Payment network operators Visa (V) and Mastercard (MA) are quite simply some of the best companies we have ever examined in terms of capital efficiency and growth.
While this has already led to significant share appreciation, we think the consensus for Visa and Mastercard’s revenue growth is still too low based on our view that electronic and mobile payment adoption will accelerate at a much faster pace than expected.
While smaller payment companies PayPal (PYPL) and Square (SQ) will also benefit
from this trend, we think these companies will remain at a disadvantage given they still
must use (and pay for) Visa and Mastercard’s lucrative networks.
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