We are steadily moving toward a cashless, paperless society. This change has led companies like Shift4 Payments (FOUR) to focus on innovative payment solutions. 

The company offers an all-in-one digital platform that helps clients transition from basic POS services to higher-margin, end-to-end solutions. 

It has expanded into adjacent markets like retail, casinos, and entertainment through strategic acquisitions, further strengthening its market presence. 

Despite some market concerns over competition and M&A sustainability, its attractive valuation and growth signal strong future potential.

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The world is inevitably transitioning into becoming a cashless, paperless society due to the digitization of money and developing payment systems.

As we move into this transformation, we don’t only need banks or card networks like Visa (V) and Mastercard (MA). We also need payment processors that connect merchants, merchant banks, card networks, and consumers to make card payments possible.

This is where Shift4 Payments (FOUR), a niche payment processor, comes in.

Instead of dividing its focus for any industry that needs payment solutions, Shift4 primarily focuses on the lodging and restaurant industries.

The company makes around 40% of the transaction volume in the lodging industry and 16% in the restaurant industry.

Additionally, the company provides an all-in-one platform for businesses to manage their digital operations.

The offerings through the platform include a business intelligence dashboard, loyalty programs, waitlist and reservation management, and CRM tools.

Through the platform and its technology solutions, the company is transitioning its customers from its lower-margin gateway payment processing business to higher-margin end-to-end solutions. Doing so simplifies the customer’s business and cuts out the competition for Shift4.

The company is highly successful in this conversion too. The 3-year compounded annual growth rate (CAGR) for its end-to-end solutions volume is 47%, which is a remarkable growth.

Moreover, the company plans to expand into new but similar markets like retail, casinos, and sports and entertainment facilities to drive further revenue and profitability growth.

Additionally, since going public, it has made multiple acquisitions to help it expand into new verticals, including e-commerce and sporting and concert venues.

These integrations and acquisitions have helped it become even more essential for its core restaurant and lodging customers. It has built out capabilities to expand to connected markets.

And its work on building a complete solution has allowed it to successfully expand its offering to a full set of solutions for the markets it has come to dominate.

All these factors combined enabled the company to achieve a 60% Uniform return on assets ”ROA” and 80% asset growth last year, and analyst expectations for the future look even better.

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