As payment networks, both Visa (V 0.51%) and Mastercard (MA 0.78%) occupy a sweet spot as more commerce shifts from cash to digital.
But which of these two leading payment networks makes for a better investment?
At a high level, the two companies share the same attractive economics, earning fees on global payment activity without taking on the risk of being a bank or lending money directly. A close look, however, reveals that there are differences between the two companies. Scale, growth rates, and valuation, in particular, are some key areas where the two companies differ.
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Visa's steady compounding continues
Visa ended fiscal 2025 with net revenue of $40.0 billion, up 11% year over year.
For its fiscal fourth quarter specifically, CEO Ryan McInerney said, "continued healthy consumer spending drove net revenue up 12% to $10.7 billion."
Capturing the company's vast network, Visa's processed transactions were 67.7 billion in the final quarter of the year, up 10% year over year.
How has profitability been faring? For the full year of fiscal 2025, Visa's adjusted earnings per share rose a solid 14% year over year.
NYSE: V
Key Data Points
Meanwhile, the company continues to send a lot of cash back to shareholders. In fiscal 2025, Visa returned $22.8 billion through share repurchases and dividends. The bulk of this capital return was in the form of share repurchases during fiscal 2025. Visa repurchased $18.2 billion worth of its own stock.
Mastercard's growth is exceptional
Mastercard's recent results show growth at a faster clip than Visa's. The credit card company's third-quarter revenue rose 17% year over year to $8.6 billion.
The key driver for the quarter was Mastercard's value-added services and solutions, which delivered net revenue growth of 25% year over year. With this revenue segment comprised of drivers that aren't directly tied to payment volume, like security solutions and business and market insights, strong growth in this area could make Mastercard's business more resilient and less dependent on payment volume over time.
Capturing the lucrative nature of Mastercard's business profitability grew faster than its total revenue. Third-quarter operating income rose 26% year over year to $5.1 billion, and operating margin expanded from 54.3% in the year-ago quarter to 58.8%. Mastercard also grew earnings per share 23% year over year to $4.34.
NYSE: MA
Key Data Points
Like Visa, Mastercard has been aggressively buying back its stock. During the third quarter alone, the company repurchased 5.8 billion of its own shares for a total cost of $3.3 billion. In addition, it paid $687 million in dividends during the period.
Which is the better growth stock for 2026?
On the one hand, Mastercard is showing faster revenue growth right now -- and its services expansion looks like a durable advantage. But Visa shouldn't be underestimated. It is still growing at an attractive clip, and off a much larger base.
Still, given that both companies have a similar valuation, evidenced by Visa and Mastercard's price-to-earnings ratios of 35 and 36, respectively, I think that Mastercard's much faster growth gives it the edge when comparing the two stocks head-to-head. Of course, you could argue that Visa demands a higher valuation, given that the company has greater scale and possibly a superior competitive advantage because of it. But the substantial difference in the two companies' growth rates is enough of a reason for me to choose Mastercard, even if it doesn't boast Visa's scale and reach.
Whichever of the two companies' investors decide they personally like better, approaching these investments with caution, given their premium valuations, is probably wise. If the economy weakens, these two companies could see spending on their platforms soften. This could lead to a deleveraging effect and, ultimately, an outsize hit to earnings.
Yes, Mastercard looks like the better stock today, but investors interested in buying a share of this high-quality business may want to consider keeping the position underweight. They could always increase the position size if shares sell off and become more attractive at some point in the future.
