Visa Inc (V) & Mastercard Inc (MA): Need to Lose a Few Pounds? Try Using a Debit Card

Banks are especially fond of interchange fees, tasty little nuggets that are created each time a consumer swipes his credit card. Last year, the battle between retailers and card issuers over swipe fees resulted in a settlement, one from which many retail stores, led by Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT) have since opted out.

These swipe fees can add up to around $40 billion each year for banks, which is why they are getting involved in a state-by-state push to enact laws to prevent retailers from charging consumers extra when they make a credit card purchase. Both banks and card issuers are concerned that such a fee would reduce the utilization of credit cards, thus cutting into profits. For its part, Visa has sued Walmart to force it to accept the original $7.25 billion settlement.

Dispute hasn’t dinged profits
Despite all the hullaballoo over interchange fees, Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) have had a brilliant year. As the economy — and consumer confidence — continues to improve, these two companies will reap the rewards.

Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends MasterCard, Visa Inc (NYSE:V), and Wells Fargo. The Motley Fool owns shares of JPMorgan Chase, Mastercard Inc (NYSE:MA), and Wells Fargo.

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