Why MasterCard is Underperforming Visa Today

A court ruled today that bank fees may not have to be lowered as the market expected, which should be good for both Visa and MasterCard.

Mar 21, 2014 at 3:30PM
Longview

Stock markets were mixed today with little economic or earnings news to drive trading. The one notable news item in the last 24 hours was the Federal Reserve "stress test" finding that 29 of the 30 largest U.S. banks would be able to continue lending in a severe recession. The only bank to fail was Salt Lake-City based Zions Bancorporation.

As of 3:30 p.m. EDT the Dow Jones Industrial Average (DJINDICES:^DJI) was up 0.11%, while the S&P 500 and Nasdaq Composite were both down for the day.

Visa leads the Dow
Credit card payment processor Visa (NYSE:V) was up 0.75% today. Interestingly, competitor Mastercard (NYSE:MA) was down 2.9% on the day.

Visa Image Tmf

Visa cards could become more common if swipe fees are raised. Image owned by The Motley Fool.

A federal appeals court ruled today that the Fed was reasonable in setting debit card swipe fees, reversing a ruling last year that may have resulted in fees lower than the current $0.21 per swipe cap. What the ruling didn't do is end the court battle between retailers and banks that charge the swipe fees. The court said the law was written poorly and more clarification is needed to determine the appropriate cap.  

A pending appeal from retailers could go as high as the Supreme Court. For now, fees will stay where they are, which relieves some pressure Visa and MasterCard may have felt if the cap was lowered.

Why MasterCard is underperforming Visa today
You might think VIsa and MasterCard would rise together because both companies would benefit from higher swipe fees. But Visa would actually benefit more from the fees due to its higher market share in debit cards. If banks were forced to raise fees for consumers having debit cards, this could have meant a shift toward credit cards, where MasterCard holds a higher market share, or other payment methods.

That's why MasterCard isn't seeing the Visa's pop today. Whether the ruling will actually have a positive effect on Visa or a negative effect on MasterCard is yet to be answered. Remember that the court battle isn't over. For today, though, the market sees Visa as the big winner.

A great growth opportunity for you
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.

Travis Hoium manages an account that owns shares of MasterCard and Visa. The Motley Fool recommends MasterCard and Visa. The Motley Fool owns shares of MasterCard and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers