Since its early days selling a white card reader that plugged into an iPhone, Block (XYZ 1.01%) has evolved into a comprehensive financial services provider for both merchants and consumers. Its shares were once a darling on Wall Street. But they now trade 74% below their peak (as of Oct. 1).

Mastercard (MA -1.03%) has long been a dominant player in the payments landscape. Investors have been rewarded, as shares are up an incredible 12,320% since the company's initial public offering in 2006.

Between Block and Mastercard, which is the better fintech stock to buy right now?

Person using smartphone with dollar signs floating over it.

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Buying an earlier-stage business

Block was founded in 2009, so it has a much shorter operating history than Mastercard. However, don't let that take away from the success that the former has achieved. Block is becoming a leading force in the payments industry, particularly when it comes to in-person transactions.

The company's Square segment is a popular choice for merchants looking to handle their finances. It offers solutions ranging from point-of-sale hardware and working capital loans to tools that help manage staff and marketing campaigns. During Q2 (ended June 30), Square handled $64.2 billion in gross payment volume and generated over $1 billion in gross profits (up 11% year over year).

Block is also focused intensely on individual consumers, hoping to be a primary banking provider for households making less than $150,000 in income per year. Its Cash App division counts 57 million monthly active users. And 45% of those have a Cash App debit card, a penetration rate that has increased steadily. Management sees a $75 billion gross profit total addressable market for this segment.

The business is pushing further into the Bitcoin space, a passion project for co-founder and CEO Jack Dorsey. Square merchants can accept payment in this crypto, while Cash App users can buy, sell, and hold it. Block sells a hardware wallet and mining equipment as well.

Because Block is a younger company that's still pushing aggressively for growth, while also working on various Bitcoin-related initiatives, it's clearly a riskier bet for investors. However, that also presents more upside.

Owning an established company

Investors might not view Mastercard as a fintech company, but this is precisely what it is. The business doesn't lend any money to customers. It simply operates the underlying payments platform that facilitates the processing of debit and credit card transactions. Mastercard looks nothing like a traditional banking entity.

The business has been around for much longer than Block has, and it is a leader in the payments industry, enabling smooth commerce to happen. During the three-month period that ended June 30, Mastercard processed a whopping $2.6 trillion in payment volume. It has a presence in more than 210 countries and territories around the globe, with 3.2 billion cards active and 150 million acceptance locations. This is evidence of tremendous scale and reach.

Despite the rise of new payment methodologies, none more pressing than stablecoins, Mastercard's competitive position is almost impossible to disrupt. It benefits from a powerful network effect, as more cards and merchants constantly make the platform more valuable to all stakeholders. And paying with and accepting cards is ingrained in the fabric of how the economy operates.

You'd struggle to find many businesses more profitable than this one. During the second quarter, Mastercard raked in $4.8 billion in operating income, which resulted in an unbelievable operating margin of 58.7%. In the past three years, operating income has climbed at an annualized pace of 17%. With the ongoing penetration of cashless transactions, coupled with general economic and spending growth, earnings should keep rising.

What kind of investor are you?

Both Block and Mastercard have positive attributes. Choosing between them, though, comes down to your personal investing philosophy. Those who are comfortable taking on more risk will choose Block. Risk-averse investors, on the other hand, will pick an already dominant company in Mastercard.