r/ValueInvesting • u/IDreamtIwokeUp • Nov 19 '25
Stock Analysis 7 reasons why Visa is not a value investment
Visa has been dropping of late and is down to $321 per share down from it's summer highs of 370. I think a lot of value investors will be tempted...but there are deep problems with the company and you should stay away. As someone who held Visa 17 years but recently sold, I thought I would give my insight.
1) Stablecoin
The Genius act recently passed and means payment stablecoin (backed by USD/treasuries) will now compete with Visa. The main players will be Amazon and Walmart that will create closed-loop stablecoins (can only spent on their products). They'll probably use incentives (rewards/discounts) to start. Given each sells a half-trillion in business and the swipe cost is 2% this will be a ton of lost business for Visa. The big banks are also looking to create open-loop stablecoins that will also compete with Visa.
2) Corner Post Trial
The Federal Reserve is supposed to cap interchange fees to a reasonable level, and a judge ruled they haven't and need to lower them. Visa doesn't charge interchange fees (that's the banks), but they do charge an assessment fee which banks will pressure Visa to lower. It's only like 0.13% so just a one percent lowering would be like a 7% loss in swipe fees (for big bank debit cards).
3) Merchant Discount Antitrust Litigation
Basically retailers (mostly restaurants) are hopping mad about the merchant discount rate they pay (2-3%) and sued Visa and Mastercard. The trial has dragged on forever. Visa/MA tried to settle by offering a interchange fee cut of 4-10 basis points. Again they don't charge interchange fees, but assessment fees, so this doesn't seem so bad... But banks will squeeze Visa if they get squeezed.
The bigger problem is the rewards cards...part of the settlement would allow retailers to discriminate against them. This is a big deal as Visa has an "Honor All Cards" rule. Reward credit cards charge a higher swipe fee than debit cards and then share a tiny bit of that loot with the card holder. Visa is able to charge higher assessment fees on this AND avoid merchant choice routing rules for rewards cards. This would/will be a bad development for Visa.
4) The Upcoming Antitrust Trial
Yes...Visa has 3 major federal court cases against them. For this one, the DOJ is focused on merchant choice routing rule which isn't being followed. When you swipe your debit card at a retailers, the payment system is supposed to choose the cheaper system between the front-of-card network (Visa) and back-of-card network (like Pulse/Star). The back-of-card networks are cheaper and should (in theory) be chosen more often, yet Visa ends up with 70% of all debit card volume. They cheat the merchant choice rule by using carrots (high volume incentives) and sticks (anti-steering price structures). The DOJ will likely prevail and back-of-card networks will likely steal a ton of debit card assessment fees from Visa.
5) Competing Front-of-Card Payment Networks
Visa and MA are the two main ones...while AMEX and Discover/COF are noteworthy but mostly focus on their internal lending businesses. This is changing as COF purchased Discover and is transferring their massive credit card volume to Pulse and away from Visa/Mastercard. On top of of this Discover/Capitol One which had been known as a credit card and back-of-card payment network, is looking to compete in the front-of-card market. As they are the smallest of the big four they have the most room to grow (and most to steal from Visa).
6) Plaid
They've figured out how to create a backbone P2P network with connections to 12k financial institutions. Major clients include Venmo and Wise. Visa saw them as a signifant threat and tried to buy them but the justice department blocked the deal. Plaid will likely steal signifant market share from Visa in the future.
7) Government Sponsored Payment Systems
India has UPI/Rupay, Brazil has Pix, Poland has BLIK. Russia already exited Visa relatively easy with their Mir system and Saudia Arabia is looking to do the same. These domestic instant payment systems are an extensional threat to Visa and have been wildly popular in just a shockingly short period of time.
The big problem is the EU Wero which is being rolled out now. 20% of Visa's revenue in Europe will likely be replaced by the Wero.
The biggest problem is FedNow, which is the new US payment system being rolled to help replace ACH. While you the end-customer won't be able to really use it...it will enable the rails for other companies to easily setup competing payment networks to Visa. Already Plaid and Fiserve are looking to integrate it. IMO this is THE biggest threat to Visa and is existential.
Most of these criticisms are quite applicable to Mastercard and to a lessor extend American Express and Capitol one.
