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September 1, 2020Blog Posts

Why Wall Street Loves Payments

Digital Transactions – Read the full article

Shift4 and Bill.com have joined a club of about 40 publicly traded payments companies that, in addition to the four U.S.-based global card networks, includes merchant acquirers, online and specialty processors, PayPal, and all manner of tech suppliers.

As a group, the publicly traded payments companies have done better than the broader market for years, according to merchant-acquiring consultancy The Strawhecker Group.

Starting in the first quarter of 2011, a $100 investment in a basket of more than 25 payments stocks TSG tracks would have been worth $670 by 2020’s second quarter, representing a 22% compounded annual growth rate. That compares with $234 for the equivalent of a $100 investment in the S&P 500 over the same period, which had a compounded growth rate of 10%.

“You look at a lot of the payments stocks, even some of the legacy companies … their stocks have been holding up fairly well,” says Jared Drieling, senior director of consulting and market intelligence at Omaha, Neb.-based TSG.

TSG’s Drieling says Shift4’s integrated offerings enable the company to capitalize quickly on new market trends. He points to the huge spike in restaurants’ demands for online-ordering and related capabilities in response to the closure of inside dining.

“Integrated payments really give you that ability to pivot and focus on channels that are [growing],” he says. “A lot of those merchants are looking to pivot, and quickly.”

The acquiring industry isn’t noted for flashy advertising, but Drieling says Square Inc. and Shift4 have stood out. Shift4 has advertised on the reality TV show Bar Rescue, and in July it was designated the “Official Credit Card Processing Company of the Las Vegas Raiders” and the Raiders’ Allegiant Stadium, where all payment transactions will be processed on Shift4 technology.

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