Visa, Mastercard Shares in Rally Mode

NEW YORK (TheStreet) -- Visa (V Quote) and MasterCard (MA Quote) shares each made substantial gains Wednesday on heavy volume.

With more than 12 million shares changing hands on Wednesday, a level that's more than double the San Francisco-based payments network's three-month average daily volume, Visa's stock climbed 3.8% to $70.86. MasterCard shares tacked on 5.1% to finish the session at $210.90, again on frothy volume. Shares of competitors Discover Financial Services (DFS Quote) and American Express (AXP Quote) each rose 1.4% on the day.

Visa and Mastercard, the two larger electronic payment networks, have been relatively shielded from the worst of the financial crisis. Both companies earn fees by charging banks to issue cards on their networks. They also generate fees for each transaction swiped as well as a percentage of total purchase volume per bank. Neither company holds credit card loans on their balance sheet.

One impending event that may have influenced trading was a Congressional hearing scheduled for Thursday morning. The House Committee on Financial Services is set to receive testimony on the Credit Card Interchange Fees Act of 2009, H.R. 2382, and the Expedited CARD Reform for consumers Act of 2009, H.R. 3639. The hearing would potentially move forward legislation to make interchange fees - a controversial subject in the payments industry -- less of a hassle and more transparent for merchants.

Visa and MasterCard set the pricing of interchange fees for their bank customers. There has been considerable controversy surrounding alleged interchange abuses, including a host of lawsuits against the firms regarding the overcharging of the fees.