formthirteen Posted January 2 Posted January 2 Inspired by @Rainier I thought I would start a new thread on payment networks and processors. MA, V, AXP are perhaps obvious choices for anyone's portfolio. Are there any other stocks that are interesting? I first looked at GPN when it traded at around 200 USD in 2021. I'm glad GPN didn't pass my smell test. I have owned both FOUR and PYPL briefly last year before I noticed 2025 is not the year of payment networks & processors. Maybe 2026 is? I'm already familiar with PYPL but can't make myself buy it again. KLAR seems pretty cheap. GPN's FCF is impressive but is it suistainable? WU is a great example of what market sentiment and disruption does to a stock. Attaching some data for anyone interested: 52-Week Low Symbol Current 52W Low 52W High Distance Pct from Low ------ ------- ------- -------- -------- ------------ FOUR $62.70 $61.23 $127.50 $1.47 2.4% KLAR $28.74 $27.90 $47.48 $0.84 3.0% PYPL $58.20 $55.85 $93.25 $2.34 4.2% FISV $66.29 $59.56 $238.59 $6.73 11.3% PAYO $5.50 $4.92 $11.19 $0.59 12.0% GPN $75.34 $65.93 $115.19 $9.41 14.3% V $347.39 $299.00 $375.51 $48.39 16.2% WU $9.34 $7.85 $11.95 $1.49 19.0% MA $563.30 $465.59 $601.77 $97.71 21.0% TOST $34.55 $28.12 $49.66 $6.42 22.8% ADYEY $16.33 $13.14 $19.94 $3.19 24.3% PAY $29.59 $22.65 $40.43 $6.94 30.6% MQ $4.66 $3.48 $7.04 $1.18 34.0% BILL $51.98 $36.55 $100.19 $15.43 42.2% XYZ $65.02 $44.27 $94.25 $20.74 46.9% COIN $237.31 $142.58 $444.65 $94.73 66.4% FLYW $13.78 $8.20 $21.31 $5.58 68.1% AXP $370.95 $220.43 $387.49 $150.52 68.3% DLO $14.14 $7.61 $16.78 $6.53 85.8% STNE $14.80 $7.72 $19.95 $7.08 91.7% AFRM $74.71 $30.90 $100.00 $43.81 141.8% FCF Yield Symbol FCF/EV FCF/P Spread EV/FCF P/FCF FCF Rating ------ ------ ----- ------ ------ ----- --- ------ WU 11.96% 10.30% -1.66% 8.4x 9.7x $368.9M *** PYPL 8.08% 7.99% -0.09% 12.4x 12.5x $6.8B *** BILL 7.72% 6.56% -1.16% 13.0x 15.2x $312.5M ** GPN 7.06% 10.25% +3.20% 14.2x 9.8x $2.9B ** AXP 5.58% 5.83% +0.25% 17.9x 17.2x $12.1B ** FOUR 4.82% 5.45% +0.63% 20.7x 18.3x $391.9M * ADYEY 4.70% 3.64% -1.05% 21.3x 27.4x $1.7B * FLYW 4.65% 3.54% -1.11% 21.5x 28.3x $90.5M * MQ 4.57% 1.93% -2.64% 21.9x 51.7x $37.0M * COIN 4.43% 4.06% -0.37% 22.6x 24.6x $2.6B * PAYO 3.74% 3.22% -0.51% 26.8x 31.0x $116.5M * FISV 3.68% 4.37% +0.69% 27.2x 22.9x $5.1B * XYZ 3.35% 2.95% -0.40% 29.8x 33.9x $1.6B * V 3.27% 3.27% +0.00% 30.6x 30.6x $21.6B * MA 2.77% 2.82% +0.05% 36.0x 35.4x $13.6B AFRM 2.14% 2.68% +0.53% 46.7x 37.4x $601.7M TOST 1.57% 1.47% -0.11% 63.5x 68.1x $306.0M PAY 0.70% 0.66% -0.04% 143.1x 150.7x $27.1M DLO N/A N/A N/A -83.6x -93.2x -$34.5M STNE N/A N/A N/A -1.6x -3.2x -$718.9M Data is from quickfs and yahoo and might contain errors. DYOD.
