Mastercard 🆚 Visa: The Battle Of The Payment Networks

Joshua Novick > Blog > Uncategorized > Mastercard 🆚 Visa: The Battle Of The Payment Networks

Visa versus Mastercard a comparison

Visa and Mastercard, two remarkable companies…

❌Are not banks
❌They don’t issue cards
❌They don’t provide credit &
❌They don’t have a direct relationship with consumers or merchants

They are basically hashtag#fintechs. Their role is to supply the technology and network infrastructure for banks to facilitate electronic transactions

Some Crazy Numbers:

🏆Visa ($530B market cap) is worth more than any bank (10% more than JPMorgan Chase & Co. $480B market cap) and is 12th worldwide in the hashtag#marketcap ranking.

💰MasterCard ($395B), is worth significantly more than the 2nd most valuable bank worldwide (Bank of America, $265B), over 3X times American
Express ($135B), and is 21st worldwide in the market cap ranking.

💵Visa’s EBITDA margin on revenue for the trailing 12 months was an astounding 70%, while Mastercard’s was 60%. Their EBIT margins were 67% and 57%, respectively. In comparison, among megacaps, only the Taiwanese semiconductor manufacturer TSMC, with a 68% EBITDA margin, rivals Visa and Mastercard in this metric, though it has a considerably lower EBIT margin of 46%. Saudi aramco’s EBITDA margin is 54%, Microsoft is at 50%, NVIDIA 49%, Meta (Facebook) is 43%, Apple 33%, and Google 32%.

🥇Visa and Mastercard managed over💲23 trillion in gross transactions in 2022 (almost the size of the US GDP which was $25Tin 2022🤯 )

Growth Prospects:

🌬️Visa and Mastercard have benefited from significant tailwinds. Factors such as the rise of 🛒 ecommerce, COVID, increased preference for card over cash transactions, and government initiatives promoting electronic payments to combat tax and VAT fraud have all played a role.

🌱There’s still significant room for growth in areas like traditional retail, expansion of ecommerce, & the transition of B2B or larger transactions to electronic formats.

⚠️Threats to Consider:

🔏Regulatory Challenges:
there is a possibility that governments might attempt to break up the Visa and Mastercard duopoly

🌏Rising Competitors:
China UnionPay, Alipay, and WeChat: In China, a near-cashless society, over 80% of daily consumption transactions occur on hashtag#mobile platforms, primarily through Alipay and WeChat Pay, which hold a combined 91% market share

UnionPay accounted for 40% of global debit card purchase transactions, surpassing Visa (2022 Nielsen Report). UnionPay International has expanded globally, partnering with over 2,500 institutions and enabling card acceptance in 181 countries, with issuance in 79 countries.

🍎ApplePay and GooglePay: Currently serve fundamentally as wallets for Visa and Mastercard cards, and lack direct merchant relationships. But what could happen if they acquired someone like Square or PayPal (which have established merchant networks)?

🖍️PayPal: Presently processing «only» $1.3 trillion in transactions (although a significant increase from $150 billion a decade ago). PayPal could still emerge as a competitor in the future, but has a long way to go…

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