Credit card giant Visa (V) wants a little change of pace for its open banking business. It has shuttered the operation in the United States, and is instead pulling resources toward what it calls “high-potential markets.” The move did not sit well with investors. In fact, they sent shares down fractionally in Monday morning’s trading.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Reports noted that Visa wanted to take its open banking show on the road, heading for those “high-potential markets” like Latin America and Europe. But the reports further noted that Visa does not just want high-potential markets elsewhere. It is concerned about the state of open banking in the United States, as there is “…regulatory uncertainty around access to consumers’ banking data.”
Moreover, reports noted, there are at least two banks suggesting that they may charge fees for such access, which would naturally hurt Visa’s open banking operations. Reports going back to July suggested that JPMorgan Chase (JPM) was looking to charge for access to bank data, with some word suggesting that the amounts of those fees could hit “…hundreds of millions of dollars.”
A Boost from Lithic
However, Visa also got a little extra help from Lithic, which recently moved to add Visa Account Level Management to its operations. With such a move in place, more businesses can bring out their own premium card programs, and deliver an experience that works for the customer. With that, Visa gets better access to the financial company market, and can deliver one more service, which it could likely use thanks to its departure from the open banking field.
There are some analysts, however, who believe Visa is currently overvalued by around 44%. Much of that value is fueled by “market optimism,” reports suggest, and with the Credit Card Competition Act stepping in to provide a little headwind, Visa may be looking at a decline in the near future. Moves like Lithic, however, may help to stem that tide before it can even truly hit.
Is Visa a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on V stock based on 20 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 30.51% rally in its share price over the past year, the average V price target of $399.09 per share implies 14.13% upside potential.
