Bank of America has resumed coverage of a range of payment-sector companies, telling investors that steady transaction volumes and broader adoption of digital payment methods continue to underpin the industry even as investor sentiment has been pressured recently.
The firm described its outlook for the group as broadly constructive, citing three structural trends driving the thesis: expanding digital commerce, improving cross-border travel and spending, and a continued migration away from cash.
Card networks ranked as top choices
Among the firms now covered, Bank of America identified card networks Visa and Mastercard as offering the most compelling risk-adjusted opportunities and assigned both companies Buy ratings. The bank highlighted that these networks benefit from durable earnings profiles, resilient fee structures and robust cash generation as electronic payments take share around the world.
Bank of America added that the networks' business models are largely insulated from potential disruption tied to artificial intelligence, and that recent share-price weakness linked to regulatory and macroeconomic concerns has opened more attractive entry points for investors.
Digital wallets: divergent views on Block and PayPal
In the digital-wallet segment, the bank assigned a Buy rating to Block Inc. with a price target of $88 and a Neutral rating to PayPal Holdings with a $48 price target. Bank of America said Block enters 2026 with a lower cost base after a recently announced 40% workforce reduction tied to AI initiatives, together with improving trends in its Square and Cash App operations.
By contrast, the bank described PayPal as facing a "fundamental reset," pointing to slowing growth in branded checkout. While PayPal's scale and strong free cash flow offer some support, Bank of America said visibility on the company's future growth trajectory is limited. The bank also noted that press reports have suggested PayPal or some of its assets could draw acquisition interest from payments rival Stripe.
Buy-now-pay-later coverage resumed
Bank of America also restarted coverage of buy-now-pay-later providers Affirm Holdings and Klarna, giving both Buy ratings. The bank argued that Affirm benefits from steady gross merchandise value growth, disciplined underwriting and broader distribution, including partnerships with Amazon and Shopify.
Klarna, the bank said, is gaining traction in the United States and is posting faster gross-profit growth, though it warned that near-term guidance and an upcoming lock-up expiration could increase volatility in the shares. Overall, Bank of America judges buy-now-pay-later services to be well positioned to gain share as adoption increases across online commerce.
This coverage reset from Bank of America reflects a sector view that structural demand trends remain intact even amid episodic sentiment pressures. The bank's ratings and price targets signal a preference for established networks with predictable cash flows, while taking a more nuanced stance across wallets and BNPL names based on cost actions, growth visibility and event-driven risks.