Marco Van Basten Posted January 3 Posted January 3 One would think that COF with the purchase of Discover is interesting, no? 8x 2027 consensus EPS?
Spekulatius Posted January 3 Posted January 3 WU has been a secular loser for a few years. GPN, PYPL, FOUR are still growing organically, so they are not the same situation. As long as they have some growth and stable margins, they should do OK. COF is a different business and has credit risk. It’s a CC company with a bank attached.
tnathan Posted January 5 Posted January 5 GPN will do well simply because it trades so cheaply and doesn't have enough hair on it to trade this cheaply. Long term loser, but things in this world don't move that quickly and it still grows. Klarna is very cheap vs. peers and if you believe BNPL has a decently long runway (I do) it's a good buy in a market where competitors are a bit more rational these days. FISV and FIS are both cheap and operate in strong markets. FIS should benefit from the wave of bank M&A, as they provide the operational backbone for the larger regional banks that are doing a lot of the buying. Overall I think this group could have a year of oupterformance. The market is very down on these names and they feel a bit left for dead.
Dalal.Holdings Posted January 5 Posted January 5 On 1/2/2026 at 4:57 PM, formthirteen said: Inspired by @Rainier I thought I would start a new thread on payment networks and processors. MA, V, AXP are perhaps obvious choices for anyone's portfolio. Are there any other stocks that are interesting? I first looked at GPN when it traded at around 200 USD in 2021. I'm glad GPN didn't pass my smell test. I have owned both FOUR and PYPL briefly last year before I noticed 2025 is not the year of payment networks & processors. Maybe 2026 is? I'm already familiar with PYPL but can't make myself buy it again. KLAR seems pretty cheap. GPN's FCF is impressive but is it suistainable? WU is a great example of what market sentiment and disruption does to a stock. Attaching some data for anyone interested: 52-Week Low Symbol Current 52W Low 52W High Distance Pct from Low ------ ------- ------- -------- -------- ------------ FOUR $62.70 $61.23 $127.50 $1.47 2.4% KLAR $28.74 $27.90 $47.48 $0.84 3.0% PYPL $58.20 $55.85 $93.25 $2.34 4.2% FISV $66.29 $59.56 $238.59 $6.73 11.3% PAYO $5.50 $4.92 $11.19 $0.59 12.0% GPN $75.34 $65.93 $115.19 $9.41 14.3% V $347.39 $299.00 $375.51 $48.39 16.2% WU $9.34 $7.85 $11.95 $1.49 19.0% MA $563.30 $465.59 $601.77 $97.71 21.0% TOST $34.55 $28.12 $49.66 $6.42 22.8% ADYEY $16.33 $13.14 $19.94 $3.19 24.3% PAY $29.59 $22.65 $40.43 $6.94 30.6% MQ $4.66 $3.48 $7.04 $1.18 34.0% BILL $51.98 $36.55 $100.19 $15.43 42.2% XYZ $65.02 $44.27 $94.25 $20.74 46.9% COIN $237.31 $142.58 $444.65 $94.73 66.4% FLYW $13.78 $8.20 $21.31 $5.58 68.1% AXP $370.95 $220.43 $387.49 $150.52 68.3% DLO $14.14 $7.61 $16.78 $6.53 85.8% STNE $14.80 $7.72 $19.95 $7.08 91.7% AFRM $74.71 $30.90 $100.00 $43.81 141.8% FCF Yield Symbol FCF/EV FCF/P Spread EV/FCF P/FCF FCF Rating ------ ------ ----- ------ ------ ----- --- ------ WU 11.96% 10.30% -1.66% 8.4x 9.7x $368.9M *** PYPL 8.08% 7.99% -0.09% 12.4x 12.5x $6.8B *** BILL 7.72% 6.56% -1.16% 13.0x 15.2x $312.5M ** GPN 7.06% 10.25% +3.20% 14.2x 9.8x $2.9B ** AXP 5.58% 5.83% +0.25% 17.9x 17.2x $12.1B ** FOUR 4.82% 5.45% +0.63% 20.7x 18.3x $391.9M * ADYEY 4.70% 3.64% -1.05% 21.3x 27.4x $1.7B * FLYW 4.65% 3.54% -1.11% 21.5x 28.3x $90.5M * MQ 4.57% 1.93% -2.64% 21.9x 51.7x $37.0M * COIN 4.43% 4.06% -0.37% 22.6x 24.6x $2.6B * PAYO 3.74% 3.22% -0.51% 26.8x 31.0x $116.5M * FISV 3.68% 4.37% +0.69% 27.2x 22.9x $5.1B * XYZ 3.35% 2.95% -0.40% 29.8x 33.9x $1.6B * V 3.27% 3.27% +0.00% 30.6x 30.6x $21.6B * MA 2.77% 2.82% +0.05% 36.0x 35.4x $13.6B AFRM 2.14% 2.68% +0.53% 46.7x 37.4x $601.7M TOST 1.57% 1.47% -0.11% 63.5x 68.1x $306.0M PAY 0.70% 0.66% -0.04% 143.1x 150.7x $27.1M DLO N/A N/A N/A -83.6x -93.2x -$34.5M STNE N/A N/A N/A -1.6x -3.2x -$718.9M Data is from quickfs and yahoo and might contain errors. DYOD. The fact that this list is so long tells me all I need to know about the competitive dynamics of this industry
