美联储两年一度研究中的借记卡市场洞察

The Fed recently released its biennial US debit market study. Key learnings: 1)while network fees have increased over the long-term, net yields continue todrift lower due to higher incentives on the merchant side of the network, 2) post Reg II clarification, likely due to V/MA paying out higher incentives tomerchants/acquirers. 15+ summary exhibits below. Dual-message (i.e. signature debit) continues to take share from single-message (i.e. PIN), 2023 vs. 45% in 2021. PIN debit networks saw no material share gains from the Reg II clarification that went into effect July '23.The clarification mandated issuers enable two unaffiliated debit networks for card-not-present transactions; prior to the clarification, issuers representing >50% of debitvolume from covered issuers only processed online transactions over one network. The Fed's data shows market share of card-not-present volume for single-message networks (i.e. PIN networks including STAR - Fiserv, PULSE - Discover, NYCE/Accel - FIS) only increased to 5% in2023 vs. 4.5% prior to the clarification. While the data in the Fed's study is only for 2023 (wouldonly capture half of the change post-clarification) it's our view that the market share figuresfor 2024/2025 would look similar--we believe V/MA have effectively used increased incentivesto merchants/acquirers (V & MA both saw a significant Y/Y jump in incentives in FY23) as atool to maintain volume share. ~55% in 2011. Increased network fees have been more than offset on a net basis by higher incentives.Incentives increased to 12bps of volume in '23 from 10bps in '21 (and up from 7bps in 2011). Authorization/clearing/settlement costs ~unchanged since '21--relevant for where debitinterchange rates ultimately end up.Debit interchange rates (set by the Fed) are supposed tobe proportional to ACS costs, which are now ~50% lower than they were when the current $0.21+ 5bps interchange caps were set in 2011. As a reminder, the current Corner Post case (wediscussed: here) challenges the Fed's basis for using the absolute level of ACS costs instead of Trevor Williams * | Equity Analyst Alexander Glockner * | Equity Associate incremental ACS costs (incremental costs are near-zero). If forced to consider just incrementalcosts, regulated debit interchange could eventually fall to $0.01-0.02 per transaction. US Debit Volume Mix: Card Present vs. Card Not Present, Single Debit purchase volume mix: In 2023, card-not-present was ~48% of debit volume (vs. 45% in 2021) Minimal Impact From Reg II Clarification in 2023 Card not present (CNP) debit volume on single-message (PIN) vs. dual-message (signature) networks:despite the July 2023 clarification to Reg II (clarified that issuers enable 2+ networks for CNP transactions),PIN networks only saw slight uptick in share Net Yields Net yields (network fees less incentives as % of debit volume): have drifted lower since 2017, driven byhigher incentives on the merchant side of the network Network Fees Debit Network Fees as % of Volume: Network fees as a % of debit volume increased ~1bp from 2021 to2023; have expanded ~3bps since 2011 driven by acquirer side fees Network Incentives Network Debit Incentives as a % of Purchase Volume: Incentives rose to 12bps of debit purchase volume in2023, 2bps higher than 2021 driven by acquirer side incentives Authorization, Clearing, and Settlement (ACS) Costs Authorization, clearing, and settlement costs (excl. fraud losses) per txn increased 2c from 2021 to 2023,but have declined since 2011 In 2023, the base I/C fee cap (excl. fraud adjustment) exceeded the average per-transaction ACS costs(excl. fraud losses) for ~80% of covered issuers and ~99% of covered transactions Fraud Losses Fraud losses as a % of debit purchase volume were ~steady in 2023 vs. 2021; have increased meaningfullysince 2011 as mix of eComm has risen Company Valuation/Risks Fidelity National Information Services, Inc.Our $65 price target is based on a ~10.5x P/E multiple on our pro-forma FY26 EPS estimate. Risks include macro, regulatory, competition, andconsolidation Our $60 price target is based on a ~6.5x P/E multiple on our FY27 EPS estimate. Risks include macro, regulatory, competition, and consolidation. Mastercard, Inc.Our $675 price target is based on ~30x our CY27E EPS estimate. Risks include macro, consumer spending, regulation, and competition. Our $410 price target is based on ~28.5x our FY27E EPS estimate. Risks: macro, consumer spending, regulation, and competition. Analyst Certification: I, Trevor Williams, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressedin this research report. I, Alexander Glockner, certify that all of the views expressed in this research report a