3 compelling ASX payment shares to buy

This article is about 3 ASX payment shares that seem compelling and could grow pleasingly, including Pushpay Holdings Ltd (ASX:PPH).

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This article is about three ASX payment shares that investors may find compelling.

Visa and MasterCard are the biggest payment businesses in the world, but they are listed in the US. But on the ASX there are a number of other options that give exposure to the payment sector:

Pushpay Holdings Ltd (ASX: PPH)

According to the ASX, Pushpay has a market capitalisation of $2.1 billion.

Pushpay is a business that facilitates electronic donations, largely to large and medium US churches.

The company wants to become the market leader with a market share of more than 50%, which will help it achieve its long-term goal of US$1 billion of revenue.

Social distancing and COVID-19 restrictions are causing Pushpay’s growth to accelerate. Its app includes a livestreaming service, which is popular under these conditions.

Pushpay is demonstrating its scalability. In the recent FY21 interim result, it reported that its gross profit margin increased from 65% to 68%.

The company has provided guidance for FY21 of earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) of US$54 million to US$58 million.

At the current Pushpay share price, it’s valued at 27x FY23’s estimated earnings according to Commsec. Pushpay is a business that’s liked by fund manager Eley Griffiths Group.

EML Payments Ltd (ASX: EML)

According to the ASX, EML Payments has a market capitalisation of $1.4 billion.

EML Payments is an ASX payment share that offers a wide variety of payment services. It has general purpose reloadable offerings such as gaming payouts with white label gaming cards, salary packaging cards, commission payouts and rewards programs. EML Payments also offers physical gift cards, shopping centre gift cards and digital gift cards. Finally, it offers virtual account numbers.

The company is seeing a recovery as the world heads back towards somewhat normality from COVID-19.

For the first FY21 quarter, for the three months to 30 September 2020, first quarter revenue grew 75% to $40.6 million compared to the prior corresponding period and that was 20% higher than the fourth quarter of FY20.

EML also said it generated $10 million of earnings before interest, tax, depreciation and amortisation (EBITDA) in the first quarter, which was up 215% compared to the prior corresponding period and up 69% compared to the FY20 fourth quarter.

Sezzle Inc (ASX: SZL)

According to the ASX, Sezzle has a market capitalisation of $1.1 billion.

Sezzle is a buy now, pay later (BNPL) business that’s headquartered in the US. Whilst Sezzle is smaller than other competitors like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P), it is growing at a faster pace in percentage terms.

The important Black Friday and Cyber Monday sales just happened, which is why Sezzle gave an update for November 2020. The recent Black Friday and Cyber Monday saw UMS of US$28.5 million, which was a 146.4% increase for the ASX payment share

Sezzle said that its underlying merchant sales (UMS) grew by 188.5% to US$113 million for the whole month. Its annualised UMS stood at US$1.36 billion. Its active merchants were up 164.5% to 24,846 and active consumers grew by 151.5% to 2.07 million.

Sezzle executive Chair Charlie Youakim said at the time of the update: “We are extremely excited about the direction of our business, as we recently partnered with GameStop and eCommerce platform Wix. Sezzle is now offered at Gamestop’s network of more than 3,300 US retail stores, its online store and in the GameStop mobile app. Our integration on Wix is available to all Wix merchants in the US, Canada, India and in the future will be able in other regions as Sezzle expands internationally.”

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended EML Payments, PUSHPAY FPO NZX, and Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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