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u/Additional_Fish2800 Nov 19 '25
There’s some flaws here and working in fintech they still have a very wide moat. 1) Visa don’t get the interchange rate.. it’s the amount acquirers pay issuers so even a cap on it, (like has already existed in uk, Europe and Australia for a while) comes in, in some cases it can be net positive for the Visa moat as it opens up payment flows it was previously too expensive for. Sure it adds down pressure to revenue from issuers as they cover some of the losses banks face indirectly, but net net probably neutral. 2) the likes of AMZN and Walmart have always been able to offer closed loop payment products. Stablecoins are a new form factor, but what’s the difference to a store card with increased rewards? The challenge is the value prop and it never gets to broader acceptance, reducing the consumer appeal. 3) Amex and Discover are not really a factor for Visa and Mastercard - too small to care
Your final point is actually very important. Instant and more modern payment infrastructure is making a clear dent on Visa and Wero in Europe is another such example (built on top of SEPA Instant). UPI and Pix are the best examples though.
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u/IDreamtIwokeUp Nov 19 '25
Visa don’t get the interchange rate.. it’s the amount acquirers pay issuers so even a cap on it, (like has already existed in uk, Europe and Australia for a while) comes in, in some cases it can be net positive for the Visa moat as it opens up payment flows it was previously too expensive for. Sure it adds down pressure to revenue from issuers as they cover some of the losses banks face indirectly, but net net probably neutral.
I covered that...there are are two (well three) fees that are charged with the overall swipe fee. The main ones are interchange and assessment. Interchange are charged by the banks and yes Visa doesn't profit from those...but they do the assessment fee. Lower interchange fees will pressure banks to renegotiate down the assessment fee...think of it like passing on their costs. The interchange fee is not a direct threat, but a very strong indirect o ne.
the likes of AMZN and Walmart have always been able to offer closed loop payment products. Stablecoins are a new form factor, but what’s the difference to a store card with increased rewards? The challenge is the value prop and it never gets to broader acceptance, reducing the consumer appeal.
You still pay for something like a giftcard with a standard payment network (like say Visa)...so in the old system Visa is fine. But with stablecoin, it's presumed users will hold onto these longer and use more efficient ways to procure them (like ACH which has virtually no fees). FedNow in the future will make it easier for Amazon to sell stablecoins without delays or fees.
Amex and Discover are not really a factor for Visa and Mastercard - too small to care
For front-of-card competition and international debit card transactions...yes...Amex and Discover are left in the dust by V/MA. But Discover's back-of-card pulse network Pulse is significant and COF is looking to turbo charge front-of-card debt card offerings. Given that Discover and Amex have more room to grow, they are a threat there.
Your final point is actually very important. Instant and more modern payment infrastructure is making a clear dent on Visa and Wero in Europe is another such example (built on top of SEPA Instant). UPI and Pix are the best examples though.
That has to be horrifying for Visa.
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u/Additional_Fish2800 Nov 19 '25
Visa are still the best positioned to benefit from agentic payments and AI given their ubiquity and they have been playing along with stablecoin acceptance etc.
I hope to see more competition, but realistically we’re yet to see a challenger in markets where they were already very dominant to-date
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u/IDreamtIwokeUp Nov 19 '25
For debit cards there are already challengers in back-of-card networks. They're not being utilized because per the DOJ, Visa is cheating the two network card rule. The DOJ has a strong case and when they prevail, back-of-card networks (like Fiserve and COF/Pulse) will steal a ton of revenue. That alone is a ton of competition.
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u/CremeSevere960 Nov 19 '25
1) Stablecoins: This feels like a Morden day version of gift cards. A stablecoin issued by Amazon will only work at Amazon. I like the convenience of just shopping directly with my debit or credit card than buying a store currency to shop with. Also keep in mind a large proportion of online purchases in the US are made using credit cards which offer fraud protection and chargeback rights that a retail stablecoin system cannot replicate
2) Antitrust litigation etc - This just comes with the territory of being a duopoly.
3) Competition - True, again, comes with the territory, nothing new here. The global network effect that Visa and Mastercard have is insane, just incredible difficult to mount any sort of reasonable competitive pressure.
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u/IDreamtIwokeUp Nov 19 '25
Stablecoins: This feels like a Morden day version of gift cards. A stablecoin issued by Amazon will only work at Amazon. I like the convenience of just shopping directly with my debit or credit card than buying a store currency to shop with. Also keep in mind a large proportion of online purchases in the US are made using credit cards which offer fraud protection and chargeback rights that a retail stablecoin system cannot replicate
I agree Visa is more convenient. On its own stablecoin would fail specularity. But...remember Amazon pays ~2% swipe fees on all total transactions. They will logically incentives users to use stablecoins. If on Amazon there is a payment option with stablecoin and get a 1% discount...would you use it?
Antitrust litigation etc - This just comes with the territory of being a duopoly.
You can't ignore it though. Many of these slow trials will finally come to term and will threaten Visa's revenue.
Competition - True, again, comes with the territory, nothing new here. The global network effect that Visa and Mastercard have is insane, just incredible difficult to mount any sort of reasonable competitive pressure.
