Payments, and fintech more broadly, appears to be shifting into a selective market where it pays for investors to pick their spots. Top payments players are posting losses on the equity markets. PayPal , Marqeta, and Block are in the doldrums.

But there’s light at the end of the tunnel, especially for business-to-business focused companies, credit strategies, and patient investors. An influx of new bidders continues to buoy M&A valuations, at least for now.

“I still see payments as being attractive,” says Grant Thornton partner John Cristiano. “You see a lot of interest there, lenders want to get into payments and e-commerce wants to get into payments.”

Yesteryear’s market surge from players now struggling to retain equity valuations has spurred a new wave of potential market entrants eager to buy or to build their way into the sector, writes DA Davidson in a recent note. Payments is no longer a service provided by lenders or tech companies; it’s an enabling function of a frictionless customer experience. That means every industry competing for market share can do so at the pay point. Payments is becoming horizontal instead of vertical, the bank’s January Fintech note reads.

It’s a trend playing out in auction processes across the country. Take lenders and fintech companies, for instance. The client-customer relationship cooled merger interest between the fields until recently, when competition to build out rival platforms matured into full-scale acquisition interest.

Banks are not only dipping into tech, but you see tech funds looking to buy traditional banks, Cristiano says.

Indeed, tech platform SoFi earlier this year received conditional approval to become a bank in its own right, coinciding with its acquisition of bank charter-holder Golden Pacific Bank.

Fintech players are also becoming acquirers themselves. SoFi’s $1.2 billion acquisition of payments platform Galileo Financial Technologies last year is potentially instructive. Galileo doubled processed payment volume from September 2019 to March 2020 to $53 billion, a growth trajectory that drew bidder interest.

But even an influx of bidder interest in the sector may not be enough to modify the market’s recent trajectory. Public sector valuations could begin to weigh on private sector multiples, depressing M&A volumes for last year’s league table darling.

LBO purchase price multiples of Ebitda remain at record high levels across a variety of sectors, particularly tech and software. Will recent volatility in public markets skim off some of that foam? Churchill Asset Management co-head of senior lending Randy Schwimmer wonders this himself. “That’s assessed on corporate performance. If operating numbers disappoint, you could see flattening of what has been an upward curve the last several years.”

The picture for fintech deal multiples is already rationalizing. Trailing enterprise value to Ebitda multiples recently clocked in at a historically reasonable 26.6x, compared to 42x late last year. Median deal multiples haven’t averaged under 20x Ebitda since January 2019, the data show.

Just as those valuations spiked in 2020, they could settle back to earth, Schwimmer said. He predicted higher growth businesses, being subject to more customer demand pressures, could be impacted by higher inflation from supply chain bottlenecks. Markets will be watching these signs closely.

Pricing pressures, both market and inflation driven, could spur investor interest in another corner of the M&A market. The proliferation of private credit funds gives limited partners a safe haven — participation in riskier deals but high enough in the credit structure to limit their risk should valuations falter and inflation rise.

Price volatility in stocks and rate sensitivity of bonds could grow as the Fed proceeds with rate hikes, perhaps at an accelerated pace, Schwimmer said. Private credit is clearly seen as an attractive alternative to liquid strategies.

Could that mean the fintech trade shifts from equities to credit? Historic tech investors like Thoma Bravo and Francisco Partners have launched credit funds, the former having vintages stretching back to 2017. Francisco Credit Partners II raised $2.2 billion in October, clocking in at nearly twice its $1.25 billion target as a late-2021 sign of investor interest in technology takeover debt. Vista Credit Partners took in $2.3 billion for its third fund, also announced in October of last year.

Most of these funds differentiate themselves by the breadth of their strategies. Instead of focusing exclusively on direct lending to finance deals, the credit fund managers speak about providing capital for growth, transition, and liquidity.

Francisco Partners, for instance, plans to offer structured solutions for companies that are flexible and scalable, differentiating the fund from lenders with more standardized offerings. Francisco Credit Partners II invests in senior secured debt.

Whether limited partners storm to credit strategies instead of private equity, or valuations stabilize, might be theoretical topics, says Grant Thornton’s Cristiano. Deal talks and transactions already in the pipeline threaten to change the prevailing narrative on tech back to merger mania. From 2021 to 2022, activity hasn’t slowed down, he notes. If anything, it’s as fast as it ever was.

The data is also unequivocal. MoneyGram International is fielding interest from financial sponsors after its $1.2 billion takeover offer from China’s Ant Financial was blocked by U.S. regulators. And in a vote of confidence for the strength of credit and equity strategies, Citrix is currently pending a $16.5 billion sale to Elliott Investment Management and Vista Equity Partners.

“We expect the amount of private equity dry powder available for buyouts will mean strong M&A activity again for 2022,” Schwimmer said. “The appetite for yield and to deploy capital with good performing businesses is robust. We expect that to continue for quite some time.”

The fintech trade is not quite over yet.