Synchrony ($SYF) podcast mentions
Well, first off, I like that you're looking at quality companies, quality businesses, but there are risks here. And there's a big difference between a Visa and a MasterCard and an American Express. What you have to understand is that MasterCard and Visa, those are not credit card companies. Those are credit card processing companies. Very, very different. They make money on swipe fees, on debit fees. That's how they make money. Now, American Express also makes money on that, but as you said, they lend money. Mastercard and Visa do not take credit risk. They do not lend to customers. Banks lend to customers. Synchrony lend to customers. SoFi Bank lends to customers. Those are credit card companies that actually take credit risks. So very different businesses. American Express historically has a pretty nice business of doing a little bit of both, getting the swipe fees as well as charging interest on their credit cards. They didn't have a higher quality of customers. So in rougher times, they have less defaults. They don't tend to lend to low credit customers. So somewhat different. Now, when you're stepping back and you're looking at all three and the swipe fees, what I worry, and I think you're seeing this in the chart, is that will the shifts in crypto and stablecoins cause more and more people to move away from those transaction Rails? Will AI start to utilize— and that's the kind of the current consensus, it could change obviously— is that AI will start to transact on with stablecoins and, and on crypto networks versus Visa or Mastercard or American Express. And I think that's being priced in the markets. Now, that's a big question you have to answer yourself. If you think that their triopoly, as you said, it will maintain, then you want to invest It's fine to invest in these. You want to be fading this decline in these names. I would pick American Express because of that higher profitability, that diversity in their business of the three. But frankly, I wouldn't buy any of them because I do think over time their premiums that, that the market is pricing on these names is too high. And it's going to come down, have to come down a lot for me to take on the risk of their payment networks being disintermediated over time.
Justin Klein · InvestTalk · Best of Caller Questions · 2026-09-10