Which Is A Better Investment: Visa Or Mastercard
The ongoing coronavirus pandemic has been detrimental to a lot of different industries. With consumer spending dropping by a record 16% in the U.S. in April, this naturally is having an impact on the likes of Visa and Mastercard , as all signs point to a poor second and third quarter for the payment giants.
Issuer Benefits Are More Important
To understand the difference between credit card payment networks and issuers, take a look at a card like the Chase Freedom Unlimited®:
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Chase is the issuer of this card. It sets the interest rate and the fees. Chase pays the merchant when you use the card to buy something. When you pay your bill, you pay Chase. The cash-back rewards on the card are paid by Chase. Put simply, the bulk of what people take into consideration when choosing a card is determined by the issuer.
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Visa is the payment network on this card. You can use it anywhere that accepts Visa. When you buy something, Visa makes sure that the merchant gets its money and the transaction is reported to your issuer so that it shows up on your statement.
Now compare the Chase Freedom Unlimited® with the Citi® Double Cash Card 18 month BT offer. Citi is the issuer of the latter card, and Mastercard is the payment network.
This card has a higher ongoing rewards rate than the Chase Freedom Unlimited® and a different 0% introductory interest period. But that’s not because it’s a Mastercard rather than a Visa. It’s because it’s issued by Citi rather than Chase.
There are hundreds of credit card issuers in the U.S., but there are only four major payment networks: Visa, Mastercard, Discover and American Express.
Visa Vs Mastercard: An Overview
The electronic payments industry is dominated by four companies. Visa, Mastercard, American Express, and Discover are responsible for handling the majority of the worlds card payments. Visa and Mastercard present distinct offerings, as neither company is involved with extending credit or issuing cards. This means that all Visa and Mastercard payment cards are issued through some type of co-branded relationship. While the two companies dont extend credit or issue cards, they do partner to offer the broadest array of products encompassing credit, debit, and prepaid card options.
According to the Federal Reserves 2020 Diary of Consumer Payment Choice survey, 42% of Americans preferred to pay bills with a debit card, while 29% used a , meaning that 71% had at least one or the other. Many people have a number of them, seeking to take advantage of all the rewards, cash back opportunities, and promotional benefits that issuers offer.
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Both Are Accepted Nearly Everywhere
Just about every merchant that accepts credit cards takes both Visa and Mastercard. That’s true not only in the U.S., but also internationally, where acceptance is lower for American Express and Discover, the two other big payment networks.
There are just a few exceptions to this near-universal acceptance of Visa and Mastercard. Usually, they occur when a merchant has an exclusive deal with one payment network. Probably the best-known arrangement is at Costco wholesale clubs, which accept only Visa cards. Similarly, Sam’s Club used to take Mastercard but not Visa, although it now accepts both. Even so, such exclusions are rare. You’re far more likely to run into a merchant that doesn’t take AmEx than one that doesn’t take both Visa and Mastercard.
Payment networks require merchants to follow a rule called “honor all cards.” What that means is that if a merchant takes Visa, it must take all Visa cards if it takes Mastercard, it must take all Mastercard cards.
Do The Differences Matter
A common question about credit cards is: “Which is better, Visa or Mastercard?” The answer, really, is neither. What matters most are the card features determined by the issuer fees, interest rates, rewards, sign-up bonuses, perks and more.
For some people, choosing Visa or Mastercard may provide a minor feature or two that acts as an added convenience. But most people would be better off spending time comparing what issuers offer. This is where you’ll find the most value per dollar.
Also, keep in mind that which cards you can qualify for will depend on your credit. The best credit card rewards and perks are generally available to people with excellent credit. But there are decent . Even those working to build or rebuild their credit history have good options among .
What’s next?
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The Pros And Cons Of Investing In Payment Processing Stocks
Before we compare Visa and Mastercard specifically, lets talk about credit card stocks in general.
Overall, payment processing stocks make for outstanding investment opportunities. The concept of buying now and paying later is so attractive and convenient that its sure to remain popular for a long time to come.
Whats more, when people shop online, they use credit cards more than any other method of payment. Plus, this type of commerce is projected to keep growing over the next several years, if not longer, especially since more and more people will start purchasing their groceries via the internet.
In addition, all over the world, the cashless trend seems to be on the rise. In fact, some governments are actively trying to reduce their nations dependence on cash. For instance, South Korea is striving to get rid of all coins .
