Visa (V, Financials) and Mastercard (MA, Financials) are seeing a slowdown in their share of consumer spending in the U.S. as the shift from cash to card payments reaches a saturation point, according to a recent analysis by Mizuho analyst Dan Dolev.
In a note, Dolev underlined that evaluating Visa and Mastercard's U.S. growth trajectory now mostly depends on personal consumption expenditure. The Commerce Department said on Thursday that PCE increased 0.3% in September, or by $105.8 billion, compared to a 0.2% rise in August, aligning with experts' average estimate.
Though it is believed to be similar, Dolev pointed out that roughly 45% of Visa's revenue growth has historically come from the cash-to-card conversion—a statistic Mastercard does not reveal. Between the third quarter of 2019 and the third quarter of 2024, Visa's share of incremental U.S. consumer spending, computed as its payment volume against changes in PCE, was almost 61%. From a 52% average in 2023, this share has dropped to 47%. From the same five-year period, Mastercard's share—at 22%—has fallen from an average of 22% to 20%.
Dolev also pointed to Mastercard's advantage in the American debit card scene, where its share increased 20 basis points above Visa. In the third quarter, U.S. debit growth for Mastercard was 8%, while Visa's was just 5%. With its U.S. switching volume increase in October showing a 400 basis point month-over-month acceleration, Mastercard exceeded Visa's projected 200 basis point increase.
For both businesses, cross-border transaction growth in October was similar; Mastercard noted a 200 basis point rise from September following a consistent third quarter.
Dolev then changed his Mastercard price objective to $532 from $496 and Visa to $292 from $279. While the SA Quant rating system marks both companies with a "Hold," Mizuho keeps an "Outperform" rating on Mastercard and a "Neutral" rating on Visa.
