V, MA, PYPL: U.S. Threatens Action on Debanking, Warns against Political Bias

Visa (V) and Mastercard’s (MA) shares slipped below the flat line on Thursday afternoon after the U.S. trade watchdog, in a letter, threatened to open investigations and pursue enforcement actions against the card services giants if they debank American consumers in violation of their terms of service and its own rules. The U.S. Federal Trade Commission (FTC) also cautioned against discrimination on the grounds of political or religious views.

The regulator also sent a similar letter to payment services heavyweight PayPal (PYPL) and its private rival Stripe. The former’s shares also fell on the news but were still up nearly 1% at the time of writing.

Trump Administration Cracks Down on Debanking

In a statement announcing the letters, Andrew Ferguson, chair of the FTC, noted that it raised concerns to the companies’ CEOs about publicly reported cases in which financial services firms cut off customers from their services because of their political or religious views. He described such practice as “inconsistent with American values,” noting that President Donald Trump’s executive order in August “makes clear that it is unacceptable to debank law-abiding citizens” due to these reasons.

Ferguson’s letter comes weeks after President Trump — who last August accused investment banking leaders JP Morgan Chase (JPM) and Bank of America (BAC) of debanking him over his political views following the January 6, 2021, attack on the U.S. Capitol — dragged JPMorgan and its CEO Jamie Dimon to court, seeking at least $5 billion in damages.

Last month, JPMorgan for the first time confirmed that it shut down accounts tied to the president and his businesses shortly after the attack.

Which Payment Stock Is the Better Buy?

Visa narrowly beats Mastercard as the best buy of the three publicly traded payment infrastructure companies mentioned in this article. Strong Buy-rated V stock offers about 32% upside based on an average price target of $402.25.