Visa and Master Card both seeing big gains this year. This is credit cards gain favor/debit cards. According to first data which processes card transactions for more than four million merchant locations purchase is made with credit cards, rose more than ten percent in the third quarter versus six percent for debit cards. So, with just a few days left to get your Christmas shopping done is this a buying opportunity for credit card stocks. So, good things, big runs obviously in both Visa and Master card.
Visa and Master Card
Let’s just start there. Does it time to take some money off, the table credit card usage obviously is up. These companies are making more on credit cards, than they are with debit usage. So, it would lead you to believe that things pretty good yeah. I think things are still pretty good. We’ve had a pretty good run but as you look out over the next 12 months and beyond, we’ve still got this secular tailwind as consumers migrate from using cash and checks over two cards, which will continue to benefit these companies on a global basis. If you had to pick one versus the other, who’s growing transactions and volumes bigger master card or visa is that one of the reasons, why master card perhaps is outperformed visa a year to date. It is a little bit master card is growing faster from a transaction and a volume perspective. Although, if i have to pick one of the stocks, we still favor visa. Just we think, we have a little bit less to worry about visa, as it doesn’t have the same exposure to europe. A little less currency exposure and a little less exposure to do some litigation.
The Master card is growing faster still today. We expect it to grow a little faster in the year ahead as well help us understand Gregg exposure to Europe, that MasterCard has compared to visa. Whether it be by transaction volume or by revenues, sure it’s actually very simple Visa. Europe is not part of Visa Inc the public company, they decided not to come together when visa the public company as we know it today was formed, whereas MasterCard is a single global entity. so, Western continental Europe is part of MasterCard the public company, but it’s not part of visa the public company.
Why are the two the valuations of the two very similar curious. Well at the end of the day, they’re very similar competitors doing the same thing. They play in the same sandbox, they benefit from the same secular trends. We expect them to grow similarly in the years ahead. So, it’s not surprising that the valuations are at the end of the day very similar. It seems to be getting at least from an auto buying perspective, a little bit easier to get an auto loan even for what you would consider to be a subprime buyer. We seeing the same thing with credit card,s I mean it’s just easier to get a credit card. I know that I’m bombarded still with you. Today, the credit card companies view the credit. The credit cards are a very good business. It’s very profitable today. It went through some challenges over the past couple years and as you look ahead with some of the regulation debit cards are a little less profitable. Therefore, we expect banks to push people towards credit, and again the environment is just a little bit easier to get a credit card.