Piyush

Visa Reality Check

Herb,
There are two points you overlook when making your case

a) The growth of plastic around the world, sans US where Visa is a major player has been overlooked. Be it Debit or Credit or Gift Cards, growth in plastic is here to stay and Visa will be one of the beneficiaries of this phenomenon. MasterCard is working overtime to capture the Debit market where it has been a historically marginal player esp. in the US and has been true in all emerging & established economies but Visa still has it beat by a long shot.
b) The payment system is moving to electronic/plastic/ble... (Chips in Cards, Cards tied to Phones) are set to grow dramatically in the next few years - outside of US, again a large market which makes Visa & MasterCard very attractive buys.
I agree the above two points are interrelated but there is a subtle difference - inspite of cost of network creation going down dramatically in the last 1.5 decades, no one is building any new ones and governments arent pushing Visa/MC to share theirs like Bandwidth of Telephony carriers anytime soon - all this means Visa & MA are good buys for atleast next 5 years with solid growth prospects.
Add to that, a certain level of decoupling of emerging economies from US economy, providing counter cyclical cover for Visa/MC over time.

Piyush