Key Points
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Visa handled 74.2 billion transactions in its latest quarter, up 10% year over year.
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Mastercard’s revenue from value-added services climbed 19% in the third quarter.
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PayPal’s transaction revenue grew more slowly than its payment volume last quarter.
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Visa (NYSE:V), Mastercard (NYSE:MA), American Express (NYSE:AXP), PayPal (NASDAQ:PYPL), and Capital One (NYSE:COF) all collect money at the same time: when a buyer pays for something. Visa alone handled 74.2 billion transactions in the three months ended Sept. 30, up 10% year over year.
But they don’t all face the same risk to get paid. Some just run the network, while others also lend the money for the purchase.
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And I think the market prices this difference in. Visa and Mastercard both trade at around 28 times analysts’ earnings estimates for 2027 (fiscal 2027, in Visa’s case). PayPal and Capital One sell for about 10 and 9 times earnings estimates.
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1. Visa: a tiny fee on billions of payments
Visa doesn’t issue cards or lend money. The banks behind its cards do that, and they carry the credit risk.
It earns fees by moving the money. Visa’s net revenue in its fiscal fourth quarter (the period ended Sept. 30) climbed 13% to $12.1 billion, or around 16 cents for each of those 74.2 billion transactions.
Payments volume growth slowed a bit, to 9% on a constant-dollar basis from 10% a quarter earlier. Yet Visa’s non-GAAP (adjusted) earnings per share climbed 17%.
2. Mastercard: more than the swipe
Mastercard doesn’t lend to cardholders either. Its third-quarter gross dollar volume climbed 7% on a local-currency basis to around $3 trillion.
Notably, more of Mastercard’s revenue now comes from what it sells beyond the swipe. Value-added services and solutions revenue (security and data tools, among others) jumped 19% to around $4.1 billion and now makes up about 41% of net revenue. Payment network revenue climbed a slower 11%, and total net revenue grew 14% to $9.8 billion.
3. American Express: the fee and the loan
American Express charges merchants a fee, too. But unlike the networks, it also issues cards and lends to the people who hold them.
Amex’s discount revenue (what merchants pay to accept its cards) climbed 8% year over year in the third quarter to around $10.2 billion, about half of its total revenue. Net interest income from its lending added around $4.9 billion, up 10%.
Lending also means putting money aside for credit losses, around $1 billion in the quarter. Still, its net write-off rate (the share of loans written off as uncollectible) eased to 1.8%, a bit better than a year ago.
4. PayPal: more volume, but a slimmer cut
PayPal works differently. Most of its revenue is a percentage of the payment volume that flows through its platform.
Its third-quarter payment volume climbed 6% year over year to $487.1 billion, while transaction revenue rose just 3%. Measured against volume, its cut has shrunk for three straight quarters, to around 1.58% from about 1.65% in the fourth quarter of 2025. I think this shrinking cut is the biggest reason the stock trades so cheaply.
Adjusted earnings per share still grew 8%, even though adjusted net income dropped 3%, thanks to around $6 billion in buybacks over the last 12 months.
5. Capital One: a lender with its own network
Capital One is mainly a lender. Net interest income made up about $12.9 billion of its $16.3 billion in third-quarter revenue.
But it now has a fast-growing network of its own. Capital One bought Discover in May 2025, and it’s since reissued its legacy Capital One debit cards onto that network. Volume on the network climbed 25% year over year to around $191 billion. Across the whole company, discount and interchange fees were about $2.3 billion.
Of course, credit still matters more for this stock than fees do. In its card business, the net charge-off rate dropped from 5.05% in the first three months of the year to 4.71% in the June quarter and 4.01% in the September quarter. A softer economy might reverse the trend.
Which of the five would I buy?
The valuation gap arguably tracks the risk attached to each cut. Capital One and PayPal look cheap, but one relies on borrowers paying back loans and the other on stopping its shrinking cut. American Express, at around 16 times 2027 earnings estimates, falls in between. And Visa and Mastercard cost the most because their fee comes with no loan attached.
Those are the two I’d want to own. Neither is cheap at about 28 times 2027 earnings estimates, and Visa is around $425 as of this writing, near its 52-week high. Mastercard’s faster-growing services business arguably gives it a small edge today. Still, for investors who want the simplest form of a fee on every payment, I think either stock is worth considering — perhaps buying a bit at a time.
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American Express is an advertising partner of Motley Fool Money. Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express, Mastercard, PayPal, and Visa. The Motley Fool recommends Capital One Financial and recommends the following options: short December 2026 $62.50 calls on PayPal. The Motley Fool has a disclosure policy.
