While certain sectors of Fintech have dipped in interest when it comes to capital markets activity, payments continue to be a hot sector of Fintech. According to S&P Global Market Intelligence, capital markets continue to support payments innovators as technology is changing the way we save, spend and transfer money.
The report claims that legacy payments players “appear vulnerable,” thus opening up an avenue for competition..
Sampath Sharma Nariyanuri, Senior Research Analyst at S&P, says markets are reshaping growth and investment across, payments, cross border transfers, wallets, bnpl, neobanks and more.
Neobanks are typically non-chartered Fintechs that offer legacy banking services. At least in the US, neobanks frequently work with federally chartered banks to provide bank like services.
Nariyanuri adds:
“Legacy payment stocks lag amid slowing growth and tech competition, pushing incumbents to adapt. Venture Capitals prioritize Fintechs with strong unit economics, product differentiation, and sustainable models. B2B startups tackling invoicing, cross-border transactions, and embedded finance attract funding. Payments Fintech IPOs remain sluggish, though buy now pay later (BNPL) and consumer wallets show promise. Investors remain interested in cross-border payments, but many Fintechs delay initial public offerings (IPOs) for capital-efficient growth. M&A activity is driven by four priorities: vertical payments, cross-border innovation, fraud prevention, and geographic expansion.”
Approximately 77% of publicly traded payments providers have reported growth yet the majority 951 out to 93 have experienced negative returns on their share price.
At the same time, BNPL companies ranked among the top 10 highest-performing payment stocks and fastest-growing payments Fintechs by revenue.
Even while private payments companies struggled in 2024, as total funding volume declining by 47% to $7 billion and the number of deals fell by 23% to 392, there were 220 payments M&A transactions totaling $48 billion in 2024, up from 208 deals worth $26 billion in 2023.
