Jan. 13 at 5:24 PM
#NOISE
$V $326.89 -16.31 and Mastercard sink amid concerns interest rate caps will impair transaction volumes, while American Express holds firm (326.89 -16.31)
Visa (V) and Mastercard (
$MA) are retreating sharply lower as the market continues to react to President Trump's proposed plan to cap credit card interest rates at 10%, a move that threatens to disrupt the broader consumer credit ecosystem.
While V and MA are payment networks rather than direct lenders, investors fear a rate cap would force issuing banks to tighten credit standards and slash rewards programs, ultimately leading to a significant contraction in processed transaction volumes.
This regulatory headwind creates a "volume-chill" effect for the networks, as the potential for lower credit availability and a shift toward debit or cash would directly impact their high-margin service and data processing fees.
Conversely, American Express (
$AXP) is holding firm because its affluent, premium-focused customer base typically uses cards for spending rather than long-term revolving debt, making the company far more dependent on merchant discount fees and annual membership dues than on interest income.
By operating a "spend-centric" closed-loop model that prioritizes high-velocity transactions among wealthy cardholders who largely pay in full each month, AXP is viewed as structurally more insulated from interest-rate-cap legislation than mass-market competitors.
