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Why Shares of Mastercard Are Falling Today

By Bram Berkowitz – Nov 17, 2021 at 1:18PM

Key Points

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The likely reason for the decline appears to be linked to news about one of Mastercard's rivals.

What happened

Shares of the payment processor Mastercard (MA -0.85%) had fallen nearly 5% as of 12:30 p.m. EST for no obvious reason, although it likely has something to do with the news that came out today about its rival Visa (V 3.00%).

So what

The market isn't exactly having a great day, with the Dow Jones Industrial Average down, but the more likely reason for the decline in Mastercard shares seems connected to Amazon's (AMZN 3.04%) decision to soon stop taking payments from Visa credit cards issued in the United Kingdom. Amazon attributed the decision to the high fees it pays Visa for transactions.

Amazon added that shoppers will still be able to pay for items using Visa debit cards, Eurocard, and credit cards from Mastercard and American Express.
While some may see this as a win for Mastercard, I'm guessing shareholders may be thinking that if Amazon will stop accepting certain Visa cards due to high fees, who's to say the same thing can't happen to Mastercard?
Cylinders lined up in descending order.

Image source: Getty Images.

Now what

I don't think this is the be-all and end-all for Mastercard or Visa. The two companies have set up some of the largest payment rails in the world, and both businesses appear to have benefited from the pandemic because the use of digital payments has accelerated.

But it does present likely far-off concern for Mastercard and Visa. As more and more payment options come into play, with alternatives like blockchain being able to potentially cut out the middlemen in the payments process, transaction fees may decline over time and may not be as pervasive as they are today.


John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. American Express is an advertising partner of The Ascent, a Motley Fool company. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Mastercard, and Visa. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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