On top of that, there are still emerging markets all over the globe that have yet to fully adopt payment processing systems. Thus, huge growth potential remains.
At the same time, there are never any guarantees when it comes to the stock market. You never know when new companies, technologies and processes will disrupt existing systems of commerce, much the way online retailers have displaced many of their brick-and-mortar counterparts.
Further, the payment processing industry seems uniquely susceptible to disruption, given the concerns that many consumers have about digital privacy as well as the emergence of cryptocurrencies such as Blockchain.
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Stock Wars: Mastercard Vs Visa
Benzingas weekly Stock Wars matches up two leaders in a major industry sector with the goal of determining which company is the better investment.
This week, the duel is between two leaders in the credit card world: Mastercard Inc.MA and Visa Inc. V.
The Case For Mastercard: This company traces its roots to 1966 when brought together a number of banks and regional bankcard associations to form the Interbank Card Association as a rival to Bank of America Corp.’s BAC BankAmericard, the forerunner of Visa. While Interbank grew quickly to 150 members by 1967, it had problems creating a satisfactory marketing brand until the endeavor was renamed Master Charge in 1969. The MasterCard name was adopted in 1979.
Today, the Purchase, New York-headquartered company provides payments processing network solutions in more than 210 countries and territories under the MasterCard, Maestro and Cirrus brands. Mastercard conducted its IPO in 2006.
The company has positioned itself as a data leader with its Mastercard Spending Pulse reports, and it has expanded into the cryptocurrency space through its Mastercard Start Path Crypto program focused on start-up companies using blockchain technology and in its recent acquisition of CipherTrace, a cryptocurrency intelligence company offering digital asset security and fraud solutions to banks, exchanges and other financial institutions.
Related Link: The complete Benzinga Stock Wars series
How Do Credit Card Businesses Make Money
The credit card business is all about lending money. Credit card companies issue credit to ease purchases and allow consumers to delay payment on items. Credit cards allow consumers to purchase items they may not have the cash for at the time of purchase but will at a later date. Of course, like any loan company, the extended credit comes at a price, which is the interest rate charged on the borrowed money.
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Visa’s Dispute With India’s Promotion Of Rupay
Visa has complained to the U.S. government that India’s “informal and formal” promotion of domestic payments rival RuPay gives it an unfair advantage vis-a-vis the U.S. card giant in a key market, according to a Nov. 28 Reuters report.
The report says that on Aug. 9 Visa discussed the issue with U.S. Trade Representative Katherine Tai.
Publicly, Visa has downplayed competition from RuPay. RuPay is an Indian multinational financial services and payment service system, launched by the National Payments Corporation of India in 2012.
India’s Prime Minister Narendra Modi has likened the use of local cards to national service.
Visa Vs Mastercard: Key Points
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Visa and Mastercard don’t actually issue or distribute credit cards. Instead, they are payment networks they process payments between banks and merchants for credit card purchases.
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The bank that issues the card matters much more than the payment network. Interest rates, fees, and most rewards and perks on a credit card are set by the issuing bank, such as Citi, Wells Fargo, Capital One or your local community bank.
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Payment networks provide some benefits. Those benefits are the only substantive difference between Visa and Mastercard, but they’re relatively minor. Most of what you get with a card comes from the issuer.
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Visa and Mastercard are both accepted just about everywhere that takes credit cards. With only a handful of exceptions, any place that takes one will take the other.
We’ll dive into these matters in more depth, but if the summary above is enough for you, you could:
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Start at the beginning with our guide to choosing the best credit card for you.
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Understanding Visa And Mastercard
Visa and Mastercard are the only network payment processors involved in all three areas of the payments market. Working exclusively as network processors, these two companies have a unique edge, but they operate differently.
Visa and Mastercard are both publicly traded. Visa commands a $497.5 billion market capitalization, while Mastercard follows closely behind at $359.8 billion . As neither company extends credit or issues cards through a banking division, both have a broad portfolio of co-branded offerings.
The business models of both companies are very similar. Visa and Mastercard do not issue cards directly to the public but rather through partner member financial institutions such as banks and . The member financial institution then issues cards for individuals and businesses, either directly or in partnership with airline, hotel, or retail brands.
