Logiq Inc (LGIQ)

[GoingBig35]

Boom ( MT Newswires) -- A shift from cash for buying and selling along with recent merger deals in the electronics payments industry show there's scope for further growth prospects, Fitch Ratings said in a note on Wednesday.
More retailers are adopting cashless transactions, and the pending acquisition of First Data (FDC) by Fiserve (FISV) that was announced last month shows how increasing scale and gaining capabilities in key technologies are driving large deals in the segment, the agency said.

"Strong demand for electronic payments capabilities and related technology should support industry fundamentals for merchant acquirers, card processors, network operators, and technology and gateway providers," Fitch said in the note. "But large-scale acquisitions may have credit implications."

First Data was placed on rating watch positive by Fitch after the Fiserv deal w First Data was placed on rating watch positive by Fitch after the Fiserv deal was announced because of the latter's "stronger credit profile and plans to refinance First Data's debt upon the transaction closing."

Other deals in recent years include Vantiv's acquisition of Worldpay (WP), the take-private deal for Verifone Systems and PayPal's (PYPL) purchase of iZettle, Fitch said.

"We expect M&A activity to persist due to attractive growth opportunities, strong cash generation, private capital interest and historically low interest rates," the agency said.

Large companies are increasingly willing to accept mobile and contactless payments, driving the shift away from cash, Fitch said, citing recent announcements that Target (TGT), Yum! Brands' (YUM) Taco Bell and Marathon Petroleum's (MPC) Speedway that they would start accepting Apple (AAPL) Pay, Alphabet's (GOOGL) Google Pay and Samsung Pay.

Visa (V) and Mastercard (MA) "highlighted growth in contactless payments in the US" as large financial institutions including JPMorgan (JPM) and Wells Fargo (WFC) are among those planning to "more aggressively issue cards with tap to pay capability starting in 2019," Fitch said.

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