Visa, (V), MasterCard (MA) Surge As Fed Approves 21 Cent Cap for Debit Swipe Fees
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Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.7%
Revenue Growth %: +16.3%
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Stocks in the credit-card processing group surged in late-day trade Wednesday after the Federal Reserve released its proposal on the heavily-debated debit swipe fee caps. The proposal was later (after the close) approved.
In a memo, the Fed proposed setting the debit interchange cap at 21 cents per swipe, well above the 12 cents the Durbin amendment had initially suggested. Debit swipe fees currently sit at 44 cents per transaction.
The Fed also offered several other additional changes to the interchange rule: a 5 basis point component to reflect a portion of fraud losses, and a 1 cent conditional fraud-prevention adjustment upon the issuer adopting effective fraud prevention policies and procedures.
Shares of the two largest processors, Visa (NYSE: V) and MasterCard (NYSE: MA), were both halted after a volatility circuit breaker was triggered.
Around the Street:
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In a memo, the Fed proposed setting the debit interchange cap at 21 cents per swipe, well above the 12 cents the Durbin amendment had initially suggested. Debit swipe fees currently sit at 44 cents per transaction.
The Fed also offered several other additional changes to the interchange rule: a 5 basis point component to reflect a portion of fraud losses, and a 1 cent conditional fraud-prevention adjustment upon the issuer adopting effective fraud prevention policies and procedures.
Shares of the two largest processors, Visa (NYSE: V) and MasterCard (NYSE: MA), were both halted after a volatility circuit breaker was triggered.
Around the Street:
- Visa shares are currently 16 percent to $87.12
- MasterCard up 10.6 percent to $307.80
- AmEx (NYSE: AXP) up 2.8 percent to $51.04
- Discover (NYSE: DFS) up 1.7 percent to $26.58
- Capital One (NYSE: COF) up 1.6 percent to $52.25
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