Venkatesh
2 min read
In This Article:
European regulators have once again spotlighted Visa Inc. (NYSE:V) and Mastercard Incorporated (NYSE:MA). The latest round of scrutiny zeroed in on scheme fees, the charges levied on banks that facilitate card payments through their networks.
JMiks / Shutterstock.com
New questionnaires dispatched by the Commission seek clarity on three main concerns, including the degree of choice retailers have in accepting Visa and Mastercard, the value derived from the fees they pay, and the transparency of these charges. According to Bloomberg, though the investigation is at its preliminary stage, it could result in formal proceedings and penalties reaching up to 10% of a company's annual revenue.
The new scrutiny comes amid the European Central Bank President Christine Lagarde's recent comments, which endorsed the digital euro currency's rollout and reduced the bloc’s reliance on overseas payment networks.
While Visa Inc. (NYSE:V) defends its pricing by pointing to security, minimal fraud risk, and uninterrupted service, Mastercard Incorporated (NYSE:MA) justifies the fee by emphasizing consumer choice and global reliability. The ongoing nature of the inquiry is preventing the Commission from commenting further.
Earlier, in 2019, Mastercard Incorporated (NYSE:MA) was fined $646 million for artificially raising the costs of card payments. Last year, a $30 billion settlement reached by the two companies was rejected by a U.S. federal judge. Adding the new EU scrutiny to the list could potentially intensify the investor caution against Visa Inc. (NYSE:V) and Mastercard Incorporated (NYSE:MA). As of now, both stocks hold consensus Buy ratings, with respective upside potentials of 10.39% and 10.72%.
We acknowledge the potential of V as an investment. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than V and that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: 10 Unstoppable Dividend Stocks to Buy Now and 11 Oversold Global Stocks to Buy According to Hedge Funds
Disclosure: None.
