When you’re out on the town, a credit card is a safe and reliable way to pay for items. Similarly, when you’re looking to invest in stocks, a credit card company has the potential to be a way to grow your wealth.
When you hear the term “credit card,” two names might instantly leap to mind: Mastercard (NYSE: MA) and Visa (NYSE: V). Of course, they represent two of the most famous payment processing brands on the planet. But are they really worth your money? And, if you must choose between the two, which of these companies should you actually invest in?
The Pros and Cons of Investing in Payment Processing Stocks
Overall, payment processing stocks make for outstanding investment opportunities. The concept of buying now and paying later is so attractive and convenient that it’s sure to remain popular for a long time to come.
What’s more, when people shop online, they use credit cards more than any other method of payment. Plus, this type of commerce is projected to keep growing over the next several years, if not longer, especially since more and more people will start purchasing their groceries via the internet.
In addition, all over the world, the cashless trend seems to be on the rise. In fact, some governments are actively trying to reduce their nations’ dependence on cash. For instance, South Korea is striving to get rid of all coins by 2020.
On top of that, there are still emerging markets all over the globe that have yet to fully adopt payment processing systems. Thus, huge growth potential remains.
At the same time, there are never any guarantees when it comes to the stock market. You never know when new companies, technologies and processes will disrupt existing systems of commerce, much the way online retailers have displaced many of their brick-and-mortar counterparts.
Further, the payment processing industry seems uniquely susceptible to disruption, given the concerns that many consumers have about digital privacy as well as the emergence of cryptocurrencies such as Blockchain.
Is Visa Stock Worth Buying?
Visa Inc., which went public in 2008, was founded in 1958, and it’s headquartered in Foster City, Calif.
Visa represents an attractive investment opportunity because it’s actively pursuing growth opportunities right now. For instance, it’s increasing its mobile payment offerings through a new collaborative program with PayPal.
This company is also taking major steps to grow its international footprint. For instance, it recently invested in a Brazilian digital payments company called Conductor as it seeks to make inroads into Latin America. To give you another example, a few years ago, it acquired Visa Europe. Visa Europe had previously been a separate company that only licensed the Visa name.
On the (somewhat) negative side, Mastercard is currently outpacing Visa in terms of growth. From the end of third quarter 2017 to the end of third quarter 2018, Mastercard shares rose 41 percent while Visa’s went up by just 27 percent.
Should You Buy Mastercard Stock?
For its part, Mastercard Inc. has been around since 1966, and its initial public offering came in 2006. Mastercard makes its corporate home in, appropriately enough, Purchase, N.Y.
What’s really exciting about Mastercard from a shareholder’s standpoint is that it’s been investing in entirely new technologies. For instance, the company has developed a service called AI Express. It uses artificial intelligence to alert businesses to payments that could be fraudulent.
This reliance on innovation is important, particularly over the long haul. After all, the companies that tend to last the longest and keep growing over time are those that diversify and evolve. It may be a key reason why Visa’s stock growth rate has recently surpassed that of Visa.
On the other hand, Visa may have more potential than Mastercard in terms of foreign markets. That’s because Mastercard already earns much of its revenue from customers overseas, whereas Visa still has quite a bit of room to expand in other countries. Given its new global initiatives, Visa could start enjoying the fruits of international growth very soon.
Visa Stock Vs. Mastercard Stock: The Ultimate Decision
If you can, you may wish to buy both Visa and Mastercard stocks. However, if you can’t do so, this decision comes down to personal judgment.
For many people, Mastercard may be a little more attractive now because, over the past year or so, the company has pulled ahead in the stock price growth race. Interestingly, in years past, Visa and Mastercard had always been neck and neck in this competition. Mastercard’s embrace of artificial intelligence and other exciting new technologies may account for its recent gains.
Even so, for a decade, Visa has been a more-than-solid performer for its investors, and its business model seems primed for continuing success. In the end, both of these stocks are likely winners. Therefore, you should definitely listen to your gut, and if you’re so inclined, buy the payment processing stock that just seems right to you. In a world of financial uncertainty, these stocks may be the closest thing to a sure thing.