Why these 3 fintech growth stocks are on my watch list

Afterpay Touch Group Ltd (ASX:APT) is not the only payment services company worth a closer look.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

As people and companies worldwide rely less and less on cash, they look for the payment solutions that better suit their needs.

Here are three ASX-listed companies that provide payment services:

Afterpay Touch Group Ltd (ASX: APT)

Afterpay offers something in between a credit facility and a payment service: the possibility of postponing small purchases by dividing them in four fortnightly instalments. The idea proved to be extremely successful, particularly with millennials, underpinning an outstanding share price run.

After a temporary setback, due to concerns that the business had peaked and was about to come under regulatory scrutiny, the stock resumed its upwards trend. Recently, Afterpay began operations in the USA, securing plenty of room for growth in that multi-billion dollar retail sales market. On Thursday, Afterpay was 0.5% up to $8.19.

EML Payments Ltd (ASX: EML)

Shares in EML climbed 4% higher to $1.28, after the company announced the launch of its Total Rewards Payments Card in the Caesars Palace Casino of Las Vegas. The card can be used to make purchases and earn points that can be later redeemed at the casino. This single deal may not be a game changer, but it gives a good example of EML's creativity in designing payment solutions for a variety of business needs, including paying suppliers, paying employees, and providing customers with reward programs and gift cards.

Xero Limited (ASX: XRO)

Xero's accounting software provides small and medium enterprises with a range of tools to organise payments to employees and suppliers – for instance scheduling future payments, setting up recurring bills, and batching transactions. The platform keeps a paperless archive of all operations. Furthermore, a few months ago National Australia Bank Ltd (ASX: NAB) said it would allow its customers to make payments directly through Xero, without the need of importing payment information manually into the bank's software. On Thursday, Xero was 1% up to $44.01.

Consumers and businesses will always need effective payment solutions, and companies that can provide them will never lack a customer base. While I think EML's product range is broad but quite traditional, both Xero and Afterpay offer innovative services and have a great potential for growth, with Afterpay more exposed to regulatory risk, given the proximity of its business model to one of a lender.

But there's another sector that could disclose great opportunities for forward-thinking investors. To find out all about it, check out this free report.

Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO, Emerchants Limited, National Australia Bank Limited, and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »