Visa, Mastercard Risk Ramped Up Competition

Visa (V) and MasterCard (MA) are credit card brands that were started by banks to facilitate transaction payment. Their business model is to simply facilitate and process the credit and debit transactions between the bank of the merchant and the bank of the customer and generate revenue from the service and transaction fees. In other words, they were created to add a layer of convenience to the consumers for the payment of goods and services.

As more convenient forms of using credit cards and debit cards are added, the likelihood of consumers using credit card and debit cards increases. For Visa and MasterCard, this is a good thing because, as more Visa and MasterCard credit card and debit card transactions occur, more fee income they will make – a very simple business model.

So Where Is The Risk?

The very simplicity of the business model is also the weakness of Visa and MasterCard. Due to its simplicity and the rapidly changing landscape of commerce, there are risks of increasing competition from retailers and yet to be developed or in development payment facilitation systems. Additionally, credit cards are in danger of reaching full saturation where there will be no appreciable growth of new customers or new ways of using their credit cards for payment. Finally, there are the existing competitions: American Express (AXP) and Discover Card.

Risk From eCommerce

Just as Visa and MasterCard changed the landscape of commerce, there are other companies currently working on and effecting change, this time, in the electronic landscape. Internet commerce, or eCommerce, is now a major marketplace. According to geocart, an eCommerce application and service company, the market size of eCommerce in the U.S. as of 2006 was estimated to be $130.3 billion from 210.8 million online users. CNNMoney reports that eCommerce will grow to approximately $259.1 billion in 2007. eCommerce Journal estimated that in 2007 “about 13% of total US retails sales excluding cars and groceries are processed online.” While it is not a lot, it is amazing given that online sales did not exist 10 years ago.

While credit cards still dominate in eCommerce, PayPal, a payment system owned by eBay (EBAY) is making rapid gains. In 2007, PayPal had $47.5 billion in total payment volume [TPV], out of a total of approximately $113 billion in TPV for eBay, a 33% increase over 2006. PayPal is accepted in other eCommerce sites, making it a major contender to Visa and MasterCard for payment services on the Internet. Another emerging payment facilitator in eCommerce is Amazon Payment, which went live in 2007. Amazon Payment Service will allow payment of goods directly from a bank account or Amazon Payment Account. This service is not limited to purchases on Amazon (AMZN) only but on other eCommerce sites. In addition, there is a growing list of eCommerce payment facilitators that will erode credit cards’ dominance in eCommerce.

Given that eBay and Amazon, two largest online retailers, have their own payment systems to compete with credit cards will be a growing risk to Visa and MasterCard.

Risk From Brick & Mortar Commerce

Credit cards are not only being attacked from eCommerce. The traditional ‘brick and mortar’ businesses have been increasingly offering gift cards as a form of payment. While the appeal of gift cards are limited, their growing use, especially as a replacement of the traditional holiday purchases, will also limit credit cards’ growth in the existing retail market. For traditional retailers, the gift card provided a way to capture loyalty and sale without having to pay processing fees to the credit cards. Bankrate.com notes that the gift card use in 2007 would be approximately $35 billion, an increase of 25% from 2006.

Risk From Saturation

A Bankrate.com article notes this risk.

Simply put, everyone has a credit card who wants one…Credit card issuers now look to cash spending, not other credit cards, as their chief competition.

As credit card uses reach near saturation point, the next step in the evolving use of credit cards is in the smaller purchases. However, the resistance so far comes from the razor thin profit margin that is associated with smaller purchases. Therefore, the growth from adding on additional functions to the credit cards to capture more of the smaller purchases will not be as sizeable as hoped, unless payment facilitating and processing fees come down drastically.

Conclusion

The risk to Visa and MasterCard right now is that they were too successful. Having captured most of the payment facilitation and processing market, their only hope of growing is to increase fees or to figure out a way to wring out more of the smaller purchases.

To accomplish this, Visa and MasterCard are moving to a mobile platform. However, they are not the only ones. PayPal has already moved to a mobile platform. Furthermore, as technology evolves and improves, there will be more competition coming into the market for payment facilitation and processing, especially in eCommerce and Mobile commerce (mCommerce).

It will be interesting to see how Visa and MasterCard adapt to these challenges. However, it seems that investors are already betting that Visa will figure out a way. This is evident by their current trading multiple of approximately 28.75x, based on Wednesday’s close of $63.96 and annualizing their 4Q 2007 net income per share of $0.55. Knowing their model, I don’t think that this is a wise bet.

May your trading be profitable!

Disclosure: None

Comments

[User 168848]

YOU forgot to mention that china india and all developping countries are just starting to use credit card.so there is no saturation.people do not like gift certificate any more....ect

[foutjo]

Another negative article about VISA. What is it with you guys? So you missed the boat on the IPO and now the only thing you can do is spin negative info trying to get some cheap shares? I can understand that everyone has an opinion but it is very odd that every article that Seeking Alpha puts out is negative. Things that make you go mmmmmm. Considering the that Visa was the largest IPO in American history and they have a proven business model one would think that you guys could find some POSITIVE to write about once in awhile. It is for this reason that I and many others who read Seeking Alfpha articles have lost respect for the true intent of the writings from their authors.

Good luck with your investing and keep trying to get those cheap Visa shares:)

[5 BillionPotentialNew VisaUsers]

Only EUROPE is out of "V"; ASIA and rest of the world are in the "pipe". Your analysis missed 5 billion wallets !?

[stockreader]

Ya, water is free but somehow people are still willinging to pay $100 per bottle for it.
Visa and Mastercard are good buys for any investor. Your negative comments are not helpful. You are not telling us anything we dont already know.
This stock will go up and up and up.
I say STRONG BUY.

[visabox]

Securitization is the achilles heel to watch - This article misses the point of what makes the credit card industry work; it's called securitization. Visa and MasterCard are merely back room operations for clearing and settlement amongst banks. However, what happens at the banks, that creates the need for Visa and MasterCard, are the loans originated on credit cards. Banks make money by charging loan fees, and over limit fees. And while these are pretty good income streams, they are small on an account basis and costly to manage over time. That changes, though if the loan is packaged with other loans and sold in the stock market: Securitization.

Given the present low appetite for buying collaterized backed securities, another way of saying Securitization, it may be that the golden goose may soon be out of eggs. Which is a long way to say that there will not be as much need for back room operations from the likes of Visa and MasterCard.

Until you understand how Securitization will survive, I would stay away from these stocks.

[JKC]

How do you think most gift cards are bought? What do you have to have to open a Paypal account? Get real!

[User 168884]

I am concerned that you post only negative comments about Visa. Don't get me wrong. Investors need to know about the inherent risks involved with putting their money behind Visa, but how about commenting what you think Visa is actually worth? Be a little more balanced in your approach. That is what good journalism is all about. Yes Visa may be overvalued as of today, but what is a fair valuation if it does what it hopes to do? That is what people are buying....Visa's future earnings potential. Why not comment on what you believe Visa will earn in this recessionary environment? Any people care to comment?

[D Ramirez]

Danger of reaching full saturation? You've got to be kidding me. Unless the entire world of almost 7 billion people - including those in emerging markets - has a debit and credit card then this statement could be true. But where do these baseless assumptions come from? Are we forgetting the rest of the world? What about new generations? Will they not use cards to facilitate transactions? Also, Discover and Amex are not really competitors since they provide lines of credit of which Visa and Mastercard do not - thus shielding V and MA from the current credit turmoil.

The point made on eCommerce is also flawed in that eventually the threats the Visa and Mastercard will wither once M & A starts rolling when they start gobbling up the smaller players in that arena. The synergies are evident in that these new financial facilittators are very similar to Visa and Mastercard's current business model. It makes absolute sense in this market driven global economy.

Also, it's obvious the author doesn't know much about the Visa and Mastercard business model since you name competitors who aren't really competitors and he fails to see that this industry is still growing and projected to grow further still. Buy Buy Buy - and scratch the Cramers of the world. Forgive them for they know not what they do...

[Llee]

I found the comparison to Paypal odd to say the least.
Paypal takes Visa as one of the payment methods for those of selling online and eBay.
So Paypal must pay Visa some fees.

[Wez]

Visabox, good call. Heaven forbid someone write something about Visa that isn't overwhelmingly bullish. I've never seen so many rabid Visa fan boys.

[MoneyGuru]

Hey Guys, I hate to burst your bubble, but we have a problem. Yes, I bought Visa @$58.04 with expectations of a 400% return like Mastercard. However, I've been doing my homework after hearing Cramer saying "Buy Mastercard it's cheaper". Book value of Visa is only $20/share & "NO" Visa Inc. does not have access to European customers. "Visa Europe" is a different company owned by 4600 European Banks !!!!!!! Look at the numbers ! I'm short now !!

[User 167029]

wow I must say that you missed a HUGE factor. South American and Asia have not been captured. Big opportunity for growth there ( a lot of ppl in china and indina ) and to poster moneyguru, what are you talking about? -_- you making that trade based upon those thought are very freightening.

[OmnipotentPoobah]

Being intimately familiar with Visa's corporate culture, I find it exceedingly difficult to believe they will be nimble enough to effectively counter competitors. I'd say it may look like a good investment now, but I think in the long run, you'll take a bath on it.

[coeus89]

i bought visa at 59.5 and im glad i did. i feel their fair value by the end of the year is arround $80. plus visa has A LOT more cash than mastercard. lets see 2.7 B on its balance sheet now + 19B in ipo - 10B that goes to member banks that makes about 11B - 12B in cash. what are they going to do with that much cash. even setting aside 3b for lawsuits they will have 9 billion in cash. now lok at mastercards cash. plus there is a possibility that visa europe will join v down the line. what will that do to earnings. i agree with the general consencus. there are too many visa bears who are mad they missed the ipo

[D Ramirez]

Ed Kim, why would you write an article on future prospects of a company without doing proper research in advance. Now we see backtracking and CYA stuff from you. You should just retract this article because it's misleading and inherantly incorrect. Do your research, Kimmy and get back to us. In the real world, this is called half-assed. uhhhh... other half please...

[Owning V &lovin it!]

Wow Kim...your information is way in left field...I don't think you will hear any Visa stock holders complaining about their position new investment. I've made $4k in a week!!! The last thing I'm worrying about is paypal or amazon bucks (excuse me as I laugh to myself) knocking visa off of the map.

My advice Kim...get as many share as you can now...this puppy is going exponentially higher

[skip]

Do you know Paypal has credit and debit cards? It has the Mastercard logo on it :p

I'm beginning to wonder if Seeking Alpha is the Chicken Little of the financial world. I haven't heard one positive article about anything.

[ridedan2]

I would rather of not waste my time reading this babble. Wow everyone who wants a cc has one???????? China does not know what credit is???? I guess the trade between china an other countries is a all cash deal! was this stuff put on here by a second grader???

[Ed Kim]

Hello noneyabiz. Not a CYA. If you and others can actually comprehend the purpose of the article, which is on the risks facing V and MC. I am not doing an equity analysis; rather a risk analysis focused on the current valuation, not projected valuation or fair valuation. I commented back to User 168884 specifically since what he is suggesting is that a valuation of V in the current market and future growth would also be helpful.

As for good journalism, it does not necessitate a balanced view. Rather it necessitates a position based on facts. However, my blog is not a substitute for mainstream media; it is my analysis of risks facing the market. That's the difference. If you want to call that 'half-assed', then so be it. It is your opinion and you are entitled to it. As for calling me 'Kimmy', I do take exception since only my girlfriend calls me that and you would not qualify to be my girlfriend.