moatrep Posted January 25 Posted January 25 (edited) Edit 17/02: "The price is not exactly 20x fcf, this may not be sustainable. They have an internal non gap metric that seems more sustainable, so the price right now it's expensive and I will look from the sidelines. " Wise I would add. Has room to go if you compare with Revolut that has 4 times the users (and keeps growing at a huge rate). It's growing around 15% per year deposits (0% interest paid on them), users and transaction amounts. Now trading around 20x fcf and net income. It's a disruptor, and the CEO it's the founder and has 15% of the shares. They are going to list in the US this year and have the advantage that they partner with a lot of payment networks from the different countries regulators, so that give them a durable moat. Even if you are an user of revolut, you are a potential user of wise. It's better to travel with more cards in case one is blocked or to use the monthly free cash withdrawals. The fee structure is clear. They just charge 0.5% to convert any currency for any other, all at google's price. You get access to bank accounts to recieve money in any currency and to diferent payment networks. At the end they offer reliability. You need the currency, you get it at the best price that you can get in an instant. Pd: I think it has a good culture, trying every year reduce the cost for the customer, giving better reliability, and with the owners expanding the network and heavely invested. As for the product I found miself recomending it dozens of times in the last 3 years that I'm an user. Edited February 17 by moatrep
Spekulatius Posted February 16 Posted February 16 For a bearish perspective on legacy payment provider check out the Block investor day. Block hasn’t really been run well for shareholders, but they clearly ha e product vision. THey are one of the biggest debit card issues in the US (Cash) and they have a teens program that seeing now many graduate into the more profitable adult card (My son has a cash card as well). Also half way through they mention that they want to reduce th translation cost for throw customers from ~3% to 1% in 2027 thought a bitcoin or stablecoin based stack. Amit great of you are a legacy payment processor or credit card issuer. Will it work? probably. To as fast as advertised but I think eventually we will get there. I think these guys have product vision and might just get there. https://block.xyz/investor-day-2025
kab60 Posted February 17 Posted February 17 12 hours ago, Spekulatius said: For a bearish perspective on legacy payment provider check out the Block investor day. Block hasn’t really been run well for shareholders, but they clearly ha e product vision. THey are one of the biggest debit card issues in the US (Cash) and they have a teens program that seeing now many graduate into the more profitable adult card (My son has a cash card as well). Also half way through they mention that they want to reduce th translation cost for throw customers from ~3% to 1% in 2027 thought a bitcoin or stablecoin based stack. Amit great of you are a legacy payment processor or credit card issuer. Will it work? probably. To as fast as advertised but I think eventually we