There aren’t many businesses quite like Visa (NYSE: V) and Mastercard (NYSE: MA).
Both operate open-loop payment networks — the rails that shuttle money between a shopper’s bank and a merchant’s — while the banks that issue the cards, not the networks, take on the credit risk
Each network also grows more valuable as it scales; more cardholders attract more merchants, and vice versa. That durability is why both have compounded for years and generated enormous free cash flow along the way. The model is also remarkably asset-light.
Neither company lends money or carries inventory, and both run on modest capital expenditures. So most of the fees they collect become profit. These similarities them easy to compare.