How Did We Choose The Best Credit Cards For Investing
To pick the best credit cards for investing, we looked at dozens of credit cards, including brokerage, cash-back, and cryptocurrency reward credit cards. We picked cards that offered the best rewards rates with reasonable annual fees for the rewards or no annual fee at all.
Every card here allows you to turn your rewards into investments in some form, including stocks, bonds, funds, and cryptocurrencies.
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Investing In Credit Card Companies
The American obsession with easy credit and consumers unwavering need to use means these companies have the potential to be long-term winners. However, investors must learn all they can about this ever-evolving industry to be successful. Read on for an overview of investing in credit card companies.
Visa Stock Vs Mastercard Stock: The Ultimate Decision
If you can, you may wish to buy both Visa and Mastercard stocks. However, if you cant do so, this decision comes down to personal judgment.
For many people, Mastercard may be a little more attractive now because, over the past year or so, the company has pulled ahead in the stock price growth race. Interestingly, in years past, Visa and Mastercard had always been neck and neck in this competition. Mastercards embrace of artificial intelligence and other exciting new technologies may account for its recent gains.
Even so, for a decade, Visa has been a more-than-solid performer for its investors, and its business model seems primed for continuing success. In the end, both of these stocks are likely winners. Therefore, you should definitely listen to your gut, and if youre so inclined, buy the payment processing stock that just seems right to you. In a world of financial uncertainty, these stocks may be the closest thing to a sure thing.
#1 Stock For The Next 7 Days
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Is Visa Stock A Buy
The Dow Jones card giant has a commanding share in the fast-growing digital payments market. Visa earnings are rebounding as coronavirus headwinds subside.
Meanwhile, Visa is also a top payments stock in an industry group that is acting well.
To be sure, competition in digital payments is intense. And global economic and legal/regulatory risks are ever-present, as the recent U.K. court ruling and DOJ antitrust lawsuit show.
Bottom line: Visa stock is not a buy, as it in a months-long consolidation with a 252.77 buy point. Keep an eye on the Dow Jones card giant, as it compares favorably with many top-rated large-cap stocks to buy or watch.
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Invest Less With Your Visa Or Mastercard Recommendations
Invest Less With Your Visa Or Mastercard Recommendations
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Is Mastercard A Great Long
Andvari Associates, an investment management firm, published its fourth-quarter 2021 investor letter a copy of which can be seen here. A quarterly net return of 11% was delivered by the fund for the year 2021, below its S& P 500 and Russell 2000 benchmarks that delivered a 28.7% and 14.8% return respectively for the same period. Spare some time to check the funds top 5 holdings to have a clue about their top bets for 2022.
Andvari Associates, in its Q4 2021 investor letter, mentioned Mastercard Incorporated and discussed its stance on the firm. Mastercard Incorporated is a Harrison, New York-based financial services company with a $365.6 billion market capitalization. MA delivered a 3.57% return since the beginning of the year, while its 12-month returns are up by 15.12%. The stock closed at $372.14 per share on January 14, 2022.
Here is what Andvari Associates has to say about Mastercard Incorporated in its Q4 2021 investor letter:
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Our calculations show that Mastercard Incorporated ranks 6th on our list of the 30 Most Popular Stocks Among Hedge Funds. MA was in 146 hedge fund portfolios at the end of the third quarter of 2021, compared to 156 funds in the previous quarter. Mastercard Incorporated delivered a 4.53% return in the past 3 months.
In November 2021, we also shared another hedge funds views on MA in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
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Bank Stocks News: Why Zelle Could Be A Threat To Mastercard And Visa
Zelle could soon be available as a checkout option at retail stores
Today, bank stocks are in focus after a report from the Wall Street Journal indicated Zelle may soon be a checkout option at retail stores. Zelle is owned by Earning Warning Services, which is in turn owned by seven of the largest U.S. banks. These banks include JPMorgan , Wells Fargo , Capital One and Bank of America .
Zelle operates as a peer-to-peer payment platform allowing users to send and receive money straight from their bank accounts. The service is offered by a wide range of financial institutions, helped by its connections to the aforementioned banks. In 2021, sent payment values on Zelle increased by 59% year-over-year to $490 billion. Meanwhile, transaction volumes increased 49% YOY to 1.8 billion payments. Finally, the payment platform reported a 162% YOY increase in payments to small businesses.
Heres what investors should know about the recent Zelle news moving forward.