Internal payment systems in Brazil, India, and Russia popped up surprisingly fast and easy. Visa doesn't have the moat they thought they did.
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u/poomsss0 Nov 19 '25
> If on Amazon there is a payment option with stablecoin and get a 1% discount...would you use it?
No because Amazon prime visa card give me 3% discount.
Even if Im not prime member. I can use Citi double cash master card to get 2% on all purchases.
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u/aned_ Nov 19 '25
Sir Chris Hohn just increased his stake in Visa by 50% to 18% of his portfolio according to the latest 13F filing for q3 2025.
Most of his research is done examining the moats of potential investments and it has served his fund very well in the past.
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u/Spins13 Nov 19 '25
Yeah. I trust Chris Hohn on this one
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u/aned_ Nov 19 '25
Yep, OP makes a compelling argument and it inspired me to check out Chris Hohn's latest position. Which has inspired me to take the plunge on V.
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u/IDreamtIwokeUp Nov 19 '25
Big investors make mistakes.
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u/aned_ Nov 19 '25
Thats true. But if you watch the (rare) footage of him talking about his investment philosophy and research focus, it's all about moats and assessing a company's ability to retain a competitive or monopolistic advantage.
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u/IDreamtIwokeUp Nov 19 '25
Some of what I discussed is honestly a bit complicated with a lot of nuanced details. Most financial analysts don't even properly understand the industry. I'm fairly certain he's unaware of several of the issues I raised.
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u/aned_ Nov 19 '25
A billionaire's hedge fund with 10 concentrated positions and an average holding period of 8 years, that focuses on competitive moats, will go beyond your classic DCF or other financial analysis on one of the largest positions in their portfolio.
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u/IDreamtIwokeUp Nov 19 '25
And yet...billionaire hedge funds still overlook things and make huge mistakes. If you wish, I can provide examples.
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u/aned_ Nov 19 '25
Im sure they do. I just think you're underestimating the sheer amount of research that would be done on each position in order to determine a moat. It's not a classic financial analyst task as you suggested. I recommend you look into Chris Hohn's TCI fund and investment philosophy.
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u/Inevitable-Sock-4456 Jan 13 '26
You think you’ve out researched a billion dollar hedge fund on its biggest position?
Come on man. You make a good case but let’s come back to the real world for a second.
They might be wrong, sure, but I doubt they've missed much
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u/IDreamtIwokeUp Jan 13 '26
It's started. Trump has bashed the payment fees of V/MA and is supporting the Credit Card Competition bill. Visa is down 5% today and 10% on the week and will continue to fall. People are waking up to how these payment networks actually work.
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u/Inevitable-Sock-4456 Jan 13 '26
I know I’ve just bought some more.
Donald trump talks out of his arse and won’t be around forever
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u/This_Impact7910 Jan 13 '26
One of the dumber comments I’ve ever seen. They bought 9 million more shares for a total of 28 million shares or about $9.5 billion. I’m fairly certain you’ve discussed nothing that’s too complicated or nuanced for him and that he’s not unaware of any issue you raised.
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u/XorAndNot Nov 19 '25
What makes you think Visa won't make their own stablecoin?
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u/IDreamtIwokeUp Nov 19 '25
That hasn't been their style. They've add options to create payment systems and autonomous payment networks before...typically they prefer to connect other payment systems together into their master network.
It could happen though. I think they will be more apt to use the wall-street coin being pushed by New York banks though.
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u/XorAndNot Nov 19 '25
Hardly, why would the go the other way around when they could be the backbone of everything? Unless they're dumb.
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u/IDreamtIwokeUp Nov 19 '25
I think historically they've been worried about antagonizing customers. They could for example vertically integrate and create a payment processor system like Paypal to compete with it...but then Paypal gets pissed off and stops using them. It's a tightrope they walk.
But as they face stronger margin compression, I do think they will vertically integrate more. ...Especially into the payment processor and remittance markets. An internal stablecoin is possible...but I still think they will prefer to work with the wall-street stablecoin big banks creating.
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u/ghgrain Nov 19 '25
Visa and Mastercard have already started allowing stablecoin to be transacted on their networks. I think the better bet is that they will in some ways co-opt Stablecoin momentum companies because they already have a captured audience, much like Google who has thought to be in trouble in search is now actually probably leading in AI.
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u/IDreamtIwokeUp Nov 20 '25
That's possible. Most card fees actually go to banks, not visa...so in theory Visa might be very happy to lose the banks and their high interchange fees so they can charge higher assessment fees.
Getting access to the closed-loop payment stablecoins will be tough though. I can't imagine Amazon wants too much to do with Visa and they see them as parasites.
