Relative growth advantage may return to Mastercard in 2027

Overview

This report compares recent and 2027 trends in revenue, payment volume, value-added services, and valuation for Visa and Mastercard. Over the past year, Mastercard has lagged Visa by about 10% because its historical revenue growth advantage disappeared and its valuation premium narrowed. Bernstein believes this trend may moderately reverse in 2027: Mastercard will benefit from a reduced drag from the Capital One migration, growth in security solutions, and some improvement in macro comparison bases, while Visa needs to lap high bases from FIFA, the Olympics, M&A, and token pricing. Both companies still have double-digit long-term growth capabilities, but the current relative allocation preference tilts slightly toward Mastercard.

Core views

First, Mastercard's revenue growth in 2027 is expected to be about 13%, versus about 12% for Visa, and a modest growth advantage may help Mastercard regain a limited valuation premium. Second, Mastercard's recent payment volume deceleration partly stems from the Capital One debit card migration, slower share gains in Europe, and a lower U.S. business weighting, and these pressures will partially fade in 2027. Third, Visa reported significantly higher value-added services growth this quarter, but that includes contributions from M&A, FIFA marketing services, and pricing; after adjusting on an organic, constant-currency, and comparable basis, value-added services growth at both companies may be in the high teens. Fourth, Mastercard has a higher business mix in cybersecurity, identity authentication, and anti-fraud, and accelerating demand could create additional upside. Fifth, payment network competitive moats, value-added services penetration, agentic commerce, and stablecoin co-branded card opportunities support long-term double-digit revenue growth for both companies.

Analysis framework

The report uses a horizontal comparison of Visa and Mastercard, analyzing historical and forecast revenue growth, payment volume, cross-border business, value-added services structure, and valuation multiples, while adjusting for non-recurring or temporary factors such as M&A, major sporting events, token pricing, the Capital One migration, client wins and losses, and currency fluctuations. The valuation section uses expected fiscal 2027 earnings per share and P/E multiples, while also referencing valuations relative to the S&P 500 and each company's historical valuation range.

Methodology notes

• Relative fundamental analysisRevenue growth gap comparison

  Assess the direction of relative share-price performance and valuation premium by comparing the revenue growth gap between the two companies.

  The report notes that the historical relative share-price performance of Visa and Mastercard has been mainly driven by relative revenue growth, and forms a slight preference for Mastercard based on the 2027 forecast of about 13% versus about 12%.

• Growth quality analysisOrganic constant-currency adjustment

  Exclude M&A, currency effects, one-off events, and special pricing factors to compare sustainable underlying growth.

  Visa's 34% constant-currency growth in value-added services this quarter includes contributions from M&A, FIFA marketing, and pricing; after adjustments, comparable growth for both Visa and Mastercard is judged to be in the high teens.

• Segment analysisPayment network and value-added services split

  Separately evaluate payment-volume-driven network revenue and value-added businesses such as security, identity, anti-fraud, and acceptance services.

  This method is used to identify structural differences behind the two companies' overall growth and to highlight the growth elasticity brought by Mastercard's higher mix of security solutions.

• Valuation analysisForward P/E method

  Determine the target price by multiplying expected fiscal 2027 earnings per share by the target P/E multiple.

  Mastercard's $710 target price is based on FY27E EPS of $23.16 and a 31x P/E multiple; Visa's $450 target price is based on FY27E GAAP EPS of $15.20 and a 30x P/E multiple.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Mastercard Inc (MA.US)

  Relative top pick, maintain Outperform rating

  Strengths

  2027 revenue growth is expected to be slightly higher than Visa's; the drag from the Capital One migration is gradually fading; security solutions account for about 40% of value-added services revenue; demand for cybersecurity, identity authentication, and anti-fraud provides upside; valuation has compressed more significantly relative to its historical range.

  Weaknesses

  2026 payment volume is affected by the Capital One migration, European share growth has slowed, and U.S. business weighting is lower than Visa's; the exit of contract performance payments may extend migration-related revenue pressure into 2027.

  Comparison

  Revenue growth in 2027 is expected to be about 13%, higher than Visa's about 12%; security solutions account for a significantly higher share of value-added services revenue than at Visa, but recent reported revenue and payment volume performance has been slightly weaker.

  Risks

  NatWest credit card migration, narrowing cross-border payment growth advantage, Middle East and currency fluctuations, client migrations, competition and regulatory pressure, as well as cybersecurity or technology failures.

• Visa Inc (V.US)

  Maintain Outperform rating, but relative preference ranks behind Mastercard

  Strengths

  Higher U.S. business weighting and improved European market position; product innovation speed, stablecoin co-branded cards, token services, and continued pricing provide growth support; payment volume is still expected to grow 8% to 9% in 2027.

  Weaknesses

  In 2027, Visa needs to lap high bases from FIFA, the Olympics, M&A, and token pricing; organic value-added services growth may be similar to Mastercard's, and the current reported growth advantage may be difficult to fully sustain.

