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Here's What Fidelity National's (FIS) '23 Payments Report Says logo 3/24/2023

Fidelity National Information Services, Inc. FIS recently unveiled that account-to-account (A2A) payments hold promising growth prospects in its “The Worldpay from FIS Global Payments Report 2023”. The report holds an expanding number of real-time payment (RTP) systems across the globe responsible for the boost in A2A payments last year.

In 2022, the existence of around 70 RTP schemes extended swift payment rails and led to A2A payments contributing a massive chunk of $525 billion to global e-commerce transaction value. The contribution registered an increase of 13% in 2022 from the 2021 figure of $463 billion.

Similar to the widespread adoption observed across the world, A2A payments remain quite popular in the United States as well. Such payments accounted for 9% of e-commerce transaction value in 2022, which is anticipated to rise to 11% by 2026. The likely launch of FedNow, the real-time payments network of the Federal Reserve, in July 2023 is likely to lead to increased consumer cases, which in turn, is anticipated to spur growth in A2A payments.

Benefits of A2A Payments

The A2A payment method is quite common while making business-to-business (B2B) and person-to-person (P2P) payments. But the FIS report states that A2A payments are increasingly undertaken in person-to-business (P2B) payments. The growing popularity can be attributed to the widespread benefits offered through such payments.

A2A payments are transferred directly from the bank account of a consumer to a merchant’s account without an intermediary such as debit or credit cards. This, in turn, brings down the cost of payment acceptance for merchants, settles funds in near real-time and boosts the cash flow. Consumers might be lured to opt for more A2A payments as certain merchants extend incentive benefits for A2A payments. On top of this, consumers benefit from a speedy, safe and seamless checkout experience on selecting A2A payments.

Booming E-Commerce Market

The FIS report further underlines the tremendous growth scope of the global e-commerce market. Despite looming fears of inflation and economic slowdown, the market is likely to hit around $8.5 trillion by 2026. Ever since the onset of the COVID pandemic, digitization was infused in every sphere of life and consumers preferred shopping online in the comfort of their homes. Thereby, the usage of cash witnessed a downfall and flexible online payment methods came to the forefront.

In the United States, though consumers still remain inclined toward debit and credit cards, digital wallets emerged as the single leading payment method among online shoppers in 2022 for the first time. Digital wallets made up 32% of e-commerce transaction value in the United States last year.

FIS pursues significant investments in innovative technologies and solutions to upgrade the payments infrastructure and such efforts bode well amid a rapidly expanding digital economy.

Shares of Fidelity National have lost 26.4% year to date against the industry’s 2.8% growth.

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Fidelity National currently has a Zacks Rank #4 (Sell). 

Stocks to Consider

Some better-ranked stocks in the Business Services space are ICF International, Inc. ICFI, APi Group Corporation APG and Huron Consulting Group Inc. HURN. While ICF International and APi Group sport a Zacks Rank #1 (Strong Buy), Huron Consulting Group carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of ICF International outpaced estimates in each of the last four quarters, the average being 9.21%. The Zacks Consensus Estimate for ICFI’s 2023 earnings suggests an improvement of 9.2% from the year-ago reported figure. The same for revenues suggests growth of 10.6% from the year-ago reported number. The consensus mark for ICFI’s 2023 earnings has moved 7.3% north in the past 30 days.

APi Group’s earnings outpaced estimates in three of the trailing four quarters and matched the mark once, the average being 4.55%. The Zacks Consensus Estimate for APG’s 2023 earnings suggests an improvement of 12% from the year-ago reported figure. The same for revenues suggests growth of 4.8% from the prior-year reading. The consensus mark for APG’s 2023 earnings has moved 7.2% north in the past 30 days.

The bottom line of Huron Consulting outpaced estimates in each of the last four quarters, the average beat being 21.86%. The Zacks Consensus Estimate for HURN’s 2023 earnings suggests an improvement of 17.5% from the year-ago reported figure. The same for revenues suggests growth of 10.3% from the year-ago actuals. The consensus mark for HURN’s 2023 earnings has moved 1.8% north in the past 30 days.

Shares of ICF International, APi Group and Huron Consulting have gained 5.2%, 9.5% and 4.1%, respectively, year to date.

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