Cheers.

[D Ramirez]

Yikes! Hit a nerve. You are probably right. I would make you my girlfriend. But on to the real jist. If you are really writing an article on current risks, why do you include as facts industries that don't exist yet? "there are risks of increasing competition from retailers and yet to be developed or in development payment facilitation systems." LOL. Loaded statement to say the least.. Certainly sounds projected to me. Name a current payment facilitation system that's a real threat to V or MA. Statements like this are baseless. You also just ignored the fact the Discover and Amex are not competition because they follow a totally different business model. How's that for position based on facts? Face it Kimbo, your article is lacking... Do your homework and come back when you get it right...

[MoneyGuru]

Stop fighting kids ! With all the volume & hype slowing down on VISA, I see it at $55 in two months !!

[cachfu]

thanx for reiterating everything we have read already.

[cachfu]

V and MA too succesful??? its not as powerful as MA yet b/c the banks r selling off their shares. when thats all done, it'll climb past 120 in a flash. 55 moneyguru??? ur nutz!!!

[MoneyGuru]

cachfu, Why would the banks be selling their shares if they thought V would be at 120 ?? The "Big Boys" are selling at these prices, not buying. The public won't be able to sustain this current price, most are already in. Lower 'buying' = Lower price, the EPS just isn't there.

[Marathon]

I spend each year on the average $35,000 a year on my one cc because I get free $100 gift cards of my choice to retailers, restaurants, sky miles, and numerous products; all free for just using their card for everyday purchases that I normally make anyhow on groceries, gas, and other various discretionary purchases. I use it to purchase even small $2.00 items just to get those points and the convenience of not carrying bunch of cash in my pocket. They do have a business model that works. Your article forgot to mention VISA’s promotional items it uses to get repeat customers. Kind of like a Kroger card; you get rewarded for using it. Last time I checked, I didn’t get any $100 gift cards or sky miles from using paypal. I have traveled to Asia’s emerging markets and yes it is a cash society. The reason is most don’t have bank accounts because they don’t trust the banks. They don’t have FDIC insured banks like we have here, but it’s just matter of time that issue gets fixed and VISA will flourish in those emerging countries. They all want to be westernized and flourish like America. VISA has lots of potential and I’m glad I have shares of it.

[Pam]

Read the article. It appears this article combed through the message board of another Visa article for writing inspiration.

That said, it seems to me these SeekingAlpha articles are nothing more than unedited, entry level "opinion" pieces - so be it. However, they present a far cry from the proper rigours of journalism - a discipline for which objectivity is a hallmark.

I use PayPal for on-line purchases myself. But surprise, surprise - it's connected to my Visa card. E-payments in all their various forms can still not offer the level of protection that established brands offer. Sure I could pay via Amazon's access to my bank account - not gonna happen - but really, why would I pay immediately when I can purchase with a delayed loan from my credit card? Most of us will stick with the clout of the bigger players to protect our purchases and let the Amazons of the world stick to retailing. For those of us archaic types who still use credit cards, and like paperbooks in our hands when reading in the bathtub, they already know what I mean regarding consumer protection via the MCs and Visas of the world. Incidentally, my most consistent monthly purchases continue to be fuel and groceries...sorry, Amazon just can't help me there.

[Wez]

Ed, ignore the haters and stock promoters in here. Some of us do appreciate counter points to the flood of bullish noise surrounding this stock. The reasons to buy this stock are many and we all know them, its the reasons why you might think twice that I'm interested in hearing. I for one am still wondering what keeps V and MA from being considered a middleman and given the boot. How hard can it be to open data centers to handle transaction processing when the incentive is so high at the moment?

[Pam]

Oops - I see that SeekingAlpha looks to post "opinion" rather than "journalistic&quo... pieces. Whew! Now I know to keep my bias detecting red flag up even further.