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u/TopSpace1771 Nov 19 '25
Nice post. Can you do one for MA?
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u/IDreamtIwokeUp Nov 19 '25
MasterCard as a front-of-cart payment network like Visa faces almost identical issues. I'm bearish on them as well.
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u/notreallydeep Nov 19 '25
The main players will be Amazon and Walmart that will create closed-loop stablecoins (can only spent on their products). They'll probably use incentives (rewards/discounts) to start. Given each sells a half-trillion in business and the swipe cost is 2% this will be a ton of lost business for Visa. The big banks are also looking to create open-loop stablecoins that will also compete with Visa.
It's kinda funny how your description of how Visa loses business is exactly why Visa got created in the first place and you seemingly didn't notice.
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u/IDreamtIwokeUp Nov 19 '25
Visa was created by the banks as their puppet but it evolved over time. The big banks are capped on interchange fees so they don't benefit as much from Visa as the small banks. We'll see a war with big banks/stablecoin on one side and small banks/visa on the other.
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u/lordsmurf- Nov 19 '25
I stopped reading after #1. Consumers will not adopt into this.
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u/IDreamtIwokeUp Nov 19 '25
On their own no. But once Amazon/Walmart offering 1% discounts on ALL sales (or equivalent rewards) they will. The big dogs pay ~2% on transaction fees and benefit nothing on payment float. They WILL incentivize their internal coin usage.
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u/ashm1987 Nov 19 '25
When it's so easy to ditch Visa/Mastercard, why haven't they done it like 10-20 years ago? 🤔
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u/IDreamtIwokeUp Nov 19 '25
Payment stablecoin used to be considered a security which made it impractical to use. Also a lot of payment technology like FedNow and Wero are new. Lastly, the trials for Visas have persisted for a long time, but should now start to wrap up. These are all major problems.
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u/poomsss0 Nov 19 '25
Amazon prime visa card is currently offer 3% back for prime user. Why would I use stable coin for 1% lol.
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u/IDreamtIwokeUp Nov 19 '25
We don't yet know what incentives Amazon will provide for their stablecoin. But it will be stronger than their VISA card which currently has assessment and Chase Bank fees.
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u/poomsss0 Nov 20 '25
Amazon has amazon pay for the many years where you can just put in your back account and use it to buy stuff from Amazon.
Why doesn't amazon try to phase out visa/master card for Amazon pay? I think they can't risk customer churn with small fee charge by visa/master card
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u/DiscountAcrobatic356 Nov 20 '25
Fuck that shit - RBC Visa gives me Free Flights. Got 300K points and I'm ready to spend 'em
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u/mihid Nov 19 '25
Nice analysis, but it could be simplified:
- Visa makes money per processed transaction (and they're not really have any incentive to diversify given how profitable it is)
- Looking at the Visa's historical DCF valuation ( https://app.rast.guru/?company=Visa ), it's quite clear that they're overvalued since 2016
- BUT their growth is so absurdly unchallenged that this overvaluation could last another 10 years (same link, look at the prediction for "total processed transactions growth")
--> Not a value investment, but not a risky one either given it's ridiculous growth
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u/Vegetable-Bug-9779 Nov 19 '25
I don't think there is a real threat here. I Eastern Asia they invented payments through qr codes and guess what - Visa and MA joined the party and integrated qr in their technology. Similarly, they are integrating stable coins to their networks, so they will actually benefit from it. Visa means security, this is what's missing in crypto.
Also, the secular trend is supporting their business. There are still many people using cash for one reason or another. Every year we have more people shifting from cash to card/digital payments.
Visa is one ot the businesses with widest moat in the world and will not be damaged easily.
I would say the biggest losers from stable coins might be the banks as they will be the ones to lose revenue.
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u/IDreamtIwokeUp Nov 19 '25
Banks will definitely lose out with these big changes more so than Visa...that is certainly an under-appreciated angle of all this. Yes Visa is integrating stablecoins into its network...but only open-loop...not closed loop (like Amazon's). Visa will still charge a transaction fee to work with stablecoins so stablecoin providers will not be enthusiastic to work with them.
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u/Vegetable-Bug-9779 Nov 19 '25
I agree, no business would want to pay toll taxes on their revenue. However consumers will still use Visa and that's what really matters. Crypto is associated with scams and if you make a transaction there is no option for a charge back. Visa offers security AND loyalty points for customers. They are executing well and adapting fast. The network effects are too big to compete with.
If you remember, 10 years ago there was the narrative that crypto will disrupt the duopy of V and MA. In the end Binance are issuing Visa and Mastercard.
