTech Fund stated the following regarding Block, Inc. (NYSE:SQ) in its Q2 2024 investor letter:
“Block, Inc. (NYSE:SQ) provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. Shares gave back gains from earlier this year despite reporting strong quarterly results and raising full-year guidance. In the first quarter, gross profit grew 22% and EBITDA grew 91%, both exceeding Street expectations. Given the strong start to the year, second-quarter guidance of 16% to 17% gross profit growth may have disappointed some investors. Management remains committed to a “Rule of 40” investment framework in 2026 with at least mid-teens gross profit growth and a mid-20% operating margin. We continue to own the stock due to Block’s long runway for growth, durable competitive advantages, and innovative product offering.”
05. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 66
Global Payments Inc. (NYSE:GPN) is a key player in the payment technology and software solutions industry, operating through its Merchant Solutions, Issuer Solutions, and Business & Consumer Solutions segments. The company’s Q2 2024 earnings beat expectations, reporting an EPS of $2.93, slightly above the anticipated $2.91, reflecting strong operational performance across its diverse portfolio. The Merchant Solutions segment remains a standout, delivering high single-digit organic growth driven by robust demand for integrated software and point-of-sale (POS) solutions. The successful integration of EVO Payments has enhanced the company’s capabilities, particularly in embedded payments and commerce enablement solutions, which are seeing accelerated adoption. The segment also benefits from innovative offerings like the PROFAC solution, which has shown substantial growth in active merchants and merchant volumes.
Issuer Solutions also performed well, with a notable increase in accounts on file and strong execution in cross-selling value-added services like fraud prevention and virtual card solutions. The segment’s ability to manage and simplify card portfolios for financial institutions positions Global Payments Inc. (NYSE:GPN) as a leader in the sector, particularly as it continues to expand its addressable market through modernization efforts. Furthermore, Global Payments Inc. (NYSE:GPN) is strategically expanding its international presence, with significant progress in the European market, including key partnerships in the EV charging sector and acquisitions aimed at strengthening its distribution capabilities in the UK. The company’s diversified revenue streams, ongoing investment in technology, and global expansion efforts underscore its robust fundamentals, making it a compelling investment in the payment technology space.
In the second quarter of 2024, there were 66 hedge funds holding positions in Global Payments Inc. (NYSE:GPN), as compared to 52 in the previous quarter according to Insider Monkey’s database. The total value of these holdings is approximately $3.67 billion. Richard S. Pzena’s Pzena Investment Management held the largest stake among these hedge funds during this period.
Weitz Investment Management Partners III Opportunity Fund stated the following regarding Global Payments Inc. (NYSE:GPN) in its Q2 2024 investor letter:
“Global Payments Inc. (NYSE:GPN) reversed its first-quarter gains, becoming the Fund’s top detractor for the quarter and second leading detractor year-to-date. Investor skepticism remains entrenched despite consistent operational execution. Current results are partially muddied by the moving parts of divestitures and positive synergies from the acquisition of former competitor EVO Payments that have yet to develop, leading many investors to adopt a “wait and see” approach in advance of an expected Investor Day later this year.”
04. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 68
American Express Company (NYSE:AXP) continues to demonstrate strong financial performance, making it a compelling investment opportunity based on solid fundamentals. The company operates through multiple segments, including U.S. Consumer Services, Commercial Services, International Card Services, and Global Merchant and Network Services, which collectively contribute to its diversified revenue streams. In the second quarter of 2024, American Express Company (NYSE:AXP) reported a remarkable earnings per share (EPS) of $4.15, significantly surpassing expectations of $3.26. This impressive result underscores the company’s ability to generate robust earnings growth, even in a challenging economic environment. The 9% year-over-year revenue growth, driven by strong performance across all major segments and geographies, highlights the resilience and scalability of American Express’s business model. A key driver of this growth is the company’s premium customer base, known for their high spending and excellent credit profiles. American Express Company (NYSE:AXP) continues to attract and retain these customers through superior product offerings, as evidenced by 24 consecutive quarters of double-digit growth in card fee revenue. Additionally, the company’s strategic investments in marketing, product innovation, and technology further enhance its value proposition, driving long-term customer loyalty and engagement.
Moreover, the sale of Accertify in Q2 2024 contributed an after-tax gain of $479 million, which the company plans to fully reinvest in its core business, reinforcing its commitment to sustainable growth. American Express Company (NYSE:AXP) disciplined expense management, combined with its ability to scale operations efficiently, enables it to invest heavily in growth initiatives while still delivering exceptional earnings. With an increased EPS guidance range of $13.30 to $13.80 for the full year, American Express Company (NYSE:AXP) is well-positioned to continue its upward trajectory, making it a strong buy for investors seeking reliable growth and solid returns.
