While it’s too soon to declare the end of COVID-19, most countries have shown signs of flattening the curve and the relaxation of lockdown measures. This bodes well for the following 2 ASX tech shares that provide payment solutions and value-added business banking products. 

EML Payments Ltd (ASX: EML) 

The EML share price went on a spectacular run in 2019, soaring by more than 200%. However, the business has faced significant headwinds given its dependency on shopping centres and gift card consumption.

EML recently updated the market regarding its third-quarter and April performance. The update outlined challenging business conditions, a more diversified business model and expected improvement in trading conditions moving forward. There are many reasons why EML could emerge as a leading S&P/ASX 200 Index (ASX: XJO) tech share coming out of the coronavirus. 

Renegotiated acquisition 

EML’s acquisition of Irish firm, Prepaid Financial Services (PFS) was said to be a game-changer. PFS provides prepaid card and payments technology that offers some of the most flexible and quick to market services in the prepaid payments industry. It has a broad network of partners including governments, mobile network operators, banks and blue-chip organisations. This acquisition allows EML to diversify its earnings away from gift cards and expands its geographical footprint in the European region. 

The coronavirus pandemic has allowed EML to renegotiate the terms of its PFS acquisition. The upfront enterprise valuation was reduced to £131.5 million, down £94.5 million from £226 million. EML was previously criticised for not completing the acquisition soon enough. I believe investors should be grateful that the terms of the acquisition were renegotiated at a cheaper valuation.

Recent business update

EML highlighted a strong financial performance for the 9 months to 31 March 2020. This performance excludes its PFS acquisition which will be included in financial results from 1 April. EML’s gross debit volume (transaction volumes) increased 55% over the prior corresponding period, while revenue increased by 20%. Earnings before interest, tax, depreciation and amortisation (EBITDA) also jumped 24%.

At the end of April, EML held more than $125 million in cash. The gradual opening of malls in various countries during May and June should see an improvement to EML’s trading conditions moving forward. 

Tyro Payments Ltd (ASX: TYR) 

Tyro Payments has provided weekly updates to the market regarding transaction volumes on its EFTPOS terminals. 

In May, the company saw its transaction volumes fall 18% on the prior corresponding period. This marks a significant improvement against April, where transaction values fell 38%. 

The market appears to be very optimistic about how Tyro will perform moving forward. The Tyro share price has rebounded strongly, up 340% since its March lows and more than 10% already in June. 

Tyro’s client base consists largely of Australian small and medium-sized enterprises in the health, hospitality and retail verticals. Most restaurants, cafes and shopping centres in Australia have been allowed to reopen. This should see a general improvement in Tyro’s transaction volumes and potentially year-on-year growth moving forward. While the Tyro share price has soared in June, it is certainly one to watch. 

More reading

• The 3 ASX tech stocks that helped this fund manager outperform in May
• These 5 exciting small cap ASX tech shares rose by up to 70% in May
• Build wealth for life with these 2 ASX 200 shares
• Grow your wealth with these exciting ASX mid cap shares
• 4 ASX fintech shares to make you rich

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited and Tyro Payments. The Motley Fool Australia has recommended Emerchants Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This afternoon the Reserve Bank decided against cutting the cash rate further and kept it on hold at 0.25%.

While this was a small win for income investors, it certainly doesn’t make life any easier for them.

At present Commonwealth Bank of Australia (ASX: CBA) offers interest rates of 1% per annum on a five-year term deposit. This is broadly in line with what you can find elsewhere with the other big four banks.

This kind of yield makes it very hard for investors to earn a sufficient income from term deposits.

But never fear, because the Australian share market is home to a large number of dividend shares which offer vastly superior yields.

Two which you can use to beat low interest rates are listed below:

Rural Funds Group (ASX: RFF)

The first dividend share to consider buying is this property company. Rural Funds is different to most property companies on the ASX. It has a focus on Australian agricultural assets and owns a diverse portfolio of high quality properties across different industries. These properties have ultra long leases and come with fixed rent increases built into them. This provides Rural Funds with a lot of earnings visibility. As a result, it has been able to provide distribution guidance for FY 2020 and FY 2021. The company plans to pay shareholders a distribution of 10.85 cents per share this year and then 11.28 cents per share next year. The latter equates to a 5.6% distribution yield.

Telstra Corporation Ltd (ASX: TLS)

Another dividend share to buy is Telstra. I think the telco giant is a great option for income investors due to its defensive qualities. These have been on display during the pandemic, with Telstra able to reaffirm its guidance for FY 2020 despite the crisis. In addition to this, with the NBN headwinds beginning to ease, I believe a return to growth is not too far away. In the meantime, I’m confident that its free cash flows are sufficient to maintain its 16 cents per share dividend. This equates to a fully franked 5% dividend yield.

More reading

• How to value the big four ASX banks
• Why I would buy these ASX 200 blue chip shares in June
• 5 winning ASX dividend shares to buy in June
• How bankable are the big four ASX bank shares in 2020?
• This ASX fintech share is up 489% since March

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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