Visa, Mastercard See Rise in Payment Volume in February

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- Visa ( V) and Mastercard ( MA), the two largest credit card processors in the world, have reported continued growth in their payments volume in February.

Visa's total payments volume in the U.S. rose 10% in February from a year ago. Growth in credit card payments volume was 15%, while debit card payments volume grew by 7%. Cross border volume was also up by 20% and the number of transactions processed by Visa increased 11% globally.

See our complete analysis of Visa here. and Mastercard| here.
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After adjusting for an extra day in February, Visa's total U.S. payments volume rose 6%, credit-card volume was up 11%, debit-card volume was up 4%, cross-border volume was up 16% and processed transactions grew 8% globally.

Mastercard also reported significant growth in its transaction volumes. The gross dollar volume of U.S. transactions it processed was up 14% quarter to date through February. Cross border volume was up 17% and the total number of processed transactions rose by 26%.

Both Visa and Mastercard continue to witness growth in their payments transactions as more people shift from cash/check to electronic payments. However, the growth in the debit card volume in the U.S. is slowing down because of new regulations on how these transactions are processed.

The Dodd-Frank Act limits the fee card processor can charge merchants every time a consumer swipes a debit card. The average fee charged by card processors was previously 44 cents per transaction, the new cap limited that to 21 cents.

Not all debit card transactions were charged at 44 cent per transaction. Retailers were offered small transaction discounts on a typical transaction of less than $10 to encourage them to use electronic payments platform more often. Both Visa and Mastercard eliminated the small transaction discounts to make up for the lost revenues due to fee cap. This has caused some retailers to go back to cash which slowed the growth in debit card transactions.

We expect payments volume to continue to grow despite higher fees because of the growing popularity of electronic payments among consumers.

We have a price estimate of $90.05 on Visa's stock , about 25% below its current market price.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.