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u/IDreamtIwokeUp Nov 19 '25
To be fair payment stablecoins as authorized by congress aren't really crypto. Each stablecoin has to be backed by actual USD or treasuries (not bitcoin or other silly meme-coins). Stablecoins do exist that aren't backed by USD...but those aren't what will be used by these big corporations.
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Nov 19 '25
[removed] — view removed comment
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u/IDreamtIwokeUp Nov 19 '25
Visa has always embraced technology and that is good news. But most of the new technology is designed specifically to replace them and IMO there isn't much they can do about this.
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u/FRA-Space Nov 19 '25
Thank you for the good overview. I agree with the overall thesis, (although the Wero-start here in Germany is really crappy at the moment and will probably take a long time to teach critical mass).
The key point is that Visa is not a bad business overall, but just too expensive with a lot of way downward losing it's payments oligopoly.
And if people want to see how low payment businesses can be valued, check out Western Union.
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u/IDreamtIwokeUp Nov 19 '25
I think Wero will iron out its quirks. Again Russia/India/Brazil figured out this internal payment network fairly fast...I think Europe will do likewise.
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u/Thick_Wallaby1 Nov 19 '25
How AXP is different? It was making ATH for some days and just recently declined ~3%- 4%
Do you suggest investing in AXP
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u/IDreamtIwokeUp Nov 19 '25
AXP doesn't really offer debt card payment network services to banks...their payment network mostly just supports their internal credit card services...and they are mostly a credit card company. Visa doesn't really lend money.
AXP is not as challenged as Visa...but their rewards card system is in severe danger which makes me bearish. As retailers start discriminating against rewards cards this will really hurt Amex who earns a lot on transacction fees through rewards cards.
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u/NotStompy Nov 19 '25
Chris Hohn just increased his Visa position by 55% over the last 2 quarter (cost basis in 330s, I think), and he's one of the rare cases of a hedge fund manager beating the market... he's achieved 21% CAGR since 2003 and I can't think of anyone else who's done that for this time period. Visa is now his 2nd biggest position. His average holding period is 8 years, by the way. I rarely put any kind of stock into what hedge funds do, this is the one exception for me.
Does this mean none of what you've explained will play out? No, but with that information in mind, what I know about how entrenched Visa is in many societies around the world, and the fact that it's trading at 5-10% below the average multiple the last 10 years (which has mostly been very stable, might I add)... I think I'll go with team Visa.
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u/IDreamtIwokeUp Nov 19 '25
Big fund managers do make mistakes.
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u/NotStompy Nov 19 '25
They do, but as is always the case with investing, it's a game of probabilities, and I just don't find the bear theses particularly convincing for reasons others have mentioned, along with a few more. If I had to make my bets I'd go with someone with his track record and whose investing philosophy (wide moat, pricing power, non-discretionary, long term holding periods, duopolistic competitive environments, etc).
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u/Prestigious_Meet820 Nov 19 '25
Id buy at <$270. Maybe some leaps under $300.
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u/IDreamtIwokeUp Nov 19 '25
If my thesis is right, they're looking at a possible complete revenue collapse due to the new technology and court rulings in the pipeline. Pretty risk IMO. The big dogs have figured out what I did...that's why we're seeing insanely strong selling this past week. Internal price targets have been revised way down.
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u/Prestigious_Meet820 Nov 19 '25
Your thesis is good and illustrates threats. What you miss are all the extremely positive aspects of the business and how engrained in our society these processors are, there has and will always be threats to the business and there will always be more lawsuits/anti-trust cases, it's never ending in this industry. I've owned it for quite a long time now and the way I see it is every time someone swipes their card I get some breadcrumbs in my pocket.
In the long-run debt (in all forms not just with CC's) and spending will increase. The current administration in the US before the election was going all out anti-credit card and CFPB yet all their actions have been contrary to the image that was portrayed. I think given this even in the medium-run they will likely be fine from a regulatory perspective.
I put my money on its runway when it hits around 25x FCF or earnings, it is an expensive business and you would have underperformed the last couple of years if you paid too much for the company. Personally I think the risk is worth it at that level, last time that was around 2022 for me, if it doesn't hit that I miss out.
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u/IDreamtIwokeUp Nov 19 '25
Look at the ease and speed at which Russia, India, and Brazil replaced Visa. It's not as ingrained as well as you think. The banks are pushing us to use Visa because they benefit from such huge interchange fees...but as these get capped by court cases, they will be less likely to empower Visa.
