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Visa, MasterCard and the Power of Plastic

Finally, with 48% market share of total payment volume in the U.S., Visa dominates the credit card landscape. Visa reported earnings of $1.85 per share, or $1.2 billion, an increase of 20% and 15% over the same period's adjusted results in 2012. Total operating revenue rose by 13%, driven by strong gains in its service. Data processing rose by 17% while international transactions revenue rose by 12%.

On the top line the company reported revenue at $2.9 billion, up 8% over the fourth quarter of last year. While its key business segments saw revenue improvements greater than 10%, revenue was only up 8% due to an increase in client incentives. This line item acts as a contra-revenue item and grew from $563 million to $680 million, a gain of more than 20%. Shares of the company tumbled following the quarter but have since recouped the majority of these losses.

Wrap Up: While most of the financial sector has run substantially to the upside over the last year, credit cards seem to be performing well. Over the long term I believe each of these companies can perform well within their respective spaces. American Express stands to benefits from a renewal in corporate spending. Discover will carry its customers into its full line of offerings. MasterCard is doing damage in the international market while Visa continues in its powerful position here at home.

At the time of publication the author was long AXP and DFS.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Nate Matherson is currently a student at the University of Delaware, where he is pursing degrees in Finance and Economics. Nate manages his own investment portfolios in addition to writing investment analysis articles for a variety of news outlets. In the future, Nate would love to work in either the portfolio management or investment banking industry.
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