In the face of rising recessionary concerns and shifting global travel patterns, Visa and Mastercard continue to show resilience. According to UBS Equity Research analyst Tim Chiodo, both payment giants are well-positioned to weather a potential economic slowdown, even with their heavy exposure to discretionary cross-border spending.

Chiodo notes that cross-border transactions—largely tied to international travel and commerce—make up about 40-45% of the companies’ net revenue. While this part of the business is more vulnerable to economic softening, he believes the impact of a mild recession would be relatively limited, estimating only a 4-5% downside to earnings per share (EPS) over the next 12 months.

One recent investor concern has centered on inbound U.S. travel, which plays a key role in cross-border performance. But even if this segment sees pressure, Chiodo outlines several factors that could help offset the impact in fiscal year 2025.

Here’s what could help support earnings despite headwinds:

• A Weaker U.S. Dollar: Recent FX movements may boost reported results.
• Higher Currency Volatility (CVIX): Increased volatility can actually support nominal revenue growth in cross-border transactions.
• Pricing Power: Both companies have room to implement pricing adjustments.
• Cost Discipline: Potential reductions in discretionary marketing and investment spending could shore up profits.

Chiodo also acknowledges the rapidly shifting macro backdrop, including recent tariff developments (such as the 90-day pause for certain countries). However, he sees the insights in his report as relevant regardless of short-term fluctuations, emphasizing the long-term strength and adaptability of both companies.

Visa and Mastercard aren’t just surviving—they’re navigating uncertainty with strategic levers in place. For investors watching how top financial names handle economic turbulence, this is a story worth tracking.