Visa, MasterCard reducing credit interchange rates removes overhang, says Baird

Baird tells investors in a research note that Visa (V) and MasterCard (MA) have agreed to a settlement with U.S. merchants to lower credit interchange rates and capping rates through 2030, which removes the overhang of uncertainty around the 20+ year litigation. Lower credit interchange rates likely means merchants are less likely to push for other payment options, which helps Visa and MasterCard maintain and improve share over time, Baird says, though lower interchange could mean banks earn less and could attempt to pay Visa and MasterCard less. The firm, which made no change to its Outperform ratings on Visa and MasterCard, also views the announcement as “generally good” for Block (SQ), Global Payments (GPN), and Toast (TOST).