ZACKS·2025-12-23 19:11Core Insights - The global payments landscape is evolving with digital payments becoming mainstream, regulatory scrutiny increasing, and competition intensifying among platforms like Visa and PayPal [1] Group 1: Visa Inc. (V) - Visa operates a global payment network with a market cap of $640.8 billion, focusing on transaction volumes, cross-border transactions, and value-added services [3] - In the fiscal fourth quarter, Visa's payment volume increased by 9% year over year, with processed transactions reaching 67.7 billion, up 10% from the previous year [4] - Visa is expanding its infrastructure through real-time payments, tokenization, AI-enabled commerce, and fraud prevention, enhancing its position in digital commerce [5] - The company is making strides in blockchain and stablecoin settlements, partnering with fintechs to enable stablecoin-linked services [6] - Operating expenses rose by 40% year over year in the fourth quarter of fiscal 2025, which may impact growth potential [7] - Visa has a strong cash position of $17.2 billion, allowing for share buybacks and dividends, with $6.1 billion returned to shareholders in the fiscal fourth quarter [8] Group 2: PayPal Holdings, Inc. (PYPL) - PayPal has a market cap of $56 billion and focuses on consumer and merchant-facing payment solutions, with active accounts rising to 438 million [11] - In the third quarter, PayPal's revenues increased by 7% year over year to $8.4 billion, with total payment volume up by 8% [12] - PayPal is investing in AI-driven e-commerce through "agentic commerce" and operates its own stablecoin, PYUSD, to facilitate faster payments [14] - The company returned $1.5 billion to shareholders by repurchasing approximately 21 million shares in the third quarter of 2025 [15] - The Zacks Consensus Estimate indicates a 14.8% year-over-year growth for PYPL's EPS in 2025, with 12 upward revisions in earnings estimates [17] Group 3: Comparative Analysis - Visa's forward P/E ratio is 26.67X, while PayPal's is 10.24X, indicating a more favorable valuation for PayPal [21] - Both companies are trading below their average analyst price targets, with Visa implying a 15.6% upside and PayPal a 28.3% upside from current levels [22] - PayPal's platform-driven approach and anticipated faster EPS growth position it well for reaccelerated earnings, while Visa's strengths are reflected in its higher valuation [23][24]