Benzinga - by Anusuya Lahiri, Benzinga Editor.
Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) announced a settlement with U.S. merchants in which the card networks agreed to lower credit card interchange fees by 4bps in the U.S. The deal also caps swipe fees until 2030.
The settlement also removes anti-steering provisions, allowing merchants to price differently depending on the type of card a consumer uses at purchase.
While an interchange cap may limit their medium-term pricing power, Mizuho analyst Dan Dolev noted the settlement may help relieve regulatory pressure that Visa & Mastercard have otherwise faced. Plus, it should decrease the risk of further reduction to interchange fees between now and 2030.
Also Read: Visa Unveils New AI Fraud Prevention Tools to Safeguard Digital Payments
To the extent merchants surcharge on specific credit cards, Dolev noted the most significant beneficiaries could be merchant acquirers that earn a take rate on volume/ATV.
These include Block, Inc (NYSE:SQ), Fiserv, Inc (NYSE:FI)/Clover, and Toast, Inc (NYSE:TOST). Global Payments Inc (NYSE:GPN) would also benefit, as he noted they are more exposed to transaction-based pricing than its peers.
Dolev had a Neutral rating on Visa with a price target of $265 and a buy rating on Mastercard with a price target of $480.
The analyst had a Buy rating on Block with a price target of $99 and a Buy rating on Fiserv with a price target of $156. He had a Neutral rating on Toast with a price target of $17 and a Neutral rating on Global Payments with a price target of $129.
Price Actions: V shares are trading lower by 1.04% to $277.69 on the last check Wednesday. MA shares traded lower by 0.25% at $475.60.
Latest Ratings for MA
| Jan 2022 | Morgan Stanley | Maintains | Overweight | |
| Jan 2022 | Raymond James | Maintains | Outperform | |
| Jan 2022 | Raymond James | Maintains | Outperform |
View the Latest Analyst Ratings
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