The ASX fintech sector has been on fire in recent months, driven in particular by the booming buy now, pay later (BNPL) shares. The number of ASX listings in this segment only continue to grow.
Here we take a closer look at three fintech shares that I believe have strong potential for growth over the next few years.
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3 ASX fintech shares to consider adding to your portfolio
Sezzle Inc (ASX: SZL)
BNPL provider Sezzle is listed on the ASX, however its operations are based in the United States. The Sezzle share price has surged in recent months, increasing from 37 cents in late March to now be trading at $7.54.
Sezzle's rapid recent growth continued during the second quarter. The company reported underlying merchant sales (UMS) of A$272.3 million during the quarter. That's a 58% increase quarter on quarter and a whopping 349% year on year. The coronavirus pandemic has actually assisted, not hindered the BNPL sector, due to a surge in online shopping.
Sezzle continues to raise capital to support its rapid expansion strategy. In mid-July, it raised $79.1 million via the issue of 14.9 million shares.
Tyro Payments Ltd (ASX: TYR)
ASX fintech share, Tyro Payments, provides payment solutions for credit and debit card transactions to Australian businesses. The Tyro share price was hit hard during the early phase of the coronavirus pandemic. It fell from $4.49 in February to 97 cents in late March. Since then, it has regained most of those losses, driven by the easing of lockdown restrictions.
Tyro saw a 15% increase in transactions during FY 2020 compared to FY 2019. Overall, transactions fell during April and May, but were back in positive territory in June.
EML Payments Ltd (ASX: EML)
EML Payments is an electronics technology solutions provider. It initially offered just gift cards and pre-paid cards. However, its product range now extends to salary packaging, digital banking products and gaming.
Revenue for the nine months ending 31 March increased by 20% on the prior corresponding period to $87.1 million. EBITDA also grew strongly by 24% during this period.
The EML Payments share price grew very strongly during 2019 and early 2020, but was hit hard during the first wave of the pandemic. Since then, its share price has partially recovered but is still trading significantly lower than the $5.66 we saw in mid-February. Business activity is likely to pick up in the months ahead as the economy comes back to life, which could see the EML share price recover further.
Foolish takeaway
In my view, Sezzle, Tyro Payments and EML Payments are 3 ASX fintech shares that all have strong future growth prospects over the next few years. The provider that I would pick as having the fastest growth trajectory is Sezzle, due to the current rapid growth of the BNPL sector.