The number of hedge funds in Insider Monkey’s database owning stakes in American Express Company (NYSE:AXP) grew to 68 in Q2 2024, from 66 in the preceding quarter. The consolidated value of these stakes is nearly $38.48 billion. Among these hedge funds, Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q2.
Artisan Select Equity Fund stated the following regarding American Express Company (NYSE:AXP) in its first quarter 2024 investor letter:
“American Express Company (NYSE:AXP) shares rose 22% this quarter. This is an interesting case study given our earlier discussion about inflation. American Express operates one of the largest credit card networks in the world. Its revenue is largely a function of a fee rate applied to the dollar value of goods and services that are transacted through its network. That dollar value is, of course, nominal. As inflation pushes up the value of those goods and services as it has for the past few years, American Express will capture that value through its fee structure. The past few years inflation has clearly been a benefit. Aside from its inherent inflation protection, the business is a very strong one. Payments continue to shift toward electronic forms, benefiting American Express. It also has a strong brand that attracts loyal and highly profitable customers that are the envy of the industry. Recent results have been strong with revenues moving nicely ahead of GDP.”
03. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 87
PayPal Holdings, Inc. (NASDAQ:PYPL) stands at number three on our list of seven best digital currency and payments stocks to buy now. PayPal Holdings, Inc. (NASDAQ:PYPL) continues to demonstrate its strength as a global leader in digital and mobile payments, delivering impressive financial results for Q2 2024. The company surpassed earnings expectations, reporting a non-GAAP EPS of $1.19, a 36% increase year-over-year, driven by solid growth in transaction margin dollars and revenue. PayPal Holdings, Inc. (NASDAQ:PYPL) total payment volume rose by 11% to $417 billion, and revenue grew by 9% on a currency-neutral basis. The company is making significant strides in its transformation strategy, which is aimed at long-term, sustainable growth. Key areas such as branded checkout, Braintree, and Venmo are contributing positively to PayPal Holdings, Inc. (NASDAQ:PYPL) overall performance. Branded checkout continues to grow profitably, and Braintree has returned to meaningful transaction margin dollar growth for the first time in over two years.
Venmo, a crucial part of PayPal Holdings, Inc. (NASDAQ:PYPL) ecosystem, saw an 8% increase in total payment volume, reaching $73 billion, with monthly active accounts growing by 5%. The company is also expanding its addressable market through strategic innovations like Fastlane and new value-added services, which are expected to enhance consumer and merchant engagement across its platform. PayPal Holdings, Inc. (NASDAQ:PYPL) robust two-sided network of consumers and merchants worldwide gives it a unique competitive edge, positioning it to capitalize on the $6 trillion global e-commerce market. With continued investments in strategic growth initiatives and partnerships with major companies like Meta, PayPal Holdings, Inc. (NASDAQ:PYPL) is well-positioned for long-term growth and profitability. The company’s focus on improving customer experiences, particularly in mobile and small to medium-sized businesses, further solidifies its position as a leader in the digital payments space.
In the second quarter of 2024, there were 87 hedge funds holding positions in PayPal Holdings, Inc. (NASDAQ:PYPL), as compared to 82 in the previous quarter according to Insider Monkey’s database. The total value of these holdings is approximately $2.98 billion. Ken Griffin’s Citadel Investment Group held the largest stake among these hedge funds during this period.
Wedgewood Partners stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q2 2024 investor letter:
“PayPal Holdings, Inc. (NASDAQ:PYPL) detracted from portfolio performance during the quarter despite continued solid corporate performance. Revenues grew +10% (FX neutral), while adjusted operating income grew +15%, driven by higher transaction margin dollars and excellent expense discipline. The Company’s core branded payments volume accelerated compared to last quarter and continues to grow in line with e-commerce. PayPal has several investment initiatives that we expect will contribute to accelerating growth over the next few years to help take advantage of their leading market share in e-commerce payments. The Company serves over 35 million online merchants. PayPal’s large, online merchant acceptance base is a rare and crucial component to profitably monetizing payment volumes that many competitors lack. The Company trades at earnings multiples that we think are quite cheap, given its strong positioning in the long-term secular expansion of global e-commerce.”
02. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 142
Mastercard Incorporated (NYSE:MA), the world’s second-largest credit card payment network, reported robust financial performance in its Q2 2024 earnings, surpassing expectations with an EPS of $3.59 against the forecasted $3.51. The company’s strong fundamentals and strategic initiatives underpin its bullish outlook. Mastercard’s revenue surged by 13% year-over-year, driven by broad-based momentum across its business segments. The growth was fueled by healthy consumer spending, particularly in cross-border volumes, which saw a 17% increase.
