Jefferies Payments Expert Sees PSR Review Reverting to Pre-Brexit Rates, Positive for Visa (V) and Mastercard (MA)

Jefferies analyst Trevor Williams reiterated Buy ratings on Visa (NYSE: V) and MasterCard (NYSE: MA) after hosting a former exec. from the UK Payments Syst. Regulator to discuss the PSR's review of x-border interchange and domestic network fees who led the analyst to believe there is limited P&L risk in isolation but scrutiny of network fees/incentives could be a harbinger of other regulators following suit.

The analyst believes the likely outcome is reinstating caps on EEA ->UK cross-border interchange, stating "Our expert believes higher network fees have enabled MA to provide issuers more incentives, driving share gains. According to Nilson, MA's share in Europe grew from 29% in 2014 to 41% in 2020, while V share declined from 70% to 59%. Following the conversion of several UK debit portfolios (Santander, NatWest), MA will have >30% of UK debit vs. ~<10% in '19. Most likely outcome is UK-EEA cross-border interchange reverted back to pre-Brexit rates, which our expert assigned a >50% probability. He believes the reversal would represent an easy political win for regulators which he noted are motivated more by political pressure than market or competition-driven rationales."

For an analyst ratings summary and ratings history on Visa click here. For more ratings news on Visa click here.

Shares of Visa closed at $199.50 yesterday.

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