Visa And Mastercard Remain Top Picks, But One May Outpace Growth

Zinger Key PointsVisa and Mastercard ride digital payment trends like BNPL, wallets, and real-time payments, but face growing crypto and fee pressure.Analysts flag macro risks, travel slowdown, and stablecoin disruption as headwinds, though both card giants post strong earnings growth.Up Next: Get 5 Dark Horse Stocks Wall Street Is Quietly Loading Up OnU.S. payment processorsare shifting their focus toward faster, more convenient, and secure digital payment solutions. Key trends driving this transformation include the growth of real-time payments and the broader use of digital wallets and mobile transactions.The industry is undergoing rapid growth and transformation as "Buy Now, Pay Later" (BNPL) and cryptocurrency payments gain momentum.BNPL allows consumers to divide purchases into manageable installments, while crypto payment gateways let merchants accept digital currencies.Key players in the sector, includingVisaV, surged over 13% year-to-date compared toMastercard'sMAby over 7%. The S&P 500Information Technology Sector Index(which includes both stocks) gained 10% during the period.Also Read:Mastercard, PayPal Partner To Offer Consumers More Payment ControlVisa and Mastercard stocks surged over 10-13% in the last three months, lagging the index's 27% gains. PayPal stock is down 13% year-to-date despite gaining 23% in the last three months.Morgan Stanley and Jefferiescited concerns forPayPal over tariffs,Apple'sAAPLcompetitive threat, and a slowdown in branded checkout growth. They warned that PayPal's exposure to China cross-border transactions could face pressure from new tariffs and regulatory changes.Visa and Mastercard face intense competition fromAmerican ExpressAXP,Discover,UnionPay, andPayPalPYPLin the payment processing space. PayPal challenged Visa and Mastercard early on by delivering a more convenient and user-friendly solution for online payments, especially for peer-to-peer transfers and small online merchants.PayPal's success in digital payments helped accelerate the shift toward online and mobile transactions, pushing Visa and Mastercard to evolve and innovate in response.Visa and Mastercard also compete withCapital OneCOF,Stripe, and many fintech startups specializing in digital payments.Visa And Mastercard's Latest Quarterly ResultsVisabeat expectations inthe second quarter, reporting EPS of $2.76 and revenue of $9.59 billion (up 9.2%), slightly ahead of analyst estimates despite a mixed macro backdrop.RBC's Daniel Perlin noted solid U.S. payment volumes and strong value-added services growth. Perlin highlighted three positives: steady consumer spending, 22% year-over-year growth in value-added services revenue, which highlights Visa's expanding revenue base beyond consumer transactions, and Visa's new $30 billion share buyback plan.Despite minor cross-border softness, Visa kept its full-year 2025 guidance unchanged, with management ready to adapt as needed; Perlin slightly raised his fiscal 2025 EPS estimate to $11.30.Mastercard beatfirst-quarter estimateswith $7.25 billion in revenue (up 14%) and adjusted EPS of $3.73, driven by solid pricing and acquisitions.JPMorgan analyst Tien-tsin Huang cited strong organic growth, resilient volumes, and solid execution despite calendar and macro headwinds.Huang highlighted better-than-expected revenue yield, aided by pricing and FX volatility, and noted Mastercard's broad-based strength, even as cross-border volumes decelerated slightly off a strong fourth-quarter base.Mastercard maintained full-year guidance and forecasted mid-teens revenue growth for second-quarter, with Huang raising EPS estimates for fiscal 2025 to $15.90 and for fiscal 2026 to $18.60, supported by diversified, premium growth and pricing actions that help cushion against macro pressure.How Visa And Mastercard Stack Up Against Each Other?On March 21, JP Morgan's Tien-tsin Huanghighlighted Visa leadsthe payments industry in scale, with higher transaction volume, revenue, and operating margins. However, Mastercard has consistently outpaced Visa in growth, with faster revenue and earnings expansion driven by gains in emerging markets and diversified revenue streams.Huang noted both Visa and Mastercard as strong performers, highlighting their robust cash flows and commitment to shareholder returns through aggressive buybacks. In 2024, both stocks rose over 