(Reuters) -Tech billionaire Jack Dorsey-led Block's shares rose 7% in morning trading on Monday after the payments firm was added to the benchmark S&P 500, marking a milestone for the fintech sector.

The inclusion cements Block's status as one of the most valuable and influential players in the fintech space, and shows how digital payments and financial apps have moved into the mainstream and disrupted traditional banking models in the U.S.

Block -- with a market value of about $44.8 billion -- will replace Hess Corp, following its $55 billion merger with oil major Chevron ( CVX ).

The change takes effect before trading begins on Wednesday, S&P Dow Jones Indices said.

Shares of a company often rise after being added to the S&P 500 as index-tracking funds are required to add them to their portfolio, boosting demand for the stock.

J.P. Morgan estimates that Block's inclusion should drive net indexer demand of 54.2 million shares of the company.

"We believe XYZ (Block) deserves a higher multiple given recent momentum around product velocity and marketing efforts, and joining S&P 500 helps."

Co-founded by Jack Dorsey in 2009 as Square, the company rebranded to Block in 2021 to reflect its broader focus on blockchain technology.

Block sits at the intersection of traditional payments and digital assets, with products spanning from point-of-sale systems, peer-to-peer transfers and bitcoin services.

"The nod to join the S&P 500 highlights Block's history of innovation, profitability, and ongoing margin improvement," Stephen Biggar, analyst at Argus Research told Reuters, adding that it also reflects the rapid growth of firms in the fintech and payment processing industries.

Crypto payments have also gained momentum this year and are expected to grow further after U.S. President Donald Trump signed a law on Friday establishing a regulatory framework for dollar-pegged stablecoins, a milestone that could help make digital assets a routine way to pay and transfer money.

(Reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli)