Another quarter and another set of results from Mastercard and Visa that top analyst forecasts.
And it is fair to say that the market is impressed. For the year to date Visa’s share price as CI November goes to press of almost $180 is ahead by 37%.
For its part, Mastercard is having an even better time of it. At almost $281, Mastercard’s share price is up by 50% for the year to date.
There have been a small number of contrary voices on and off, suggesting that both Visa and Mastercard’s shares have been over-valued. And yet both Mastercard and Visa continue to delight shareholders and post record results.
At both firms, processed transactions and spend volumes continue to rise impressively. In its third quarter results, Mastercard posted a 14% rise in gross dollar volume. At the same time, transaction numbers soared by 20%.
Meantime, while costs are also ahead, expenses are manageable.
Importantly, margins are standing up. At Visa, 67% against 66% for the year ago quarter. Adjusted operating margins are also up at Mastercard.
Nor is there evidence of complacency.
It would be easy to sit back and benefit from the transformation in consumer behaviour around the world. In particular, the moves away from cash and cheques.
Future growth is assured as emerging markets tap into Visa and Mastercard’s technology.
Visa, Tencent tie up another positive
Visa has kicked off its new fiscal year with yet more positive updates. Take the announcement at the start of November from China for example. Tencent is to support international card schemes in its mobile wallet. That means that consumers visiting China will be able to use their Visa card where WeChat Pay is accepted.
Mastercard does not do complacency either and it deserves the positive PR it is earning from its work with fintechs. Take Mastercard Accelerate as an example. It is enabling fintechs to be on boarded to Mastercard in a matter of weeks.
Programme participants are connected to relevant parts of the business to integrate Mastercard’s proprietary technology. That way they can leverage its insights and cybersecurity services, engage new customers, and reach new markets.
It is one thing to partner with the likes of Revolut as it plots its expansion in the US and elsewhere. But Mastercard’s incubator programme is also targeting start-ups and a new generation of fintech entrepreneurs.
Rapyd signs up to Fintech Express
The latest example of Mastercard’s fintech drive is its Fintech Express programme, launched during the Singapore Fintech Festival. UK-based Rapyd, a Fintech-as-a-Service platform is the first signing.
Reportedly, the programme provided Rapyd with licensing as a Mastercard issuer within a mere two weeks.
Fintechs need more than just financial backing. They want speed, global expertise and scale. Mastercard (and Visa) tick all the boxes.
At both Visa and Mastercard, deals activity continues apace. For example, Visa is taking a 20% stake for $200m in Nigeria’s payments platform Interswitch.
In addition to its switching and processing services, Interswitch owns Verve. That is, the largest domestic debit card scheme in Africa with more than 19 active million cards.
According to US reports, the FTC has Mastercard and Visa in its sights, again. Reportedly, US anti-trust regulators are investigating claims that Visa and Mastercard might block some retailers from routing debit card transactions over rival debit networks.
In other words, networks such as Pulse and Star.
We have of course been here before. As recently as 2016, Visa amended its regulations at the request of the FTC.
The market is not spooked by news of the FTC enquiry and it is right to take the news in its stride.