20%, in line with the broader market.Huang highlighted that Visa has pulled ahead in early 2025, benefiting from investor interest in U.S. growth stocks and fading regulatory concerns. He also pointed out that Mastercard trades at a higher valuation, reflecting its stronger growth trajectory. While Mastercard's growth premium appears justified, Huang noted growing appeal in Visa's relative value and improving risk profile.RegulatoryProbeOn May 23, European Union antitrust regulatorslaunched a probeinto fees charged by Visa and Mastercard, questioning their impact on financial institutions servicing retailers.Regulators surveyed market participants to assess the fees imposed through Visa and Mastercard networks as EU officials explored ways to reduce reliance on foreign payment providers.European Central Bank President Christine Lagarde underscored the urgency to cut dependence on U.S. card networks, according to sources cited by Bloomberg. Visa and Mastercard stocks fell following the news, as both firms face legal and regulatory challenges over their global fee structures.Crypto PaymentsOn June 13, American Express partnered withCoinbaseCOINto launch the Coinbase One Card, ametal credit cardthat offers up to 4% cashback in Bitcoin, available exclusively to Coinbase One subscribers starting fall 2025.Mastercard powers Gemini's competing crypto credit card, offering up to 4% Bitcoin rewards on purchases like gas and rideshare, with no annual or foreign transaction fees. Both card networks are deepening their presence in crypto payments, supporting products that let users earn digital assets through everyday spending.By enabling crypto rewards cards, American Express and Mastercard are helping traditional payments converge with the growing demand for digital currency use and adoption.Trump PoliciesOn June 19, analysts warned the GENIUS Actcould intensify competitionfor Visa and Mastercard as it lays the groundwork for regulated stablecoin payments in the U.S.Mark Hines of Herrick Lake Investments said companies likeAmazon.comAMZNandStripecould quickly adopt stablecoins, bypassing traditional card networks and offering lower transaction fees. Hines predicted that Visa and Mastercard may face slower growth and fee pressure as stablecoins emerge as viable alternatives for online payments. Despite Trump's push for swift House approval, some analysts, like Rebound Capital, believe stablecoins still have a long runway before materially disrupting major payment processors.With Visa, Mastercard, and American Express handling $28 trillion in annual volume, any shift toward stablecoin adoption could eventually impact their dominance, especially if the market grows to the projected $3.7 trillion by the decade's end.Other Macroeconomic EventsOn June 24, Bank of America Securities analysts flaggedrising price sensitivityand macro concerns as potential headwinds for Visa and Mastercard's cross-border volumes. Both stocks declined 4% in the last 30 days.The analysts found that 47% of global travelers plan to alter their travel plans over the next year, up from 44% in April, posing risks to international spending.Analysts estimate that about 10% of travelers may cancel or switch to domestic trips, which could impact Visa and Mastercard's high-margin cross-border revenue.While both companies still report stable trends, analysts caution that prolonged weakness in global travel—especially U.S. inbound—could pressure future growth.Price Actions: At the last check on Friday, MA stock was down 0.54% at $560.50, and V is down 0.53%.Loading...Loading...Read Next:Amex Still King Of Premium Credit Cards — But Chase, Capital One Are Closing In Fast: AnalystPhoto via ShutterstockMAMastercard Inc$560.50-0.54%Stock Score Locked: Edge Members OnlyBenzinga Rankings give you vital metrics on any stock – anytime.Unlock RankingsEdge RankingsMomentum78.40Growth38.02Quality42.74Value11.94Price TrendShortMediumLongOverviewVVisa Inc$354.02-0.52%AAPLApple Inc$210.99-0.67%AMZNAmazon.com Inc$223.450.54%AXPAmerican Express Co$322.78-0.76%COFCapital One Financial Corp$219.50-0.56%COINCoinbase Global Inc$393.401.14%PYPLPayPal Holdings Inc$74.96-0.98%Market News and Data brought to you by Benzinga APIs© 2025 Benzinga.com. . .Posted In:FintechNewsTop Storieswhy it's movingFintech Focus NewsletterYour update on what's going on in the Fintech space. 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