[MoneyGuru]

VISA has 406 million outstanding shares with no EPS. MA only has 130 million shares with an EPS of $8 !! Visa short term is going down !! Asia is a very LONG TERM scenario, 10yrs + !!

[MoneyGuru]

Visa's $10 billion stock buyback will only take 16 million shares off the market @ $60/share !!

[MoneyGuru]

V closed down $1 ?? No buyers are left, only sellers, $55 soon!

[D Ramirez]

moneyguru, where do you get your info?.. no buyers left? lol... there is always a buyer. who's buying if i'm selling?

[MoneyGuru]

you'll be selling at the BID price, the people buying at the ASK are already in, & with more selling price goes down .. DUH ! $55 soon !
It's called "shorting" the stock !!

[D Ramirez]

we'll soon see... you must have your shorts on...

[MoneyGuru]

Big Boys just aren't buying at these prices, all stocks go up & down. They came public @ $44 for a reason !! now is the down cycle. sorry. Take your profits now & get back at $55 when the shorts cover !

[Lloydt]

I think your logic is flawed about competition. I am lucky enough to be at an age where I know some people that don't trust banks and also lots of people (like myself) that very rarely carry a significant amount of cash. That being said; don't you think Visa and Mastercard have been around long enough for someone to copy/improve their business model? You make it sound like technology was the "only" barrier to entry into the card business. Now that we have cheap processing power and lots of people use the Internet do you really think thats all it will take to topple or create meaningful competition to the 2 card giants? I honestly do not know that much about the card business but I do know this just because you can do something cheaper, faster or even better than the established brand; does not guarantee that you can compete with said established brand. Remember Visa and Mastercards first customers are the banks. And for a perfect analogy, these are the same banks that still use COBOL, not java, c++, or .Net; which are all cheaper, faster and better.

[bullbaker]

Question about Global Payments?

provides payment processing and consumer money transfer services worldwide. It operates in two segments, Merchant Services and Money Transfer. The Merchant Services segment provides credit and debit card transaction processing, including VISA, MasterCard, and online and off-line debit card processing; and check-related services, including check verification, recovery, and guarantee services.

Global Payments earnings jump in Q3 today.

So, does this means that MA & V will have good earning? Hum...

[Wez]

For those like moneyguru who still think V has only 406 million shares outstanding, do some homework first.

www.sec.gov/Archives/e...

[clitosil]

Um, Wez, your link proved MoneyGuru right.

[Wez]

Geez, I give up, people see what they want to see. If you choose to think that only class A shares should count towards shares outstanding so be it, doesn't mean thats reality.

Try this one:

www.straightstocks.com.../

[clitosil]

Wez, you are just splitting hairs, but MoneyGuru's original point is meaningless anyway (his claim about V not having EPS is just wrong). MC has much fewer shares but it has a much higher price. They could easily have a stock split to increase the number of shares and bring the price down closer to V's range.

But that article is a very good analysis. V is fairly valued at about $40, compared to MC. This makes sense as that is what the IPO priced it around. The premium on the stock right now is due mostly to hype. We won't know the true growth picture for a few months until we get more useful data.

[Wez]

How is V's market cap being twice what people are stating, splitting hairs? A lot of people think the public offering (446million) x share price is the market cap. Even Google is quoting it at that. So basically there are a ton of people out there who think V is valued at half what it actually is valued at. Shouldn't that "minor detail" be clear when people talk about what this stock is or should be worth?

[clitosil]

Wez, you have a point. I don't think there is a standard when reporting shares outstanding on these free web sites. And indeed there must be a lot of confused people out there, myself one of them. Google's data is definitely misleading. It looks like yahoo finance has something closer to reality.

It also depends on each individual company, on how they divvy up and classify their own shares, which can make comparisons a bit more difficult.

[GKM]

Wow, I'm not sure why authors here subject themselves to the same bull crowd over and over again. They are wasting their breath trying to temper the irrational exuberance for V. It does help me rationalize a short position though.

