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The company's fixed network fee penalizes merchants that route debit transactions to any competing network, and subverts the competition that the Durbin amendment was designed to foster.
June 26 -
Timothy Murphy, MasterCard's chief product officer, said in an interview that the network has "transitioned" from its credit card roots to become a fuller-service payments company.
May 10
UBS analysts downgraded Visa (V) and MasterCard (MA) stocks to "sell" ratings, citing weaker U.S. and global economic data.
"While we continue to believe that both Visa and MasterCard shares will remain reasonably attractive 'safe havens' (particularly relative to banks and many other FinTech names) for investors given their strong fundamentals, still-extant expense leverage, and favorable secular trends, we believe both companies' exposure to a slowing consumer spending backdrop makes a slowdown in key metrics simply unavoidable," analysts John Williams and Neil Fonseca said in a note on Monday.
The analysts point to a consumer-spending slowdown in the U.S. and to ongoing economic woes in Europe and elsewhere. Theirs is the "only sell rating on the Street," according to a presentation given to investors on Monday.
Intra-quarter data from both companies over the past few months show that payments volumes and transactions slowed from March to April and then again from April to May, according to the analyst note.
"If everyone loves the stocks and owns the stocks, who's left to buy?" the note says.
"Given a still very bullish and (in our view) crowded current consensus view, slowing growth rates in key metrics, and bearish macro indicators, we would recommend investors sell their shares now and wait for a better entry point, as the current risk-reward is not attractive," it adds.
The analyst note says that a potential settlement in an ongoing retailer lawsuit against the card networks over swipe fees
"All things equal, we believe that a positive outcome could drive Visa and MasterCard shares higher by ~5-10% from their current levels, but since the shares have continued to climb higher over the last month even in the face of slowing global fundamentals and key drivers, we believe that a positive outcome to the Brooklyn case is at least partially (if not mostly) priced in here," the note says.
By midday Monday, shares of Visa had fallen 1.6% and shares of MasterCard had fallen 2.9%.
