Visa and Mastercard Suspend Russian Operations

Visa and Mastercard announced that they have suspended operations in Russia. As a result, cards issued by Russian banks will no longer work outside Russia, and cards issued outside Russia will not work within Russia. For both networks, transactions related to Russia accounted for 4% of net revenue, so this decision will represent a modest headwind this year. However, we believe both networks were positioned for outsize growth in 2022, as a rebound in travel and cross-border volume should positively affect revenue, and interim results announced by Visa suggest cross-border volume is picking up as the omicron variant has faded. Taking these factors in balance, we believe both networks will still enjoy solid growth this year. After reviewing our projections, we will maintain our fair value estimates of $221 for Visa and $369 for Mastercard, as well as our wide moat ratings for both.