I wouldn't bother to be short V at this point as its in lock up until September. MA on the other hand has plenty of liquidity. When the break comes it will likely be MA first.

[Genata]

In my opinion, litigation is the most significant risk that can jeopardize the very business model for both Visa and Mastercard. I have read the IPO prospectus and I am sitting on the sidelines. It may sound crazy, but I have a buy limit order at $39 which of course did not get filled on the first trading day. I do not like chasing stocks and I am going to wait my time on this one...Good luck to all!

[Anthony5000]

I would like all the anti-visa people to start making guesses on when the price will hit 55 and we will see if your right or not. Because all i am hearing is oh this stock is going down to the low 50's. NONE of you have posted a guess or even a time frame. All i hear is that "it is coming soon" or "just wait". It is very easy to say it is going down but try covering all the angles. I bought visa at 57 a share and i am in it for the long run. I do not expect it to jump to 200 in a month. With more people in debt and the unemployment rate being so high people will use credit cards when they have no cash. that is the bottom line. People will not stop buying things just because they don't have the money right now. Bottom line is that Visa is a good long run stock, it may go up and down but i just want all the anti-visa people to start making predictions of time because we could be a year from now and all you people will still say "oh it is going down soon".

[texasgolfer]

Ed, were you recently declined by Visa?

[stacked up]

I recall the naysayers "pounding" on GOOG as the gem moved up hundred and hundred of dollars. Same case scenario here !
Let's just make that "leap of faith" and assume Visa will figure out a way to keep up with and/or beat any future biometrics advances, and/or new tech deployments.
Given the great success of these two companies, we don't think either MA or V will "fall asleep at the wheel" .. After V clears up the litigation issue(s), this stock goes $200-$300 ..Patience is a virtue..
Don't but my thesis ? Don't buy V !!

[Pam]

Stacked up: patience is definitely a virtue! Some of us actually "got" the tortoise and the hare story as wee ones...

[Coco]

Please do your homework before you put out articles like this one. I can see you are capable of repeating exactly what Visa filed with the SEC as their weaknesses, which as we all know is a requirement of publicly traded companies.

Many points are missed while others are misconstrued. To those of you considering this stock. Choose stocks you like and understand. Don't just follow someone else's advise whose intentions and knowledge base you are not certain about.

As Phil Town would say "now go play"!

[Pam]

"Choose stocks you like and understand. Don't just follow someone else's [advice] whose intentions and knowledge base you are not certain about."

Coco - so VERY true.

[User 169775]

Just how big a risk is litigation, really?

Microsoft has been sued continuously for the past 15 years for anticompetitive practices everywhere in the world. They are still here and still profitable.

Mastercard faces many of the same litigation Visa is undergoing, and that has not prevented its equity from rising 400%.

It seems to me all you need is a team of lawyers who know how to obfuscate and drag things out, which every multinational corporation has legions of on retainer.

[Dan Grossman]

This is written as if PayPal and Amazon have their own magical money-moving systems that compete with Visa. They don't. The majority of the payments moving through PayPal and Amazon's FPS are funded by a customer's credit card. They're just acting as a merchant account, passing on the transaction to the card networks like everyone else.

And as was mentioned above, both offer credit cards.. with Visa and MasterCard logos.

[Bright]

Dan you are right. Let's hang in there.

[joeinmiami]

Your argument is a weak one. I purchase all my holiday gift cards with my Visa. What about the potential of adoption rates for credit cards the emerging markets like China and India? I don't see the market as saturated.

