A recent analyst report from Mizuho indicates that the growth of Visa (V.US) and Mastercard (MA.US) in the United States is gradually slowing, as opportunities in the cash-to-card business are nearing saturation, affecting the share of these companies in US personal consumption expenditures. Mizuho analyst Dan Dolev notes that the growth share of personal consumption expenditures (PCE) is a key metric for evaluating Visa and Mastercard's growth in the US market.
According to the latest report from the US Department of Commerce, US PCE increased by 0.3% in September, slightly higher than the 0.2% in August. Dolev states that approximately 45% of Visa's revenue growth comes from the cash-to-card business, with Mastercard expected to have a similar proportion. Data shows that since the third quarter of 2019, Visa's share of incremental consumer spending growth in the US has dropped to 47%, down from 52% in 2013. Since 2009, Mastercard's share of incremental consumer spending in the US has declined from 22% to 20%.
Despite the overall growth slowdown, Mastercard has outperformed Visa in the US debit card market, with market share increases of 8% and 5%, respectively. Additionally, Mastercard's US transaction volume in October increased by 400 basis points compared to Visa's 200 basis point increase. In the cross-border business segment, Mastercard also outpaced Visa in October, with an increase of 200 basis points over September.
After analyzing the impact of personal consumption expenditure on Visa and Mastercard, Dolev has raised Mastercard's target price to $532 and Visa's to $292, highlighting the potential growth in their debit card and cross-border transaction businesses.
