Is This the No. 1 Biggest Risk for Both Visa and Mastercard?
Any long-term, quality-focused investor would most likely agree that (NYSE: V) and Mastercard (NYSE: MA) are two of the best businesses in the world. They benefit from powerful network effects. Their revenues and earnings have increased at impressive rates over the past decade, which has resulted in strong stock-price performances.
But that doesn't mean investors have nothing to worry about. Continue reading to learn about one potentially major risk that could undermine the dominance of these two card payment giants.
Both Visa and Mastercard make money by charging fees anytime one of their billions of cards in circulation is used at checkout. It has proven to be a very lucrative business model. However, merchants bemoan these so-called interchange fees that they must pay. To be clear, most of the interchange goes to the banks that issue the cards to consumers, not to Visa and Mastercard. Nonetheless, if retailers, who are typically already operating on razor-thin margins, could find ways to reduce payments-related expenses, they probably would.
Source Fool.com
Visa Inc. A Aktie
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