Will pay-by-bank option threaten Visa and Mastercard? Two analysts weigh in

Walmart’s (WMT) move to allow customers to pay directly from their bank accounts instantly when shopping online could compete with Visa (NYSE:V) and Mastercard (NYSE:MA) networks, weakening their moat, Mizuho USA analyst Dan Dolev wrote in a note to clients.

Merchants have long grumbled at the fees charged by card networks. The payment option being offered by Walmart (WMT) will run on Fiserv’s (FI) NOW network, which will be integrated with the FedNow and The Clearing House’s real-time payment network. “At just $0.05-$0.06 cost per transaction for financial institutions, FedNow offers an alternative to US debit interchange (average cost of $0.34),” Dolev said.

In addition to the risk to traditional debit card spending, the analyst said he also sees medium-term risks to push-debit services such as Visa Direct and Mastercard Send.

Citi, though, doesn’t perceive an imminent threat to the card payment networks. Analyst Andrew Schmidt offers several reasons: Consumer behavior “is notoriously sticky,” networks offer chargeback protection, and real-time payments are not yet ubiquitous. For example, “pay-by-bank adoption has been quite measured in other developed markets, like the UK,” he said. Schmidt recommends buying Visa (V) and Mastercard (MA) stocks after Thursday’s weakness.

Visa (V) stock rose 0.3% and Mastercard (MA) rose 0.2% in Friday premarket trading. On Thursday, Visa fell 1.1% and Mastercard slipped o.4%.