Shares in Visa (V) and Mastercard (MA) inched higher on Friday after the global payment network rivals agreed to pay $167.5 million to resolve a long-running class action over allegedly inflated ATM fees.
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The lawsuit dates back to 2011 and involves millions of ATM users who were charged access fees when they took out cash from ATMs not run by banks. However, the proposed settlement is still subject to the approval of the trial judge in the U.S. District Court for the District of Columbia in Washington.
The proposal would see Visa put forward about $88.8 million to the pool, with Mastercard chipping in $78.7 million. The court document indicated that it took four months of negotiations to reach the arrangement.
Visa and Mastercard Reach $197M in Different Case
The class action was initially dismissed when it was first filed years ago. However, it was reversed and later permitted to proceed as a group lawsuit. Both companies have denied any wrongdoing in the case.
The settlement agreement comes over a year after the payment network competitors similarly agreed to pay $197 million to settle another class action that accused them of deliberately keeping ATM cash withdrawal fees high.
Visa or Mastercard: Which Is a Better Stock?
In terms of stock performance, Visa takes the crown. Since the start of the year, Visa’s shares have gained about 11%, with Mastercard following closely with approximately a 9% rise.
Across Wall Street, Visa and Mastercard’s shares both currently hold a Strong Buy consensus rating. While Visa’s rating is based on 23 Buys and three Holds issued by 26 analysts over the past three months, Mastercard’s breaks down to 19 Buys and four Holds.
A comparison of their average price targets shows that Mastercard, this time, has the upper hand. While the average MA price target of $685.25 implies over 30% upside from the current trading levels, the average V price target of $403.82 suggests a lower 16% upside.
