Mastercard Inc (MA), Visa Inc (V), American Express Company (AXP): A Priceless Investment Opportunity

Companies in this business benefit from the network effect: Merchants need to accept cards that bring in customers, and customers prefer to use cards that are widely accepted among merchants. The service becomes more valuable as it gains more users, and more users increase the value of the service, creating a self-sustaining cycle of growth and increased competitive strength that can be a powerful growth driver over the long term.

Brand recognition is a key asset in the payments industry, in which trust and reliability are very important attributes. The MasterCard brand is globally acknowledged thanks to marketing initiatives like the memorable “Priceless” campaign, so consumers around the world know they can purchase almost anything, anywhere, with a MasterCard card.

MasterCard is building an enormously valuable network with strong brand recognition in emerging countries, and that means the company is exceptionally well positioned for growth over the coming years.

Bottom line

Cash still accounts for a huge proportion of retail transactions around the world, especially in emerging markets. Economic growth and access to all kinds of financial services will inexorably expand the plastic revolution to those countries over time, and MasterCard is in a rock-solid position to benefit from that opportunity.

The article A Priceless Investment Opportunity originally appeared on Fool.com and is written by Andrés Cardenal.

Andrés Cardenal owns shares of MasterCard. The Motley Fool recommends American Express, MasterCard, and Visa. The Motley Fool owns shares of MasterCard and Visa.

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