will get there. I think these guys have product vision and might just get there. https://block.xyz/investor-day-2025 Haven't gone through the investor day, but I haven't really seen anyone come up with a good use case for Bitcoin or stablecoins as a method of transacting perhaps other than transacting outside of banking hours. And they still need a fiat currency on/off-ramp. This is Corpays CEO on the subject (founder with a great track record in the space); Ramsey El-Assal (analyst) Got it. That's super helpful. And one follow-up for me. Stablecoin is a big thematic topic. Can you just give us an update on what you're seeing in the marketplace in terms of demand, if any? And also just give us a quick overview of the capabilities that you guys are building out to accommodate stablecoins. Ronald F. Clarke (Corpay CEO) Yes. That's super. I'm laughing a bit, Ramsey, because this morning when I get up knowing we had this earnings call tonight, I went out to 3 of our guys. I went to the guy that has thousands and thousands of U.S. merchants that we pay, our cross-border head that obviously moves tons of money to beneficiaries around the world and our Alpha guy who does the bank accounts, the 7,000 bank accounts that hold deposits. And I asked all 3 of them, "Hey, talk to me about the demand, how many of the merchants or the deposit holders or beneficiaries are asking for a companion stablecoin wallet so that they can receive funds in stablecoins. And the basic answer was crickets. There's been really no -- basically kind of no noise, kind of no demand. Despite that, we are -- I think we said before, doing 3 things anyway. One is we're trying to serve crypto clients that actually have crypto, have Bitcoin, have stablecoins as clients. So we're doing that. We have 4 or 5 signed up. Two is we are working on the rails and piloting that like in our own treasury, for example, to make sure we can actually move funds via blockchain. And then third, which is my favorite is despite the demand comment, we are building stablecoin digital wallet so that anyone that has a bank account, if you will, they'll have a companion stablecoin account. So if someone wants to send their money outside of the banking hours, it could be captured and then we could toggle it into the fiat account that we have for them. So we are pushing ahead to have that and just see if there's more uptake on this. But it's -- what's the line, it's all quiet on the Western front as of now.
kab60 Posted February 17 Posted February 17 (edited) I own a lot of Shift4, $GPN and $FIS. I think the space is a tremendous opportunity given stickiness of customers, structural tailwinds (cash > digital + inflation), but I also think it's very important to understand how these companies all differ. I think some of the niche players like Shift4 and Corpay (and $FIS - which really isn't a payment company but a bank software co.) are much more interesting than something like Paypal. I think the great think as an investor is that most of these have been lobbed together, and there are so many wrong narratives around based on a limited understanding of the competitive dynamics and how they all differ. Edited February 17 by kab60
formthirteen Posted February 23 Author Posted February 23 (edited) https://www.citrini.com/post/analytical-frameworks-evaluating-payments Edited February 23 by formthirteen September 30, 2024
Spekulatius Posted February 24 Posted February 24 5 hours ago, formthirteen said: https://www.citrini.com/post/analytical-frameworks-evaluating-payments Written in September 2024 - timing is hard. I think Citrini has gone negative on the payment business too, due to AI.
