The payment network world is essentially a duopoly between Visa (NYSE: V) and Mastercard (NYSE: MA). They facilitate hundreds of billions of transactions annually, totaling well into the trillions, underscoring their importance to the global financial system.
Visa and Mastercard’s stocks have struggled this year — down 7.2% and 11%, respectively, year to date through market close on May 8 — but that doesn’t take away from their long-term appeal. Both companies are built to thrive long term, but which is the better stock right now? Let’s take a look.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Recent financial performances
Both companies have delivered strong financial performances in their most recent quarters, but in different areas. With Visa, you’re getting larger scale and faster revenue growth. With Mastercard, you’re getting faster earnings growth:
|
Metric |
Visa Year-Over-Year Growth |
Mastercard Year-Over-Year Growth |
|---|---|---|
|
Revenue |
17% |
16% |
|
Non-GAAP net income |
17% |
20% |
|
Non-GAAP diluted EPS |
20% |
23% |
Sources: Visa and Mastercard earnings reports.
Value-added services (VAS) — which include services like data analytics, fraud prevention, and consulting — were a bright spot for both companies. Visa’s and Mastercard’s VAS increased 27% and 22% year over year, respectively. This is a sign that they’re diversifying their business models and becoming less reliant on just transactions.
Cross-border payments also continued to grow for both companies, which is a major source of profit because they typically earn more per transaction. This is a high-margin segment with plenty of growth opportunities as international travel and digital payments expand globally.
Approach to stablecoins
Stablecoins are digital assets designed to maintain a stable value relative to an asset such as the U.S. dollar. Over the past couple of years, they have grown from a relative niche to large-scale use cases. As major payment networks, Visa and Mastercard have been open about the importance of stablecoins to their long-term growth strategies. However, they’re approaching them a bit differently.
Visa CEO Ryan McInerney said Visa wants to establish its role as a “key interoperability layer between this powerful infrastructure and real-world solutions for users.” Simply put, Visa wants to act as a middleman to help stablecoins interact smoothly with traditional financial systems.
