RBC Capital on the Implications of the Iran Conflict on Fintech/Payments

The analyst commented: "While broadly speaking the Fintech/Payments group should have modest knock-on effects from the impacts of the Iran conflict, we believe several names in our universe have more direct exposure including GPN and FOUR, with others having potentially derivative exposure related to impacts on overall consumer spending, cross-border travel, SMB, and lower-income consumers including AFRM, MA, PYPL, V, and XYZ, while the least impacted names should be BR, JKHY, QTWO, and SSNC.

Most direct exposure – FOUR & GPN. FOUR: while the Global Blue acquisition offers material growth opportunities long-term, it’s creating more near-term volatility, given ~10% of GB’s Sales in Store (not equivalent to revenues) in Europe come from Middle East travelers, thus we believe GB’s contribution to 1Q26, its seasonally weakest quarter, will be under pressure. GPN: GPN recently disclosed at a conference that it processes for 12 of the largest Middle Eastern airlines and as a result would expect some “modest” headwind in 1Q26 and possibly 2Q26 depending on the duration of the conflict.

Derivative exposure – AFRM, MA, PYPL, V, and XYZ. AFRM: AFRM’s potential exposure is more of a knock-on effect associated with higher oil prices crowding out overall consumer spending and with AFRM’s tilt toward lower-end consumers, it’s probable to assume some potential weakness in that cohort. However, we have seen prior scenarios where BNPL, given its cash flow management properties, become more popular as inflation persists. MA & V: MA & V’s possible exposures are both positive and negative in that higher oil prices and inflation in general can prove to be good, given part of the networks’ revenue models are based on the % of the avg ticket, however, if higher prices crowd out overall consumption, then it’s likely a modest net negative/neutral as they will capture the shift from discretionary to non-discretionary. In addition, for MA, APMEA was ~21% of total payment volume in FY25, of which we estimate that ME represents <50% of the region, and for V, CEMEA was ~6%, while cross-border travel, in our view, is where the potential near-term headwinds could be lurking for both. PYPL: PYPL’s exposures, in our opinion, are travel and its tilt toward lower-income consumer spending, both of which they have recently called out as weaker in 4Q25 (for different reasons) and drove part of the slowdown in Branded TPV. XYZ: Block has a combo platter of younger & lower-income consumers utilizing its Cash App solutions, while also highly penetrated into the SMB market via its Square POS platform. We estimate ~65% of gross profit is derived from Cash App & ~60% of Square’s gross profit from payment-related streams, making XYZ slightly more exposed than the other POS providers in our universe. However, we also acknowledge that some consumer pressure would boost demand for its Cash App Borrow offering.

Least exposed – BR, JKHY, QTWO, SSNC. BR: Increased market volatility tends to be good for BR, as long as markets recover vs. a protracted down draft, as it tends to drive increases in stock record growth. JKHY: JKHY boasts recurring revenue at >90%, primarily from processing coupled with its private/public cloud offers for community banks (~24% market share) and credit unions (~48% market share), thus near-term macro-economic shocks would likely have a limited impact on current results. QTWO: With >80% of the QTWO’s revenues coming from subscriptions, we believe the company offers a high degree of visibility into near-term trends and thus short-term macro shocks should have a limited impact on current results. In addition, QTWO’s RPO, backlog of ~$2.7B, provides further confidence in near-term results. SSNC: While much of SSNC’s business is predicated on software subscription & license revenues (~80% contractually recurring), it is vulnerable to deal flow activity via its Intralinks business and some AUM/transaction pricing."