Visa/Mastercard: Why They Will Stay Relevant in the "New World"

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This is a version of a Twitter discussion with Bloomberg columnist Paul Davies today.

Introduction: Visa and Mastercard share prices fell 4.7% and 2.8% respectively today. In a column on Bloomberg, Global Banking columnist Paul Davies argued that “the power of both credit card networks is starting to crumble”, with Amazon’s plans to stop accepting UK Visa credit cards just the beginning, and that the Visa/Mastercard “train tracks” will “make no money” in the new world of Buy Now Pay Later, direct payments, etc.. Below are extracts of my views in a subsequent discussion with him on Twitter.

Incumbents Make Money from Buy Now Pay Later

Even in Buy Now Pay Later (“BNPL”), money still has to be taken from consumers’ accounts. Debit cards facilitate most of this, being the funding source for 80% of the BNPL volume at PayPal, and 90% of the same at Afterpay.

The CFOs from Visa and Mastercard both discussed this topic at length at the Deutsche Bank conference in September. Mastercard CFO Sachin…