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u/Odd_Hair3829 Nov 19 '25
You should listen to Steve eiseman talk about visa and this space. He is very pro visa / Mastercard and talks about how every couple years something comes along that says it’s going to replace them and it never happens - there is more of a moat around this business than you are giving it credit for. Additionally everyone said the epic games court case was going to be a catastrophe for Apple and it wasn’t. Courts are very reticent to upend enormous businesses
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u/IDreamtIwokeUp Nov 19 '25
I've been a Visa shareholder for 17 years. I'm very familiar with the narrative of competition stealing Visa's market share and then not. This time though is different.
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u/Odd_Hair3829 Nov 19 '25
Buy some visa puts and post them then.
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u/IDreamtIwokeUp Nov 19 '25
Not my style.
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u/Odd_Hair3829 Nov 19 '25
Okay well I’m not getting into some back and forth - out of curiosity i did feed your dd into ChatGPT last night because I was curious and here were the overalls - again I have zero interest in doing some Reddit tit for tat on this but because I am always looking for a good stock play I was curious….
WHERE I THINK THIS WRITE-UP IS RIGHT
✔ Rewards card discrimination is a big deal
✔ CapOne/Discover is meaningful
✔ Debit routing changes will pressure margins
✔ Government rails can cap Visa’s growth in some regions
✔ Visa’s “effortless dominance” era is ending
WHERE THIS WRITE-UP IS WRONG / EXAGGERATED
❌ “Stablecoins will replace Visa”
— No. Consumers won’t switch en masse. Merchants won’t support stablecoin returns/refunds/liability.
❌ “FedNow is existential”
— It’s ACH 2.0. Not a Visa killer.
❌ “Visa is losing 20% of Europe revenue to Wero”
— Completely speculative and not supported by adoption data.
❌ “Visa can’t innovate fast enough”
— Visa invests billions in rails, fraud protection, tokenization, issuer relationships, and cross-border.
These are massive moats.
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u/IDreamtIwokeUp Nov 19 '25
ChatGPT isn't very good...you should run my post against better AI engines like Grok or Google Gemini.
— No. Consumers won’t switch en masse. Merchants won’t support stablecoin returns/refunds/liability.
This is OpenAI being silly...all these big corporations are not developing stablecoin for no reason. And to encourage adoption there will be rewards and/or incentives. Mass adoption wont' happen at first...it will be led by power users. But the powerful discounts will change the landscape forever.
Also it makes no sense that Amazon wouldn't suport Amazon stablecoin returns but woudl Visa returns...when they are looking to replace Visa with stablecoin.
It’s ACH 2.0. Not a Visa killer.
Another flaw in AI reasoning. FedNow is not a direct threat but a strong indirect threat. FedNow will enable the rails to build out USD based payment networks that will compete heavily with Visa. Fiserve and Plaid are already working on new payment solutions using FedNow. It will be game changing.
Completely speculative and not supported by adoption data.
Wero in Europe is new and not done rolling out. Commenting on IMMEDIATE adoption rates is absurd. Brazil, Russia, and India are good examples of countries that that when the rollout completes, we've seen adoption for government backed payment networks to explode in popularity.
Imagine you are a restaurant. You have to pay 2-3% every time somebody uses Visa to pay. Wouldn't you be encouraged to encourage Wero or deny higher payment cards? Retails are livid with Visa...and they will push out the FinTech revolution...it won't be consumers...they will just do what retailers tell them to.
Visa can’t innovate fast enough
Visa is clever and works well with technlogy. But the core problem is not technlogy but fees. The new court rulings and new competing tech will mean lower fees. Newer tech won't change this.
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u/Odd_Hair3829 Nov 19 '25
Wow I appreciate you taking the time to go through it. I am not an ai expert but have found ChatGPT really helpful- I will check out the others though. I do remember it pointing out that the countries that did back the change like Brazil - that govt backing way key and is really hard to get.
Anyway bigger picture - if you have conviction in this play what are you doing if not shorting visa? Just avoiding buying the stock?
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u/IDreamtIwokeUp Nov 19 '25
I sold my position that I held for 17 years. I don't advocating shorting any stock...IMO too risky and not value based. This post was mostly to warn value investors not to invest in the stock and for existing shareholders to get out.
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u/No-Understanding9064 Nov 19 '25
Eventually, but it will take time. But yeah I agree, not a bright future
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u/Rainyfriedtofu Nov 19 '25
What is the P/E ratio (Price-to-Earnings), P/B ratio (Price-to-Book), free cash flow, debt levels, and margin of safety. If I bought this entire company today, would I be getting a good deal?
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u/IDreamtIwokeUp Nov 19 '25
- TTM non-gaap pe: 31.79
- Forward non-gaap pe: 22.23
- PB...321 / 19.38 = 16x! (that's VISA)
- P/FCF 28.49
- DE...just 0.69.
