Due to President Donald Trump's support of the "Credit Card Competition Act," payment networks are once again under regulatory pressure.
Trump wrote on social media on January 12 that the bipartisan bill would "stop the out of control Swipe Fee ripoff," urging senators to support it.
The markets responded swiftly. That day's morning trading saw a 4.7% decline in Visa (V) shares and a 5.2% decline in Mastercard (MA), the worst daily performance for both stocks in over six months.
Additionally, the policy risk extends beyond the discussion of interest rates. The average credit card rate in the country is 19.7%.
Trump's earlier January 9 suggestion to cap rates at 10% for a year caused large bank stocks to drop 1% to 3% as investors recalculated the profits from consumer loans.
Swipe fees are a more direct source of pressure for transaction-focused networks like Visa, which profit from processing volumes rather than lending spreads.
Following the proposal for an interest rate cap, Visa shares dropped 1.9% on January 12. However, whether or not the Credit Card Competition Act moves forward in Congress may be the more significant issue.
The law would question the fundamental economics of the card network model by requiring big banks to provide merchants with more affordable routing options than Visa and Mastercard currently offer.
If regulators split up the payment processing industry, will Visa be able to maintain its transaction-driven growth model? Let's investigate.
Visa has a straightforward payment system. Rather than making money by lending from its own balance sheet, it takes a little cut each time a transaction passes through its global card network.
The stock has increased by around 3.6% over the last 52 weeks, but it has decreased by about 6.3% year-to-date (YTD) as investors consider the political noise surrounding regulations and swipe fees.
Visa's market position, consistent cash creation, and long-term growth forecast are reflected in the company's about 26.8x projected earnings, which is more than double the sector's around 11.5x forward multiple.
The narrative of income investors is likewise continuously improving. With an annualized return of roughly 0.74% and an annual dividend yield of 2.44% on financial averages, Visa is supported by an 18-year run of dividend increases and a forward payout ratio close to 19%. A recent increase to a quarterly dividend of $0.67 per share is part of this.
With fiscal 2025 GAAP net income of $20.1 billion ($10.20 per share) and non-GAAP net income of $22.5 billion ($11.47 per share) on $40 billion in net revenue that increased by roughly 11% to 12% on a constant-currency basis, the most recent figures contribute to this optimism.
Visa reported $5.1 billion in GAAP profit ($2.62 per share) and $5.8 billion in non-GAAP profit ($2.98 per share) on $10.7 billion of sales in fiscal Q4 alone, up about 11% to 12%.
The company's processed transactions, cross-border activity, and payments volume all remained robust. This cash production contributed to the stock's long-standing premium valuation by funding $6.1 billion in buybacks and dividends during the quarter and $22.8 billion for the entire year.
The goal of Fiserv's (FISV) partnership with Visa is to link Visa Intelligent Commerce and the Trusted Agent Protocol to Fiserv's agentic ecosystem so that merchants may participate when AI-driven agents start managing customer product discovery, comparisons, and checkout.
This is significant because it brings Visa's "trust layer" authentication, permissions, and safe payment execution to the future of commerce. It also leverages Fiserv's extensive merchant network, allowing adoption to grow more quickly than Visa could on its own.
This is already going beyond notions, according to Visa. With partners throughout the ecosystem, the company has performed hundreds of safe, agent-initiated transactions, positioning 2026 as the year when agent-driven payments begin to transition from testing to wider practical application.
This also relates to the controversy about routing and swipe fees. Visa is striving to remain at the center of identification checks and payment authorization when the "buyer" is increasingly an automated agent, even if regulations surrounding traditional card routing become more stringent.
The Lumanu alliance targets a distinct, rapidly expanding market: global rewards to creators and contractors. In order to support Visa's ongoing push beyond cards into real-time disbursements, Lumanu is integrating Visa Direct to provide real-time payments to creators and contractors in more than 195 countries and territories while maintaining the visibility, compliance, and spend controls that brands and agencies depend on.
Analysts predict that Visa will report earnings on January 29 of 3.14 per share, up from 2.75 a year ago. This represents a YoY gain of roughly 14.18%. Consensus for the entire fiscal year 2026 is 12.81 per share, up 11.68% from 11.47 earlier, as Visa continues to expand payment volumes despite a more challenging political environment.
These earnings projections contribute to the explanation of why big businesses remain optimistic in spite of Trump's rhetoric.
With a price objective of $382, Bank of America recently raised V stock from "Neutral" to "Buy," citing good fundamentals, consistent revenue growth, growing cross-border transactions, and strong shareholder returns.
In a similar move, HSBC raised its objective from $335 to $389 and upgraded the company from "Hold" to "Buy," indicating that it views long-term growth and cash production as more powerful forces than the possibility of fee pressure in the news.
Visa is rated as a "Strong Buy" by all 36 analysts polled. At $403.09, the mean price objective suggests an increase of almost 22.5% above the present level.
For the time being, Trump's swipe-fee broadside appears to be less of a thesis-breaker for Visa and more of an emotion shock. Although the Credit Card Competition Act is a significant overhang, markets are aware that it is not yet a law.
The setup favors volatile, headline-driven trading over a structural derating because profits are still expanding in double digits, the valuation is high but supported, and every covering analyst is in the Strong Buy camp with about 22.5% estimated upside from here.
The stock will likely continue to fluctuate if Washington significantly advances the bill. However, Wall Street's goals and Visa's fundamentals indicate that shares are more likely to grind higher than reset lower if momentum cools.
(The original version of this story appeared on Barchart.com)
