Sunday, 4 December 2011

Visa and Mastercard – safer ways to benefit from increased holiday sales?

Thanksgiving weekend retails sales exceeded all expectations. Some retailers were big winners, whereas a few of them missed the boat. If you are betting on increased holiday sales, but do not want to gamble on specific retailers or credit card companies, perhaps you should take a look at Visa (NYSE:V) and Mastercard (NYSE:MA).

Both companies process electronic payments, i.e. credit cards and make their money but by taking a cut of each transaction.
Neither company assumes any credit risks, unlike financial institutions which actually extend credit to consumers, such as Capital One (NYSE:COF) or Chase (NYSE:JPM).
Whether consumers can pay their credit card bills when they become due or not, Visa and Mastercard will not care. They will have pocketed their slice of the transactions anyway.
Bear in mind, however, that both companies operate globally, so a potential global slowdown might negatively impact their growth. At the same time, more and more people in the world are switching from cash to credit and debit cards.


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