Bill Targeting Visa, Mastercard has an ‘Extremely Low Probability of Passage’
2022.07.28 20:30
Bill Targeting Visa (V), MasterCard (MA) Has an ‘Extremely Low Probability of Passage’
By Sam Boughedda
Analysts, on Thursday, have commented on recent reports that two U.S. senators are preparing a bill allowing merchants to process many Visa (NYSE:V) and Mastercard (NYSE:MA) transactions over different networks.
The bill is reportedly set to be introduced as soon as this week by Senator Dick Durbin and Senator Roger Marshall in an attempt to increase competition between U.S. credit card networks.
A Ramond James analyst said in a note that they give the legislation an “extremely low probability of passage.”
“This view comes from years of direct involvement in these policy debates and concerns over the feasibility of the proposal,” said the analyst.
“In 2010, Senator Durbin caught lightening [sic] in a bottle and shocked the financial world by winning approval of an amendment to regulate debit card interchange. In the years since this event, investors have continuously feared the ability of Durbin to strike again and further regulate network and credit card interchange fees,” added the analyst. “While we concede Senator Durbin continues this battle and is quite good at generating headlines, we do not view this latest attempt as representing a material risk to the networks or credit card interchange fees.”
Meanwhile, a BofA analyst stated they see a “particularly attractive buying opportunity on this modest weakness.”
“We do not see material fundamental risk to the networks. In 2021, V and MA generated 22% and 18% of total payment volume from US credit, respectively,” said the analyst.