MMM20 Posted March 14 Posted March 14 (edited) "I am continually amazed at how little is understood by investors/journalists/politicians about how the payments ecosystem actually works. There is this persistent first-order thinking reaction of 'hey why pay 2% on a credit card swipe? can't we just cut that or get rid of it with XYZ new technology?'. If you use stablecoin, 185bp of the 200bp swipe fee remains (MA/V take 15bp - the rest stays i.e. 150bp to the card issuer who takes credit risk and offers rewards, and 35bp to the merchant acquirer who has to be enabled to take non-cash payments regardless of form). In return for the 15bp, you get massive benefits - ubiquity, fraud protection, automated dispute resolution/chargebacks. This is why merchants/issuers do not switch off the networks despite zero cost networks already present and existing for years with no traction." Amen... Edited March 14 by MMM20
Spekulatius Posted March 14 Posted March 14 (edited) 1 hour ago, MMM20 said: "I am continually amazed at how little is understood by investors/journalists/politicians about how the payments ecosystem actually works. There is this persistent first-order thinking reaction of 'hey why pay 2% on a credit card swipe? can't we just cut that or get rid of it with XYZ new technology?'. If you use stablecoin, 185bp of the 200bp swipe fee remains (MA/V take 15bp - the rest stays i.e. 150bp to the card issuer who takes credit risk and offers rewards, and 35bp to the merchant acquirer who has to be enabled to take non-cash payments regardless of form). In return for the 15bp, you get massive benefits - ubiquity, fraud protection, automated dispute resolution/chargebacks. This is why merchants/issuers do not switch off the networks despite zero cost networks already present and existing for years with no traction." Amen... Replacing V&MA only makes sense if you replacing the entire stack and the 185bps swipe fee going to banks and what not. Thats the risk to V and MA and also the rest of the current payment system. Whatever replaces it needs to be way cheaper than 200bps, otherwise why bother? I think there is a chance that V&MA can latch onto new payment infrastructure but in this case the other payment players like stripe, banks etc would be screwed. Edited March 14 by Spekulatius
tnathan Posted March 15 Posted March 15 A lot of what has been said is correct. If you have a credit card that offers you 1-2% cash back / other equivalent rewards (as a consumer) the only way to get you to switch is (a) to ban the use of the cards (b) offer something else equally compelling and convenient. However, for many younger / lower income consumers, they don't have access to to the high earning rewards cards or just culturally don't like credit (See photo). This has coincided with the rise of BNPL for these groups. So taken together, if you are a large merchant (e.g., Walmart) that has a product offering which is hard to replicate AND appeals towards a lower to mid income demographic there actually is a clear wedge to introduce some sort of stablecoin payment initiative alongside a self-owned property / app (OnePay) that makes the payment seamless. Walmart could offer a strong Walmart rewards benefit for using OnePay and the stablecoin and therefore cut out a lot of the interchange. Much tougher for a non top 5 merchant to do any of this without a very robust rewards program. However, given that Walmart is already paying a much lower negotiated interchange rate and there are clear fraud benefits to the visa / mastercard networks I'm not entirely sure how it would all net out.
Spekulatius Posted March 15 Posted March 15 (edited) 21 minutes ago, tnathan said: A lot of what has been said is correct. If you have a credit card that offers you 1-2% cash back / other equivalent rewards (as a consumer) the only way to get you to switch is (a) to ban the use of the cards (b) offer something else equally compelling and convenient. However, for many younger / lower income consumers, they don't have access to to the high earning rewards cards or just culturally don't like credit (See photo). This has coincided with the rise of BNPL for these groups. So taken together, if you are a large merchant (e.g., Walmart) that has a product offering which is hard to replicate AND appeals towards a lower to mid income demographic there actually is a clear wedge to introduce some sort of stablecoin payment initiative alongside a self-owned property / app (OnePay) that makes the payment seamless. Walmart could offer a strong Walmart rewards benefit for using OnePay and the stablecoin and therefore cut out a lot of the interchange. Much tougher for a non top 5 merchant to do any of this without a very robust rewards program. However, given that Walmart is already paying a much lower negotiated interchange rate and there are clear fraud benefits to the visa / mastercard networks I'm not entirely sure how it would all net out. Block/ xyz could do this, because they both have a merchant facing business (payment systems) and customer facing apps (cash, debit cards). They could create a closed circuit payment rail without Visa/MC theoretically (via stablecoins)and nudge customer to use it. This implied in their last investor presentation and that how I became aware of this. PYPL could do the same thing. Edited March 15 by Spekulatius
nsx5200 Posted March 15 Posted March 15 14 minutes ago, Spekulatius said: Block/ xyz could do this, because they both have a merchant facing business (payment systems) and customer facing apps (cash, debit cards). They could create a closed circuit payment rail without Visa/MC theoretically (via stablecoins)and nudge customer to use it. This implied in their last investor presentation and that how I became aware of this. PYPL could do the same thing. Paypal thought they had enough customer facing leverage in 2016 to force Visa's hand but ended up settling. Companies like Visa/MC always had "threats" like this come up with similar justifications, but there's just too much legacy network effect moat and the value-to-cost provided by economy of scale to overcome. I have not seen any credible new justification on why Visa/MC would be displaced this time, and would appreciate any counter-argument that addresses the moats.