  Comparison

  Revenue grew 16% in the most recent two quarters, above Mastercard's 15%, but 2027 revenue growth is expected to be about 12%, slightly below Mastercard's; security solutions account for only about 17% of value-added services revenue.

  Risks

  Fading contributions from events and M&A, regulatory restrictions, competition from domestic and alternative payment networks, disintermediation by digital wallets, macro slowdown, decline in cross-border travel, and operational security incidents.

Key data

• Relative performance over the past yearMastercard has lagged Visa by about 10%Mainly due to convergence in revenue growth and a narrowing valuation multiple gap between the two.
• Reported revenue growth in the most recent two quartersVisa 16%; Mastercard 15%Historically, Mastercard has typically had a 2 to 3 percentage point revenue growth advantage.
• 2027 revenue growth forecastMastercard about 13%; Visa about 12%This is the core basis for the report's shift to a slight preference for Mastercard.
• Visa 2027 revenue$51.290BReport forecast value, up 11.9% from 2026.
• Visa 2027 earnings per share$15.20The report forecasts 15.2% year-on-year growth and uses it for target price valuation.
• Impact of Capital One migrationAbout 1 percentage point drag on global payment volumeMastercard is expected to largely move past this drag in 2027, but the exit of contract performance payments may create residual revenue pressure.
• Scale of NatWest credit card migrationAbout $35B in payment volumeExpected to have a relatively small impact, potentially phased in during 2027 to 2028, with about a 0.5% impact on Mastercard.
• Reported value-added services growth this quarterVisa 34%; Mastercard 18%After adjustment on an organic constant-currency comparable basis, growth at both companies may be in the high teens.
• Security solutions as a share of value-added services revenueMastercard about 40%; Visa about 17%Mastercard's security solutions also account for about 15% of its total revenue, providing higher cybersecurity growth elasticity.
• Mastercard cumulative cybersecurity investment$12BCumulative investment over the past several years in cybersecurity and risk solutions.
• Threat Intelligence anti-fraud effectivenessAbout $172MMastercard says this product helped prevent about $172M in fraud losses over the most recent three quarters.
• Target prices and valuationMastercard $710, 31x FY27E P/E; Visa $450, 30x FY27E P/ECorresponding FY27E EPS estimates are $23.16 and $15.20, respectively.

Impact & implications

For investors, both companies remain high-quality payment network assets, but the relative trading logic is changing. Visa has recently achieved faster reported growth through U.S. business strength, European investment, event marketing, M&A, and token pricing; as these contributions move into a high base, while Mastercard gradually moves past the Capital One migration impact and benefits from demand for security solutions, relative revenue growth in 2027 may shift back toward Mastercard. Given that the valuation gap between the two has already narrowed substantially, if Mastercard delivers an approximately 1 percentage point revenue growth advantage, its valuation premium has room for a modest rebuild. Visa still benefits from stablecoin co-branded cards, agentic commerce, tokenization, and continued pricing power, so the report does not turn bearish on Visa, but instead adjusts the relative preference between two Outperform-rated stocks.

Risks

• Expansion of domestic networks such as China UnionPay overseas could intensify competition among global payment networks.
• The adoption of digital wallets may weaken Visa and Mastercard's brand visibility and intermediary position.
• Increased use of ACH, person-to-person payments, and other alternative networks may divert card payment volume.
• Caps on debit or credit card interchange rates and regulatory policies favoring domestic networks may compress economic value.
• Merchant fee disputes may lead to settlements, fines, and ongoing litigation costs.
• A global economic slowdown may depress consumer spending and payment volume growth.
• International tensions, reduced travel, or economic sanctions may affect cross-border payment activity.
• Lower foreign exchange volatility may reduce cross-border transaction processing revenue.
• Cyberattacks, technology failures, or public security incidents may cause business interruptions and reputational damage.
• Mastercard may be unable to fully absorb the impact of the Capital One and NatWest migrations, or its cross-border payment growth may continue to narrow relative to Visa.
• The fading of Visa's event, M&A, and pricing contributions may be greater than expected.

What to watch

• Whether the revenue growth gap between Mastercard and Visa can reach about 1 percentage point in 2027.
• The net revenue impact on Mastercard after the drag from the Capital One debit card migration fades and contract performance payments exit.
• The actual progress of NatWest's approximately $35B credit card payment volume migration during 2027 to 2028.
• Visa's organic value-added services growth after excluding M&A, FIFA, the Olympics, and token pricing.
• Order and revenue growth for Mastercard's cybersecurity, identity authentication, threat intelligence, and anti-fraud products.
• Changes in payment volume, cross-border payment volume, and European market share at both companies.
• Contributions from agentic commerce, tokenization, and stablecoin co-branded cards to payment volume and value-added services.
• Whether the valuation multiple gap between the two companies widens again as relative revenue growth changes.
• The impact of currency fluctuations, Middle East business, and global travel demand on cross-border revenue.