Sometimes it’s stocks in overlooked sectors that are taken for granted that end up being among the best performers with small cap payment processing stocks like Cass Information Systems (NASDAQ: CASS), Euronet Worldwide (NASDAQ: EEFT), Heartland Payment Systems (NYSE: HPY), Moneygram International (NYSE: MGI), Net 1 UEPS Technologies (NASDAQ: UEPS), Newtek Business Services (NASDAQ: NEWT) and up-and-coming Calpian Inc (OTC: CLPI) worth taking a closer look at since some have been excellent performers while others have not been more so-so. The payment processing or transaction processing industry in general along with related sectors or segments is an interesting industry as after all, think about how many transactions you do in an average day or week, whether its online or in a store or through bill pay or through some other method, that need to be processed and accounted for. That means there is plenty of room in the payment processing and related sectors or segments for small cap players to operate in with some segments or companies being better than others. With that in mind, here is a quick look at who some of those small cap payment processing players are:
- Cass Information Systems (NASDAQ: CASS). A provider of transportation, utility, waste and telecom expense management and related business intelligence services, Cass Information Systems disburses $32 billion annually on behalf of its clients. Cass Information Systems is up around 27.6% over the past year and up over 49% for the past five years plus the company recently had a 10% stock dividend. Cass Information Systems has also recently announced a strategic partnership with enterprise wireless solutions provider True Wireless to provide a turnkey, managed mobility solution for corporations to securely and cost-effectively control both corporate- and employee-owned mobile devices.
- Euronet Worldwide (NASDAQ: EEFT). A global provider of electronic payment and transaction processing solutions for financial institutions, retailers, service providers and individual consumers, Euronet Worldwide has three primary business segments: EFT, Prepaid and Money Transfer. Euronet Worldwide is up 27.7% over the past year and down 21.7% over the past five years. Early last December, Euronet Worldwide bought back the stake DST Systems Inc. had in the company for $41 million. Moreover, Euronet Worldwide had a great third quarter and it should be noted that 80% of its revenues come from outside the USA.
- Heartland Payment Systems (NYSE: HPY). The sixth largest payments processor in the USA, Heartland Payment Systems delivers credit/debit/prepaid card processing, school solutions, loyalty marketing services, campus solutions, payroll and related business solutions and services to more than 250,000 business and education locations nationwide. Heartland Payment Systems processes more than 11 million transactions a day and over $80 billion a year. Heartland Payment Systems is up 21.1% over the past year and up 9% over the past five years. Heartland Payment Systems is apparently looking to grow its campus solutions business and it has recently announced the acquisition of ECSI - a processing company that serves 1,800 colleges and universities in student loan payment processing, tuition payments and other services.
- Moneygram International (NYSE: MGI). A leading global money transfer company, Moneygram International enables consumers who are not fully served by traditional financial institutions to meet their financial needs by offering them money transfer services worldwide and bill payment services in the United States and Canada through a global network of more than 293,000 agent locations—in 197 countries and territories around the world. Moneygram International is down 25.1% over the past year and down 89.1% over the past five years with much of the fall happening late in 2007 and into early 2008. Moneygram International ran into trouble when it was accused of turning a blind eye to scam artists and money launderers and then failed to act against agents who were linked to fraud schemes. It appears though that those problems are behind the company as it agreed to set up a $100 million victim’s fund with $65 million paid into it and the rest due early this year.
- Net 1 UEPS Technologies (NASDAQ: UEPS). A provider of payment solutions and transaction processing services across multiple industries and in a number of emerging economies, South Africa based Net 1 UEPS Technologies has developed and markets a transaction processing solution consisting of a smart card-based alternative payment system for the unbanked and under-banked populations and for mobile transaction channels. Net 1 UEPS Technologies is down 33.4% over the past year and 82.4% over the past five years with most of the damage coming early last December when it was revealed that the US Department of Justice and the FBI are looking into whether the company violated the Foreign Corrupt Practices Act as well as other criminal and securities laws over "corrupt payments" to South African government officials to win a contract with the country's Social Security Agency. Net 1 UEPS Technologies did bounce back up after releasing a statement, but it also goes to show you why so few foreign companies list on US exchanges any more as they become subject to US rules and regulations on their business conduct.
- Newtek Business Services (NASDAQ: NEWT). A provider of financial and business services to the small- and medium-sized business market, Newtek Business Services acts as a web hosting company, payment processor, gateway provider, web designer and web services company that services over 100,000 business accounts in all 50 states. Newtek Business Services is up 61.7% over the past year and up 59% over the past five years. Late last year, Newtek Business Services announced the The Newtek Advantage - a mobile real-time SMB management platform that puts all critical transactions of a small-to-medium-sized business plus economic, ecommerce and web site traffic data onto a smartphone, tablet, laptop or PC. Newtek Business Services also got some attention for ringing the opening bell at the NASDAQ exchange.
- Calpian Inc (OTC: CLPI). Working as an intermediary between large processors and merchants to facilitate payment for goods and services at the retail point-of-sale, Calpian is an up and coming small cap payment processing stock. Calpian is up around 3% since early October when more active trading began. What’s interesting about Calpian is its emerging market connection as the company’s Indian subsidiary offers Money-on-Mobile which offers a pre-paid mobile payment solution to more than 110,000 Indian retail locations. Specifically, Calpian’s Money-on-Mobile is India's largest mobile payment platform that acts as an m-wallet or mobile wallet that lets users carry all of their credit/debit cards and bank accounts on a mobile phone to make making payments easier. In fact, Calpian’s Money-on-Mobile users can do everything from purchase travels services (railway / air / bus tickets) to send and receive money to and from relatives. Money-on-Mobile means that Calpian is in a unique position to capitalize on the fact that India has one of the fastest growing mobile markets in the world.
The Bottom Line. Small cap payment processing stocks like Cass Information Systems, Euronet Worldwide, Heartland Payment Systems, Moneygram International, Net 1 UEPS Technologies, Newtek Business Services and Calpian are all interesting stocks to watch in the new year.