Spekulatius Posted March 15 Posted March 15 4 minutes ago, nsx5200 said: Paypal thought they had enough customer facing leverage in 2016 to force Visa's hand but ended up settling. Companies like Visa/MC always had "threats" like this come up with similar justifications, but there's just too much legacy network effect moat and the value-to-cost provided by economy of scale to overcome. I have not seen any credible new justification on why Visa/MC would be displaced this time, and would appreciate any counter-argument that addresses the moats. I agree, but the fact that they could not make it work in 2016 does not mean it won’t work it 2025.. Pix in Brazil is an example where another rail was established and competed with existing networks. The US has Fednow which is not build for consumer facing transactions but could probably get modified to do so. I expect Europe to launch something like Pix this decade for political reasons (digital autonomy).
tnathan Posted March 15 Posted March 15 1 hour ago, Spekulatius said: I agree, but the fact that they could not make it work in 2016 does not mean it won’t work it 2025.. Pix in Brazil is an example where another rail was established and competed with existing networks. The US has Fednow which is not build for consumer facing transactions but could probably get modified to do so. I expect Europe to launch something like Pix this decade for political reasons (digital autonomy). It's much easier to disrupt in regions where interchange rates are low, as the alternative (no rewards) is closer to the status quo. In the US the moat is much much larger than other regions.
Marco Van Basten Posted March 15 Posted March 15 18 minutes ago, tnathan said: It's much easier to disrupt in regions where interchange rates are low, as the alternative (no rewards) is closer to the status quo. In the US the moat is much much larger than other regions. Why? If all you are saving is 20 basis points, is it worth it?
bizaro86 Posted March 16 Posted March 16 21 hours ago, Marco Van Basten said: Why? If all you are saving is 20 basis points, is it worth it? 20 basis points is still significant to the merchants, and of course the banks etc still take a cut even though it isn't the 2% of the US. It's harder to get traction to switch with higher interchange because the customers won't want to switch because they give up their rewards. I take many flights per year that are ultimately paid for by interchange fees paid by merchants. So merchants probably have to either shut off V/MA payments (very risky) or start charging more for them (very unpopular) to get any traction on switching.
tnathan Posted March 16 Posted March 16 23 minutes ago, bizaro86 said: 20 basis points is still significant to the merchants, and of course the banks etc still take a cut even though it isn't the 2% of the US. It's harder to get traction to switch with higher interchange because the customers won't want to switch because they give up their rewards. I take many flights per year that are ultimately paid for by interchange fees paid by merchants. So merchants probably have to either shut off V/MA payments (very risky) or start charging more for them (very unpopular) to get any traction on switching. Yeah the difficulty of switching is that you need to first influence consumer behavior. Harder to force a consumer to give up a card giving them ~1-2% cash back than a card giving them essentially no rewards. If you can convince consumers to want to pay with another method that is the impetus for forcing the hands of merchants, and most merchants would welcome this regardless.
MMM20 Posted March 24 Posted March 24 Anyone see any news on FOUR? +25% intraday earlier today. I don't see anything.
frommi Posted March 24 Posted March 24 Regarding FOUR the only thing i found was that the borrow rate was increased, so maybe a little short squeeze? Has anyone looked at Adyen? To me it looks like the disruptor with the lowest take rate in the sector, growing double digits with a large cash balance. But its also sold down with the pack. Looking some years out, maybe this is the smartest bet in the sector?
MMM20 Posted March 25 Posted March 25 20 hours ago, frommi said: Regarding FOUR the only thing i found was that the borrow rate was increased, so maybe a little short squeeze? FOUR - We got a runner - by Short & Squeeze Corner.pdf
frommi Posted April 1 Posted April 1 Is the drawdown in these companies really just because of the stablecoin chatter? Or is it that fear of Apple and Google pay taking over all payment processing on all sides? (however that should work)
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