Payment "Rail" Stocks - V, MA, AXP

January 30, 2026

In credit cards and debit cards, the networks (aka, the rails) are concentrated in four major players — Visa, Mastercard, Amex, and Discover.  This week, we got earnings from three of them.  

Visa (V) and Mastercard (MA)

The two titans of the global payments system – Visa and Mastercard - reported earnings.  Both were roughly inline.  Revenue growth continued to grow  in the double digits, driven by strong payments volume and a continued secular shift to more usage of credit cards.

Specifically, Visa grew revenue and EPS by 15%.  Topline growth.  Mastercard grew revenue 18% and EPS 22%.  Similar to Visa, revenue growth was driven by strong payments volume, especially cross-border volumes which are more profitable.  

Investment Thesis

Visa and Mastercard both have a phenomenal business model. Their enormous scale (and low cost) creates a enormous network effect and very high barrier to entry to new competitors. Moreover, since both companies do not require new capital to grow, nearly all of their double-digit revenue growth falls straight to the bottom line, which are used for tuck-in acquisitions, new projects, or shareholder returns. Their growth is driven by global growth in consumer and business spending of course. But there is another secular growth driver at play -- the trend towards paying for more things with a "card". This trend is more powerful overseas, where the share of card payments is relatively less than in the US.

Despite these advantages, they unfortunately have a couple significant risks. First, the regulatory overhang. Both stocks have been in the news recently due to fears around President Trump’s support for a bill that would diversify the payment rails systems.  The bill would effectively force more competition into the payments ecosystem.  However, the success of that bill remains far from certain.  There is also a new DOJ bill related to antitrust that could result in an overhang on the shares.

The second significant concern relates to "stablecoins" and cross border payments. Stablecoins are a growing area of the crypto market that allow for much faster settlement of transactions, without having to worry about delays between middle men such as processors, banks, etc. However, Visa and Mastercard are responding to this threat by adopting stablecoin settlement for their own backoffice settlement. However, it remains a risk, as the industry is new, and the use cases are still evolving.

American Express (AXP)

By market share, Amex is the third titan of the global payments system, but it has a much smaller acceptance rate overseas.   Amex reported 4Q results that missed EPS slightly but revenue and guidance were inline.  Revenue grew 10.5% vs last year, driven primarily by 8% growth in payments volume. 

Unlike V and MA, AXP has a card “issuing” business attached to it.  Rather than relying on banks like Chase or Citi to issue the cards (like V/MA do), Amex issues the cards themselves.  As such, we also track the metrics in that side of the business.  Net card fees grew 17%, driven by growth in the premium portfolio.  And credit card delinquency were roughly inline with prior periods.

Investment Thesis

Because American Express issues credit cards (like Chase and Citibank), it often gets lumped in with those stocks in terms of valuation. However, Amex is like a combo of both Visa and Chase rolled into one. So it enjoys the payment rail economics, while also controlling the customer and merchant relationship. Amex has set the standard for pushing the boundaries on rewards cards. The fees related to its rewards cards have now grown to be a significant profit driver for the company overall. The primary risk to AXP is cyclical -- a consumer downturn would result in increased credit costs from borrowers unable to pay their bills. (V and MA do not have this risk).