Why Visa and MasterCard are Good Bets in Any Economy

January 17th, 2008 • Related • Filed Under

Why Visa and MasterCard are good bets in any economyAs many of you may know, MasterCard (NYSE MA) is public, has been for over a year now, and has done incredibly well in the markets. Visa is expected to go public soon, I am betting some time in late April or May of this year. As the market continues to take one hit after another, including the credit card industry, there is one factoid that must be made clear.

Visa and MasterCard generate their money off the good and the bad. While the groups have several revenue streams, discount rates—which are charged on every transaction regardless of whether the consumer pays the bill—ultimately end up in the hands of Visa and MasterCard.

I see a lot of talks now on the forums, blogs and message boards about how can Visa do well in a bad economy but let’s face it: in good times, people are spending their “disposable” income on new toys and in bad times, people are spending money on their credit cards to get by. In either case, people are using their credit cards and in the end, Visa and MasterCard win either way.

Kudos to you guys for creating virtually the perfect business model. I’d invest myself in the two but have too many insider ties to the industry ;) Good luck to all those who are lucky enough to get in on the Visa IPO.

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There Are 14 Responses So Far. »

  1. Comment by Aaron Wakling on 17 January 2008:

    I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.

    Aaron Wakling

  2. Comment by Junior on 17 January 2008:

    I have to agree that it is one of the best investments someone can make, as people are always spending more and more with their credit cards

  3. Comment by Kingdom on 17 January 2008:

    They are good investments now, but as any other investment, it does have risks, so it can’t be good forever, can it?

  4. Comment by Riley Poole on 18 January 2008:

    Good point Kingdom. There is no “sure” thing in the market so it’s important to know that if you do get in early, be careful of the results, a good investment can go south overnight.

  5. Comment by Kingdom on 18 January 2008:

    So true, as you said in another post, any big business can eventually break down, and so do visa and mastercard, but for this moment, they are good investments for sure!

  6. Comment by Yep on 18 January 2008:

    These credit card companies charge so many fees and the highest interests on the market, and it is easy to get a CC, so I guess they’ll continue being a very safe investment for some great time

  7. Comment by Plug on 18 January 2008:

    I do not really think these companies are going to ever break down, I mean, they will always have new customers, and if that’s what keep them alive, they’ll be alive for a long long time lol

  8. Comment by John on 18 January 2008:

    Credit card companies have a pretty good business model, the only thing that really gets in their way is other credit card companies.

  9. Comment by TechyGirl on 25 January 2008:

    Credit card is the best business model ever - they’ll make money either way (the customers have to pay though). ^_^ I wish I could reverse time and introduce credit card as my idea. Lol ^_^ that’s why time machine doesn’t exist eh?

  10. Comment by Mark higgins on 25 January 2008:

    Mastercard and visa are safe investments indeed as you say. Moreover because they are the leaders in the credit card industry.

  11. Comment by shannon on 25 January 2008:

    Thanks.
    What you said here has helped - to clear some confusion in my mind as to what stock to get into next.
    Maybe i’ll give mastercard a try

  12. Comment by Rose walis on 26 January 2008:

    Investing in these two major companies will not affect anybody. They are the masters of credit cards. Everyone is using credit cards so there is no downfall for these companies.

  13. Comment by Roger on 29 January 2008:

    I think we can see it many aspect of financial point of view and economical point of view. People will spend on new things, gadgets for their pleasure and I think thats why people earn money for that. At least that is one main reason. People are moving fast with technology and people need money. So where does money come from? Best Option Credit Cards..

  14. Comment by c0071 on 2 February 2008:

    I would agree that they will be a safe investments as they are very big companies.

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