Visa won’t stay down for long
The ruling hit Visa Inc (NYSE:V) hardest since Mastercard Inc (NYSE:MA) makes less of its revenue from debit cards than its rival. But neither card purveyor should suffer economically from a change in the interchange cap — which will stay as it is until this issue is resolved, anyway.
While it is certainly possible that banks would try to renegotiate the fees they pay to Visa Inc (NYSE:V) and MasterCard to use their networks if a smaller cap is instituted, the relationship is at least as lucrative to banks as the card companies, and I don’t think putting that situation at risk is something banks have on their priority lists. Banks have an uncanny talent for making up revenue lost to regulation, at any rate — just look at the pots of money they are still raking in on overdraft fees.
I believe that, once this news is digested, Visa Inc (NYSE:V) shares will rebound. After all, it wasn’t much more than one week ago that Visa presented investors with sweet second-quarter earnings, beating estimates on both earnings and revenue. I don’t see this blip bothering the credit card giant for very long at all.
The article Here’s Why Visa Stock Will Rally Despite Swipe-Fee Fracas originally appeared on Fool.com and is written by Amanda Alix.
Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Bank of America, MasterCard, and Visa. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and MasterCard.
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