Visa and Mastercard: Payment Titans Embrace Virtual Card Payments
Visa vs. Mastercard: An Overview
Visa and Mastercard stand as giants in the global payment processing industry. Both operate extensive networks which facilitate electronic transactions among consumers, businesses, and financial institutions. Rather than issuing cards directly, they manage the infrastructure that enables these transactions, making them more accurately described as payment networks or schemes.
Key Roles in the Payment Ecosystem:
Visa and Mastercard: These networks provide the technology and infrastructure that is essential for secure and efficient payment processing. They establish transaction rules and standards, charging fees to the financial institutions (banks) that issue their cards and to the merchants who accept them.
Issuing Banks: These financial institutions issue Visa or Mastercard branded cards to consumers and businesses, providing credit or debit facilities and assuming the risk associated with lending.
Acquiring Banks: These banks work with merchants to facilitate card payments and processing transactions on behalf of the merchant.
Visa and Mastercard dominate the global market, processing trillions of dollars in transactions annually across millions of merchants. Their robust infrastructure, stringent security measures, and strong brand recognition cement their leadership in the payments industry.
In his article for Seeking Alpha, analyst Luca Socci notes that Mastercard is seen as a “rail” in the payments ecosystem. Mastercard describes itself as a technology company in the global payments industry, operating a “multi-rail payments network” and offering a variety of payment products and services. This infrastructure role helps explain why Mastercard has not been disrupted by fintech companies like PayPal or tech giants like Apple Pay and Google Wallet, which are more partners than rivals.
Financial Performance:
In its Q3 earnings report, Visa reported a 10% increase in net revenue and a 12% rise in EPS for the quarter. Notably, payments grew 7% year-over-year, with cross-border volume surging 14%. Visa anticipates continued growth in the next quarter, with net revenue expected to rise in the low double digits and EPS projected to grow around 12%-13%. However, Visa also noted a slight moderation in consumer spending among lower-spend segments.
Mastercard's Q3 results showed continued strong performance, with revenues up 11% and net income up 16% year-over-year. Mastercard’s CEO, Michael Miebach, attributed these results to “healthy consumer spending,” although Visa’s recent outlook suggests a more cautious view.
B2B Growth Areas:
Both Visa and Mastercard are focusing on the burgeoning B2B (business-to-business) sector, particularly in virtual card payments.
Visa: Visa’s CEO, Ryan McInerney highlights Visa’s B2B expansion efforts, including partnerships with AXA and Paysure to launch a commercial virtual card solution aimed at simplifying claims processes. Visa is also working with Cintas, a major business services provider, to streamline payments and automate processes through Billtrust’s Business Payments Network (BPN).
Mastercard: Michael Miebach focuses on Mastercard’s advancements in commercial payments, noting that its market-leading virtual card capabilities are deployed with over 90 issuers globally. Mastercard has integrated its virtual card technology with major procure-to-pay solution providers, such as Oracle Cloud ERP and HSBC. It has also signed new partnerships with Brex and Ant Group's WorldFirst and expanded its commercial card distribution through collaborations with Virgin Money and SAP Concur.
The B2B and new flows sector is becoming increasingly crucial for both networks, with organizations like Boost Payments Systems optimizing virtual card use and partnering with major clients like 51 Fortune 100 companies. The future of payment networks looks promising, with Visa and Mastercard driving innovation and growth in the B2B space.
Conclusion:
With Visa and Mastercard setting the pace in the payments industry, it's crucial for businesses to stay aligned with these innovations. At Point Monarch, we specialize in helping organizations navigate these changes and leverage the latest payment technologies to their advantage. Connect with us today to learn how we can support your business in staying ahead of the curve and thriving in a rapidly evolving market.
