Visa Climbs on News China Will Open Up $6.8 Trillion Credit Card Transaction Processing Market
04/22/2015 5:10 pm EST
Shares of this multinational financial services corporation popped today on news that China will open up its credit card clearing market to foreign companies, so MoneyShow's Jim Jubak is raising his target price as of April 22.
Shares of Visa (V) popped today on news announced on the Web site of the government’s State Council that China will open up its credit card clearing market to foreign companies. Right now, China’s UnionPay has close to a monopoly position in the $6.84 trillion market for processing credit card transactions in China. That market grew by 33% last year. Starting June 1, foreign companies will be able to apply for a license to enter that market. Right now, Visa and MasterCard (MC) pay a fee to UnionPay to process Visa or MasterCard transactions in China.
Don’t expect Visa or MasterCard to start processing credit card transactions in China on June 2. The companies have to set up China-based units to handle the processing and the People’s Bank still needs to write up complete regulations.
But this will happen if only to resolve a festering long-term dispute between China and the United States. In 2012, the World Trade organization ruled that China’s policies on credit card processing discriminated against foreign credit card companies.
Today’s 4.2% gain in the shares took Visa to $68.09. That’s above the $67.50 target price I set when added the stock to my Jubak’s Picks portfolio on November 5, 2014. As of today, April 22, I’m raising my target price to $78 a share by September 2015.