[Pouya]

MoneyGuru,

Jim Cramer can be an asset if you learn to filter out a lot of what he says. If you track all of Jim Cramer's recommendations, he is statistically wrong more often than he is right; he is correct only ~48.6% of the time. In addition, you should have done your homework before buying Visa if you thought it was going to increase 400% like MasterCard. Visa's IPO was being priced to match current Mastercard’s valuation taking into account its 400% increase. The $44 Visa IPO price was actually at a $5 premium over Mastercard's current valuation. The only reason the Visa stock price is so much lower is because it has more shares outstanding. Thus, the likelihood of Visa increasing 400% is roughly the same as Mastercard trading at ~$800 per share. While this is unlikely, Visa is still a good long term play, because Visa is larger than Mastercard and has a significant advantage on the US debit card market which is responsible for the most domestic growth. In addition, and more importantly, Visa is being more aggressive in both Asia and Latin America than MasterCard. When looking at the price of a stock, don't forget to look at the PEG and the possibility of beating analyst earnings estimates. Finally, Visa's stock price will go up even further as more institutions start investing in it as a non-cyclical stock. Non-cyclical stocks such as PEP, KO, and PG tend to go up before the sign of a recession not because the company performs better , but because the recession doesn't really affect the company (e.g., people still buy toothpaste) and institutions are looking for a safe place to invest.

[User 167768]

Another extremely biased negative article about V from you guys. Is this post ipo envy or is it possible that V is the worst stock in the world? If you would include some positive arguments your case would have some credibility. I bought V in my ROTH to hold for at least 3 years. I am positive that V will beat the market over the next 3-5 years and that is why I bought at 59.45 and am holding long term. Hopefully it will help me put my son through $10,000.00 PRE-K. Only in America!!!!

I love this country

[Philly Jim]

More negativity on two basic items (Visa & Mastercard) everyone on the planet with money either already has or will have as soon as they can get it. If you want to go negative, you should focus on the banks that issue the cards, that would make more sense.

[saturationpoint?]

How could you possible argue that V and MA users are at their saturation point. In the U.S that may be possible, I don't plan on getting any additional cards for myself, but I do use them to make every single purchase I make, I haven't carried cash for years (p.s. I'm not the only person in the world doing this either). The author must not understand that V is a global player, India, Asia, South America, Africa...these places are not saturated, they have no where to go but up in regards to card use. Amex and Discover are not competitors they have a completely different business model. I would have to say V is more of a tech. business than financial, all they are doing is routing money around the world, it's that simple. Another thing commented on is all the negatvie articles on V, what ever happened to objective reporting. If you want to talk about saturation point I think seeking alpha has hit it's point of incompentent reporters and they have no where to go but down with their web traffic. I for one occasionally read the articles for a good laugh, but not any more, I'm starting to feel guilty, its like making fun of kids on the short bus.

[willchan11]

I own a few hundred shares of V so I believe I definitely have a tiny slither of a stake in the company. Currently, I think the stock is fully valued but has potential to grow.

Each year, cash transaction volume shrinks. Obviously, V gets a piece of the increased electronic transactions and shareholders benefit.

The problem I have with PayPal and other similar payment companies is that they do not offer the same buyer protection that a credit card offers. People either realize this through word of mouth or from experience. Therefore, V comes out ahead in this situation as well.

Like another post said, card companies offer reward programs for using the card whereas cash or Paypal, etc does not. I rarely use cash and pay for practically everything with a card. It makes my life easier.

Visa Europe is not part of the company which means that somewhere down the line V will buy it out for a premium. This will increase V's territory.

Developing economies will use V and others within 20 years.

Barrier of entry is extremely high since all the banks currently support use of V, MA, etc (and compared to PayPal and the like).

The main risks V has are litigation, MA and the possibility that another payment form actually gains popularity somewhere down the line. The litigation will eventually go away, unlike the tobacco industry.

I personally hope the stock's price moves in line with its growth, unlike many who are short term investors just cheering the quote price and expecting an exact replication of MA's price. I wouldn't wager as to when the stock will quadruple but the company definitely has a large, if not increasing, market share of the payment processing industry which favors a growing quote price over time.

[VWinner]

The only risk in V is not owning the stock.

I'm buying this stock until the pe- hits 1000 to 1- call me crazy (everyone does anyway) but unless a meteor hits la or ny - v can't lose.........