Visa versus Mastercard

  • Visa has better margin conversion. Mastercard has better growth.
  • Visa's risk is structural/regulatory. Mastercard's risk is cyclical.
  • Visa has more scale and better margin conversion. It handles more payment volume on similar people cost, hands back less of gross revenue to banks, and has higher operating margin.
  • Mastercard has better growth.
    • Cross border. 71% of revenue from outside the US vs 61% at Visa.
    • Non-U.S. domestic conversion of cash.
    • Value-added services. 41% comes from value-added services (fraud, data, processing), against 27% at Visa.
  • Risks:
    • Visa is more exposed to three U.S. threats.
    • Mastercard's risk is a triple downturn.
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