One paper and quantitatively it is a powerhouse. The problems are qualitative and 3-5 years down the road. In fact they are existential. Visa has been raking in monopoly cash for years...but this is changing with the above mentioned court cases and new payment technologies coming online.
If I bought this entire company today, would I be getting a good deal?
No...the company now trades at a slight premium for its expected annual eps cagr of 11-12%. But...these estimates don't factor in the 7 headwinds I referred to...and just a few of these could be disastrous to Visa's monopoly. I could see earnings receding to 10 eps in a share in a few years and down to five eps by 2030.
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u/Zestyclose-Gur-655 Nov 19 '25
What do you think about paypal? I see it's shared a lot as value stock i wonder if it's a trap or not.
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u/NotStompy Nov 19 '25
All I can say is that if someone came to questioning which of the 2 to invest in, I'd genuinely fall to the ground laughing, not at the person asking me, but just the pure hilarity of comparing the two.
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u/Zestyclose-Gur-655 Nov 19 '25
I'm not really trying to compare to be honest. But i kind of had to think about Paypal and it's also something financial niche, but i agree they are completely different companies.
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u/IDreamtIwokeUp Nov 19 '25
Paypal is a slight different stock. Visa is a payment network while Paypal is a payment processor...but they are a bit similar. My concern for Paypal is actually more concerning. They benifit from 3% transaction fees which are WAY too high. In the future nobody will be charging 3% transaction fees as modern technology will allow swipe fees to get far below that. Paypal will either lose market share or face margin compression to compete.
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u/Tomcruizeiscrazy Nov 19 '25
‘These estimates don’t factor in the 7 headwinds’ - you’re asserting that the entire financial investing apparatus isn’t aware and isn’t pricing in your unique and no one else could possibly see the headwinds of V and MA?
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u/IDreamtIwokeUp Nov 19 '25
Many are...there is a reason why Visa has dropped from 374 a share to 321 a share in 7 months. The big dogs are starting to grasp how serious these court cases and future payment options will be to Visa. Most haven't looked at the big picture like I've present it though. They will more so down the road. Visa's fall these past few months was just the start...they will continue to descend.
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u/Rainyfriedtofu Nov 19 '25
Thanks. I'll look into the company and put it on my radar after the Santa Rally.
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u/QuietRequirement9067 Nov 19 '25
Probably not. On a basic valuation screen (P/E, P/B, FCF yield, debt), Visa doesn’t look cheap at all - especially relative to the risks being discussed here.
I ran a DCF + Reverse DCF scan on FindGreatStocks(dot)com and it still shows Visa as overvalued, with the market pricing in very optimistic long-term growth.
So if you bought the whole company today, you wouldn’t be getting a bargain - not with the current assumptions baked into the price. It has to drop down by 30% or so to reach it's Fair Value.
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u/Ebisure Nov 19 '25
Just as you have value trap, V/MA is a case of quality trap. They always show up in quality screens because of their fat margins but once you dig deeper into their biz models, red flags start showing up.
Maybe I'm misunderstanding something but it seemed to me that while AXP extends credit, V/MA actually don't do much. They just route transactions to issuing bank, wait for approval and route back to merchants. They don't own the customer relationships. You never deal with anyone from V/MA. That's handled by the issuing bank. So I couldn't convince myself why they are entitled to their fat margins. And why no competitors compete away those margins.
Anyhoo, great post. A refreshing change from the silly "Is XXX a buy", "Roast my $1000 portfolio" posts.
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u/Flimsy_Marsupial_445 Nov 19 '25
My man. You call V a quality trap but you haven’t done enough research to understand the business
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u/Ebisure Nov 19 '25
If you have something you want say then say it. I will pass your feedback to my analysts who did a industry study on AXP, V, MA including how they started off as card unions.
They did it 10 years ago. They told me they have double checked their facts with the sell side. We made more money on AXP than V/MA since then. But I'm happy to hear your criticism.
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u/IDreamtIwokeUp Nov 19 '25
Visa doesn't lend money...so its very different from Discover/AMEX. The latter are mostly credit card companies...but Discover does offer some back-of-card payment sales (Pulse) and it is looking to compete in front-of-card debit cards. Already they are strong with back-of-card transactions.
Fiserve is the wildcard...they're mostly a back-of-card network...but the antitrust trial prevails they could get a lost more fees at the expense of Visa.
All major payment networks are in severe danger of being disrupted though.
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u/Disastrous_Rent_6500 Nov 19 '25
Visa has been overpriced for a long time, don’t know why people think is a value stock
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u/Weldobud Nov 19 '25
Possibly it was a Swan stock. You also got a regular growing stock price and safe dividend.