Mastercard Incorporated (NYSE:MA)s expansion into emerging markets and its focus on digital transformation further solidify its growth trajectory. The company continues to capitalize on the secular shift towards digital payments, with significant investments in technology and partnerships. For instance, Mastercard’s collaboration with Varo Bank and the extension of agreements with Wells Fargo and National Bank of Canada exemplify its ability to secure and retain key deals. Additionally, Mastercard Incorporated (NYSE:MA) strategic realignment to enhance core payments and services positions it well for sustained long-term growth. The company’s focus on innovations, such as one-click payments and biometric checkout, demonstrates its commitment to staying ahead in the competitive payments landscape. Mastercard Incorporated (NYSE:MA) robust pipeline of deals in sectors like travel and healthcare, coupled with its strong presence in high-growth markets like Africa, reinforces its potential for continued success. Given these factors, Mastercard Incorporated (NYSE:MA) diversified business model and strategic initiatives make it a compelling investment, poised for significant growth in the evolving global payments industry.
The number of hedge funds in Insider Monkey’s database owning stakes in Mastercard Incorporated (NYSE:MA) fell to 142 in Q2 2024, as compared to 148 in the preceding quarter. The consolidated value of these stakes is nearly $15.34 billion. Among these hedge funds, Charles Akre’s Akre Capital Management was the company’s leading stakeholder in Q2.
L1 Capital International Fund stated the following regarding Mastercard Incorporated (NYSE:MA) in its Q2 2024 investor letter:
“The share prices of Mastercard Incorporated (NYSE:MA) and Visa, both long term Fund investments, have both drifted down over recent months. There have been no dramatic developments, but there has been a general slight softening in the rate of growth of consumer spending in the U.S. and globally, a court decision rejecting Mastercard and Visa’s proposed settlement of a long-lasting dispute with U.S. merchants as well as other modest adverse regulatory developments. We continue to view Mastercard and Visa as two of the highest quality businesses in the world, and both are well placed to continue to deliver attractive, risk adjusted returns to shareholders over time.”
01. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 163
Topping our list of seven best digital currency and payments stocks to buy now is Visa Inc. (NYSE:V). Visa Inc. (NYSE:V) continues to demonstrate its dominance in the global payments industry, as evidenced by its solid Q3 2024 financial performance. Reporting earnings per share (EPS) of $2.42, which aligns with market expectations, Visa Inc. (NYSE:V) showcased its robust revenue growth, posting $8.9 billion in net revenue—a 10% year-over-year increase. This strong performance is underpinned by the company’s strategic expansion and deepening partnerships across various regions, further solidifying its position as a leader in electronic payments.
Visa Inc. (NYSE:V) global payments network continues to thrive, with a 7% year-over-year increase in overall payments volume and a 10% rise in processed transactions. Particularly noteworthy is the 14% growth in cross-border volume (excluding intra-Europe transactions), highlighting Visa’s ability to capture increased international market share. The company’s focus on innovation and customer engagement is reflected in its Global Net Promoter Score (NPS) of 76, a three-point increase from the previous year.
Strategic partnerships remain a cornerstone of Visa Inc. (NYSE:V) growth strategy. Recent agreements with major financial institutions, such as Lloyds Banking Group in the UK and KB Kookmin Card in Korea, exemplify Visa’s ability to expand its credit and debit portfolios while leveraging value-added services. Furthermore, Visa’s brand strength is evident through its successful co-brand partnerships and global initiatives, such as the upcoming Olympic Games, which have significantly increased brand visibility and customer engagement.
Visa Inc. (NYSE:V) ongoing investments in new payment flows, including Visa Inc. (NYSE:V) Direct and B2B solutions, coupled with the expansion of value-added services like tokenization and risk management, position the company for sustained growth. As digital payments continue to proliferate globally, Visa Inc. (NYSE:V) comprehensive suite of products and services ensures it remains at the forefront of the industry, making it a compelling investment opportunity.
In the second quarter of 2024, the number of hedge funds with stakes in Visa Inc. (NYSE:V) decreased to 163 from 166 in the previous quarter, according to Insider Monkey’s database. The combined value of these stakes is approximately $24.93 billion. Chris Hohn’s TCI Fund Management emerged as the largest stakeholder among these hedge funds during this period.
Aoris International Fund stated the following regarding Visa Inc. (NYSE:V) in its Q2 2024 investor letter:
“Visa Inc. (NYSE:V) operates the world’s largest payments network, which facilitates the movement of money between merchants, financial institutions, consumers, businesses, and governments.
The company is best known for enabling consumers to make debit and credit card payments. In the year to September 2023, 4.3 billion Visa cardholders made 213 billion transactions on its network, to a total value of US$12.1 trillion.
Compared to cash and cheques, which are still widely used around the world, Visa’s network is a more convenient, secure, and ubiquitous way for consumers to pay. Visa has invested to reduce friction and fraud in the payments experience, to the benefit of both merchants and consumers…” (Click here to read the full text)
VISA stands at number one on our list of seven best digital currency and payments stocks to buy now. However, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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