Beyond Visa: 4 Great Financial Transaction Picks

San Francisco-based Visa Inc. (V – Analyst Report) is undoubtedly a pioneer in the global card transaction processing industry. The company has benefited from a secular shift in cash to plastic payment. Now, Visa provides processing services to over 30 million merchants around the globe. Roughly 1.8 billion Visa-branded cards are currently in circulation, with total annual purchase volume of around $4.5 trillion.

Nevertheless, the company is facing a number of headwinds that include consumer spending fluctuation, regulatory and litigation risks, currency fluctuations, international travel fluctuations, alternative payment systems, pricing pressure and acquisition integration risk.

Among these, the worst threat facing the stock is the development of alternate forms of payment as the industry is shifting from plastic to mobile and now Internet-based payments. Some of the latest forms include developments in smart cards, eCommerce, mobile, radio frequency and proximity payment devices such as contactless cards. Technology has permeated into in the payments’ industry where customers don’t even need a physical credit card to spend money –– a smartphone with an app is all that it takes.

With over six billion mobile phone subscriptions worldwide and more than one billion smartphones in the market, mobile payments are gaining increased acceptance against the bulky plastic cards which also carry the risk of loss or theft.

According to Statista, mobile spending in 2015 will hit $431 billion globally, and by 2017 this figure will increase to more than $720 billion. This industry is expected to grow in the U.S. from $50 billion in 2014 to nearly $150 billion by 2019, according to research firm Forrester.

Google (GOOG), PayPal, Square, American Express (AXP), MasterCard (MA) and Visa, among others, have all developed mobile payment platforms.

The introduction of apps like Google Pay, Apple Pay and Samsung Pay has given a boost to the mobile payments’ space. BI Intelligence estimates that the number of people making a mobile payment at least once a year will grow from nearly 8% of the U.S. consumer population in 2014 to 65% by 2019.

Social Media Payments

Facebook (FB) recently launched a payments’ feature on Messenger, allowing Facebook friends to send one another money through the app. Customers also can pay for a product not in money but by sharing the details of the products and tweets that would contribute to in online marketing thereby help the retailer to reach a wider section of potential customers, rendering greater value than the price of the product.

Banking apps are now become common since most banks allow the card-less cash facility. JPMorgan Chase (JPM), Citigroup (C), Bank of America (BAC), Wells Fargo (WFC), Capital One (COF), and others are building their own mobile payments apps.