MasterCard (MA.US) is scheduled to announce its fourth-quarter earnings before the U.S. market opens on Thursday, January 29, while Visa (V.US) will report after the market closes on Thursday (Friday morning Beijing time). Ahead of these releases, JPMorgan issued a research note stating that, despite some headwinds, the fundamental outlook remains robust; it reiterated "Overweight" ratings on both MasterCard and Visa, with price targets of $685 and $430, respectively.

JPMorgan pointed out that consumer spending data indicates only a slight deceleration in growth during the fourth quarter, suggesting that U.S. domestic consumers remain healthy, especially considering the overall weak growth environment (data from Chase credit cards also shows an acceleration in spending growth so far in January).

Furthermore, the valuations of both companies are relatively reasonable, and their stock price trajectories are predictable (most notably, Visa's new tokenization value-added service fees starting in April), leading the bank to maintain a generally optimistic view on their performance, albeit with a slight preference for Visa.

Nevertheless, a series of recent news has intensified market pessimism towards the entire sector, including credit card networks. Regarding the Credit Card Competition Act (CCCA), which has been a recent focus, JPMorgan believes the potential impact on these two payment companies is unlikely but manageable.

Implementation of the Act could take years, providing payment networks ample time to restructure operations and adjust pricing strategies based on value accumulation (as they have done historically), thereby offsetting what JPMorgan expects to be a relatively moderate financial impact.

JPMorgan views the upcoming earnings reports as presenting a positive risk-reward ratio but acknowledges that strong results/guidance alone may not fully alleviate investors' near-existential concerns. However, the bank believes such market volatility should be seen as an opportunity to buy high-quality assets.

On the CCCA issue: Former President Trump previously posted on social media encouraging support for the Credit Card Competition Act. Initially proposed in 2022, the bill ultimately failed to gain widespread support. Its core requirement is for most Visa and MasterCard credit cards to be enabled with an independent, third-party payment network, similar to the structure for debit cards.

JPMorgan considers the bill unlikely to gain support, primarily because it does not offer clear, substantial benefits for consumers/merchants (and the operational burden of implementation would be disproportionate), but even if enacted, the bank believes Visa and MasterCard could adapt, facing only minor economic impacts over the coming years.

MasterCard earnings expectations summary: JPMorgan expects revenue/EPS to be approximately 1% below consensus estimates. Q4 results may be affected by foreign exchange volatility, for which MasterCard has already adjusted expectations within the quarter.

JPMorgan's forecast for MasterCard's U.S. volume growth in Q4 is slightly below Wall Street expectations, factoring in a 240 basis point slowdown due to the partial transition of Capital One's portfolio (although underlying consumer trends are generally stable).

For fiscal 2026, JPMorgan's base case expects MasterCard to guide for low-double-digit FX-neutral/organic revenue growth (JPMorgan models 12% growth), which the bank views as sufficient for the current stock price, especially given MasterCard's attractive relative valuation.

Visa earnings expectations summary: JPMorgan's Q1 revenue/EPS expectations are largely in line with Wall Street consensus, but its fiscal 2026 revenue/EPS forecasts are about 1 percentage point higher, potentially benefiting from FX movements (the bank's models suggest an approximate 50 basis point tailwind versus prior expectations).

JPMorgan believes fundamental operational trends should remain positive in the near term, including early January volume growth indicating an acceleration and expectations for stronger growth in the second half of the year. Checks suggest tokenization service pricing appears to be at least partially supportive of this trend.

Coupled with its attractive valuation (relative to both the market and Visa's own history), JPMorgan sees a positive risk-reward profile for the quarter and the full year. The bank reaffirms Visa as its top pick for 2026.

Intra-quarter volume data: Five banks—Bank of America (BAC.US), Citigroup (C.US), JPMorgan Chase (JPM.US), U.S. Bancorp (USB.US), and Wells Fargo (WFC.US)—which collectively account for nearly half of U.S. domestic Visa/MasterCard volume, have reported their Q4 2025 payment volume metrics.

Volume growth from these five issuers slowed by 40 basis points (combined credit card volume grew 6.2% year-over-year, compared to 6.7% in Q3). This performance was notably better than JPMorgan's previous spending preview (which anticipated a nearly 2 percentage point slowdown) and also surpassed Wall Street expectations (which factored in a ~1 percentage point slowdown for V/MA volumes, including the drag on MasterCard from the Capital One transition).

JPMorgan's own credit card data shows volume growth accelerated in January (through the 13th), up 130 basis points from Q4 and 220 basis points from December.

Updated expectations: Given the positive intra-quarter data, JPMorgan has modestly raised its near-term U.S. volume growth forecasts, while also accounting for FX movements. Ultimately, the bank has slightly increased its revenue/EPS estimates for both payment companies; although, due to FX impacts, MasterCard's reported Q4 revenue is still expected to be slightly lower.