Visa likely has multiple mitigation strategies

Based on our research since the unexpected legal ruling on July 31, which invalidates the Fed's Durbin rules, this note examines potential legal ou'es/next steps, plus possible financial implications for'panies across the payments food chain.We think Visa is discounting a little too much risk from Durbin 2.0, while Green Dot doesn't seem to be discounting any risk,China visa application center and Discover Financial Services doesn't appear to be discounting any benefit.

Visa likely has multiple mitigation strategies, but could continue to underperform MasterCard in the near term. If dual signature routing options are required as a result of Durbin 2.0, Visa would theoretically have the most to lose, given its 75% to 80% share of the U.S. signature debit market. However, we believe Visa could utilize multiple mitigation strategies, including: Fixed Acquirer Network Fee fee incentivizes merchants to route more transactions over Visa's networks; cut advertising and marketing spending related to U.S. debit;help issuers implement more aggressive prepaid and/or credit-card strategies unregulated economics;new pricing changes for merchants/acquirers.

We continue to believe that the worst-case scenario earnings-per-share impact for Visa from potential Durbin 2.0 regulations would be 5% to 10%, before mitigation. And this theoretical impact could be two to three years down the road,China tourist visa application of Houston based on approximate timelines required for a legal appeal, and'plex implementation of a dual-signature infrastructure across the U.S. payments industry. But in the near-term, Visa could underperform MasterCard, as has happened since the July 31 ruling, pending greater clarity on the legal ou'e.