Mastercard shares moved higher after the company reported a fourth-quarter earnings beat, supported by resilient consumer spending across travel, leisure and everyday purchases. The results arrive as regulatory scrutiny of the U.S. payments industry intensifies, raising questions about long-term growth and valuation.
BNN Bloomberg spoke with Harshita Rawat, senior research analyst at AB Bernstein, about Mastercard’s earnings, the growing role of value-added services, and how regulatory uncertainty could affect payment networks’ competitive positioning.
Key Takeaways
- Mastercard’s earnings beat was driven by steady consumer spending and strong growth in value-added services beyond traditional card payments.
- Value-added services are growing more than twice as fast as core payment volumes, supporting incremental revenue growth and longer-term diversification.
- Despite solid fundamentals, payments stocks have lagged broader financial indices due to regulatory concerns and sector rotation.
- Political attention on credit-card affordability has increased regulatory uncertainty, even if near-term legislative action appears unlikely.
- Ongoing scrutiny could continue to weigh on valuations for payment networks despite strong underlying growth trends.
Read the full transcript below:
ANDREW: We’ve got our eyes on Mastercard right now. Profit from the card giant beat expectations in the latest quarter, with shares edging up about two per cent. Spending is holding up across travel, leisure and everyday essentials. Let’s get more from Harshita Rawat, senior research analyst at AB Bernstein. Thanks very much for joining us.
HARSHITA: Thanks for having me.
ANDREW: Walk us through the quarter briefly. What jumped out for you in this report from Mastercard?
HARSHITA: Yeah, absolutely. It was a very strong quarter. Overall, consumer spending has remained steady despite all of the concerns. Mastercard beat earnings by more than 10 per cent. Some of that was driven by one-off dynamics, but I think the guidance for 2026, which was a key area investors were watching, was also quite strong, at 12 to 13 per cent. Mastercard is also doing extraordinarily well growing beyond payments and networks into value-added services, which have grown north of 20 per cent. So overall, steady spending, good momentum in value-added services, and a strong outlook for 2026.
ANDREW: That’s interesting. They’re diversifying beyond just the traditional card business. Can you give us one or two examples?
HARSHITA: Yeah. About two-thirds of their value-added services are card-linked, but there’s a strong and growing attach rate in areas like cybersecurity, data and personalization services, and analytics. That business grew north of 20 per cent this quarter. If you think about overall switched volumes growing about nine per cent in the quarter, and then you have value-added services now approaching 40 per cent of revenues and growing around 20 per cent, that adds to the incrementality of revenue growth. That’s why we saw another very strong revenue growth quarter from Mastercard, and why they’re guiding to 12 to 13 per cent revenue growth in 2026.
ANDREW: I’m comparing Mastercard and Visa over the past five years on my Bloomberg screen. Pretty similar total returns — a bit more than 70 per cent over five years — but both have lagged the S&P 500 financials index. They’ve been flagging a little lately. Why is that?
HARSHITA: Yeah, that’s an important question. I think it’s a combination of factors. More recently, there’s been growing regulatory noise and scrutiny, particularly in the U.S. Then there’s been funding rotation around the AI trade. Visa and Mastercard used to be in the TMT index and moved into financials, so they went from being perceived as cheaper TMT stocks to more expensive financials, and there’s been rotation within financials as well. That said, when you look at their underlying growth and fundamentals, they remain rock solid. Mastercard is trading near the bottom of its first percentile relative valuation range over the past 10 years because of these factors, even though the fundamentals remain very strong.
ANDREW: What about President Trump floating the idea of capping interest rates on credit cards? Obviously, banks weren’t happy about that. Is this a real threat?
HARSHITA: I think it’s interesting. The first social media post came out around two weeks ago, and then last week President Trump said he would ask Congress to draft a bill capping credit-card interest rates at 10 per cent. We initially viewed that as a more benign outcome, because once something enters the legislative process, there’s a lot of debate, and the likelihood of passage at this point feels relatively low. That said, I think the broader agenda here is the affordability crisis, and pressure on banks and payment companies to help address that. We may see banks introduce 10 per cent interest-rate capped credit cards — and we’ve already seen some announcements — which isn’t dramatically different from some of the zero per cent introductory APR offers already in the market. But at this stage, the likelihood of legislation on credit-card interest rates still feels low.
ANDREW: Harshita, thank you very much. We appreciate it. You have an outperform rating and a price target of US$710. Harshita Rawat, senior research analyst at AB Bernstein.
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This BNN Bloomberg summary and transcript of the Jan. 29, 2026 interview with Harshita Rawat are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
