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Contactless Payment Gaining Popularity: 4 Stocks to Watch

With more people preferring the contactless mode of payment owing to the pandemic, companies like Alphabet's (GOOGL) Google Pay and Apple's (AAPL) App...

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This story originally appeared on Zacks

Contactless payments have been in existence for a decade now but not too many used it till the pandemic hit. The COVID-19 pandemic has completely changed the way people have been transacting so long. As millions stayed home and avoided visiting physical stores, online sales gained traction and so did digital payment.

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Not only customers but also retailers have started preferring contactless payments and are strengthening their digital payment arm. With the pandemic far from over, and new variants like Delta reigniting fears, contactless payments are only likely to gain further popularity in the coming days.

Contactless Payment Gains Traction

According to a report in Forbes, 69% of the retailers reported a jump in contactless payment during the pandemic. As stores remained shut, people were left with no choice but to make contactless payments after every purchase.

Although stores started opening after June last year and footfall increased, millions preferred to make touch-free payments to maintain social distancing. Payments through mobile while shopping in store grew 29% in 2020.

According to eMarketer, over 92% of Americans made payments through mobile at least once during a six-month period in 2020. Retails too are more comfortable accepting digital payments.

As quoted on nfcw.com, the State of Retail Payments study, which was carried out by the National Retail Federation (NRF) along with market research company Forrester, 67% of retailers in the United States now prefer accepting contactless payment. According to NRF, 58% of U.S. retailers now accept touch-free payment, reflecting a rise of 18% from 2019.

Contact Payment Is Here to Stay

Merchants, retailers and consumers are all concerned about their health, which has seen contactless payment options gaining popularity. The ease of touch-free payments has struck a chord with both customers and retailers, thanks to the coronavirus outbreak. Americans have lagged in terms of contactless preference but not anymore.

Also, payment solution companies are introducing newer modes of contactless payments to help customers.

According to the Forbes report, merchants expect a 94% rise in contactless payments over the next 18 months. Retail Dive predicts that mobile payments users will spend $1,670 in 2021 on average.

In the coming days, contactless payments are only going to gain popularity as people have finally realized the comfort and convenience of shopping and paying online. Moreover, fears of the Delta variant of the coronavirus make act as a driver.

Stocks to Watch

Apple, Inc.’s AAPL Apple Pay is a mobile contact payment system and digital wallet service that Apple Inc. introduced in 2014. The service allows users to pay for products and services using near field communication (NFC) at the point of sale, whether in person, via iOS apps or the Internet.

The company’s expected earnings growth rate for the current year is 70.4%. The Zacks Consensus Estimate for current-year earnings has improved 7.9% over the past 60 days. Apple carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PayPal Holdings, Inc. PYPL has emerged as one of the largest online payment solution providers on the back of its strong product portfolio and a two-sided platform that enables it to offer a smooth and secure transaction facility to both customers and merchants.

The company’s expected earnings growth rate for the current year is 21.9%. Its shares have gained 8.8% in the past three months. Presently, PayPalhas a Zacks Rank #3 (Hold).

Alphabet, Inc. GOOGL, apart from other products and services, also offers Google Pay, a digital wallet platform and online payment system developed to power in-app and tap-to-pay purchases on mobile devices, enabling users to make payments with Android phones, tablets or watches. 

The company’s expected earnings growth rate for next year is 73.8%. The Zacks Consensus Estimate for current-year earnings has improved 14.3% over the past 60 days. Alphabet currently carries a Zacks Rank #3.

Square, Inc. SQ offers financial and marketing services through its comprehensive commerce ecosystem that helps sellers to start, run and grow their businesses.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 19.9% over the past 60 days. Square carries a Zacks Rank #3.



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