Battle of the Payment Giants: Visa or Mastercard - Which Has the Edge?

Visa Inc. V and Mastercard Incorporated MA dominate the global digital payments landscape, serving as essential conduits for trillions of dollars in transaction volume every year. Both companies operate as powerful duopolies, licensing their payment networks to banks and merchants while generating revenue from fees. Their near-identical business models force analysts to dig deeper to uncover which stock holds a true edge.

What makes this comparison timely is the rapid evolution of payments technology, particularly the growing adoption of stablecoins and blockchain infrastructure by traditional financial players. Both Visa and Mastercard are exploring these new rails to future-proof their businesses, making it even more relevant to assess which of the two is better positioned now. Let’s dive deep and closely compare the fundamentals of the two stocks.

The Case for Visa

Visa (market cap $651.1 billion) remains the world's largest payment network by volume, benefiting from its massive scale, global reach and trusted brand. Its first-mover advantage in cross-border transactions, a high-margin revenue stream, is unmatched, particularly as international travel demand steadily recovers. In its latest quarter, Visa posted 13% growth in cross-border volume, driving net revenues up by 9.3% year over year, exceeding expectations.

In the second quarter of fiscal 2025, Visa beat the earnings estimates on higher processed transactions and payment volumes. It beat earnings estimates in each of the past four quarters with an average surprise of 3%.

Visa Inc. Price, Consensus and EPS Surprise

Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote

Crucially, Visa is making meaningful strides in blockchain and stablecoin settlement, an important hedge against future payment disruption. Visa is deepening its stablecoin push by partnering with fintechs like Bridge, Baanx and Rain to enable stablecoin-linked card issuance, disbursements and commerce. It also invested in BVNK to strengthen its B2B stablecoin payments infrastructure, signaling a firm commitment to the future of digital currency settlement.

Visa also boasts superior operating margins (68% in 2Q FY25) compared to Mastercard (59.3% in 1Q25), reflecting its better cost discipline and scale advantage. It is also capitalizing on emerging payment trends, including Buy Now, Pay Later.

Challenges for Visa and Mastercard include regulatory scrutiny and fintech competition, but their entrenched relationships with global financial institutions make displacement unlikely in the near term. Visa’s massive cash flow, shareholder-friendly capital return policy (dividends + buybacks), and proven adaptability support its long-term thesis. Visa offers a stronger dividend yield (0.67%) compared to Mastercard (0.54%) and the industry (0.63%), making it more attractive to income-focused investors.

The Case for Mastercard

Mastercard,with a market cap of $512.4 billion, is no slouch. Its network handles nearly $10 trillion in annual gross dollar volume (against Visa’s almost $16 trillion), and the company has been actively investing in blockchain technology, crypto partnerships and AI-driven fraud prevention systems. Its recent earnings showed healthy revenue (14% YoY in 1Q25) and earnings growth, driven by strong U.S. consumer spending and cross-border volumes (15% YoY).

In its latest quarterly report, the company beat earnings estimates on strong demand for value-added services and growth in switched transactions. It beat earnings estimates in each of the past four quarters with an average surprise of 3.7%.

Mastercard Incorporated Price, Consensus and EPS Surprise

Mastercard Incorporated price-consensus-eps-surprise-chart | Mastercard Incorporated Quote

Mastercard is broadening its stablecoin efforts by partnering with MoonPay to enable businesses and fintechs to issue Mastercard-branded cards tied to stablecoin balances. It is also collaborating with platforms like MetaMask, Crypto.com, Binance, Kraken and Nuvei to facilitate stablecoin spending and acceptance across its merchant network.

However, Mastercard trails Visa slightly in several areas like operating margins, financial leverage, valuation, free cash flow and others. It operates with higher financial leverage than Visa, with a total debt-to-capital ratio of 73.7% compared to Visa’s 35.3% and the industry average of 42.7%. This higher leverage can lead to less financial flexibility, especially in uncertain economic conditions.

Mastercard generated free cash flow of $13.6 billion in 2024 and $2 billion in the first quarter of 2025. Meanwhile, Visa’s free cash flow was at $18.7 billion in fiscal 2024 and $9.4 billion in the first half of fiscal 2025.

How Do Zacks Estimates Compare for V & MA?

The Zacks Consensus Estimate for Visa’s bottom line is comparably favorable at this stage. The consensus estimate for V’s fiscal 2025 earnings indicates a 12.9% increase from a year ago, while the same for revenues suggests 10.2% growth. On the other hand, the Zacks Consensus Estimate for Mastercard’s 2025 EPS indicates 9.5% year-over-year growth, and the same for revenues signals a 13.1% rise.

Valuation: V vs. MA

Both Visa and Mastercard trade at premium forward P/E ratios, which is reflective of their wide moats and volumes. However, Visa’s valuation is more attractive, given its larger scale, higher margins and superior free cash flow. While V trades at a forward P/E of 28.57X, MA trades at 32.68X, and the industry average is at 22.58X.

Price Performance Comparison

Over the past 12 months, Visa has outperformed Mastercard, the broader industry and the S&P 500 Index, reflecting investor confidence in its strategic positioning.

Conclusion

Both Visa and Mastercard are top-tier, durable compounders in the payment space with a growing footprint in stablecoin. However, Visa edges out Mastercard due to its superior scale, higher operating margins, stronger cash generation and financial flexibility.

With better earnings growth estimates and a more favorable valuation, Visa offers a more compelling risk-reward profile now, even though the companies currently carry a Zacks Rank #3 (Hold) each.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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