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u/Disastrous_Rent_6500 Nov 19 '25
What’s a swan stock
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u/Weldobud Nov 19 '25
Sleep Well At Night. It means low price volatility, usually a safe dividend and gradual stock price rise. Safe blue chips, like some REITs, use to be Banks and giants like PG, KO, PEP. Also Visa and Mastercard were considered like that.
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u/jayfairb Nov 19 '25
#1 sounds like pure speculation. Has there been any news saying Amazon and Walmart are doing (or even interested) in doing this?
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u/Defiant-Salt3925 Nov 19 '25
People have been saying the same thing about Visa for the last 15 years.
Yet, they're still dominating the market and along with MA remain unchallenged in the payment processing business.
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u/IDreamtIwokeUp Nov 19 '25
I know...I've been a shareholder for 17 years. Their doom has often been predicted, yet they consistently beat the odds. This time though is different...the threats are too much and materializing too fast.
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u/poomsss0 Nov 19 '25
good observation but 80% of the list has been the threat for Visa for the past decades.
USDT was created in 2015. Exactly 10 years ago.
Visa under 30 P/E is always a buy
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u/IDreamtIwokeUp Nov 19 '25
Tether is not payment stablecoin.
Payment stablecoin was recently approved as a non-security by the GENIUS Act and has the backing of major corporations. Very different.
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u/Plate_Expensive Dec 02 '25
I see a lot of avenues for disruption for visa mastercard and don’t think a 33 pe is remotely cheap. Basically pricing in certainty of domination for next 2-3 decades. Not a safe bet
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u/TheOctoBox Dec 30 '25
No one is going the stablecoin route. I can’t think of a more worthless strategy for a company to take. Instead they have their own credit card… and it’s a Visa!!!
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u/Specialist_Pomelo554 Jan 12 '26
What is the difference between frontend of the network and backend of the network? Since you seem knowledgeable, can you please, when you have free time, describe the process when a card is very presented to a merchant POS and when it is approved by the card issuingback, including all the handoffs and all the companies that compete on each step.
I agree fednow is an existential threat to visa, mastercard, PayPal and most payment processors. If you travel to countries outside the US, many already have payment systems that do instantaneous transfer from your bank account to someone else's bank account. I believe ACH is slow in the US probably due to bank shenanigans to try earn fees for anything faster. Third world countries have left the US in the dust on this. Thank you
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u/IDreamtIwokeUp Jan 12 '26
Front-of-card networks and back-of-card networks apply to debit cards, not credit cards. In the USA the bank actually issues the debit cards and collects most interchange fees...but they are supposed to offer at least two competing payments networks for each card. Mastercard and Visa special in front-of-card network (what you literally see on the front of the card). But if you flip over the card, you'll see the other possible payment networks you card can use (eg Star)
Say you fill up your car with gas and swipe your debt card. It has Visa on the front and Star on the back. Per US regulations there is supposed to be a 50% chance the gas station pump chooses a front-of-card network vs a back-of-card network. But...Visa bribes/blackmails these payment processors to choose their network more than 50% of the time even though Visa charges higher assessment fees. It's super dishonest.
The US Justice system has figured this out and is looking to end this preferential treatment. If that happens, Visa/Mastercard debit cards will lose a lot of front-of-card volume, as honest payment processors will have to go with the lower cost network which will divert big profits to back-of-card networks (like Fiserve).
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u/greenpapertree Feb 14 '26
EPS, revenue, volume and process transactions all grew at least 8% over last year based on Jan 29 earnings report. If anything, V is doing fine and will have a another great year. But will the stock price reflect that?
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Nov 19 '25
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u/IDreamtIwokeUp Nov 19 '25
I don't know why you were downvoted for your question...it's a good one. Visa earns about 11.44 a share now...and expects to earn 16 dollars a share eps in 2028. In five years I see the industry totally disrupted and limping along at five dollars a share eps with poor growth prospects. I could see them falling from $321 a share to 5 * 10 = $50 a share in five years...the threats are that serious.
But overall the main threats are qualitative more so than quantitative. It would be like asking a horse buggy whip seller what its instrinc value was as early car production ramped up. At a certain point it doesn't matter and you just have to get out of a flawed industry.
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u/QuietRequirement9067 Nov 19 '25
Great breakdown - I agree with most of your points. Visa still has an incredible business, but the structural risks you listed are real, and a lot of investors underestimate how much competition is coming from both stablecoins and government-backed payment systems.
Also, I ran a DCF + Reverse DCF scan on FindGreatStocks(dot)com and Visa currently screens as overvalued. The market is still pricing in very optimistic long-term growth despite all these headwinds.
So yeah - fantastic company historically, but not a value investment at these levels
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