⚠ The Rails Governments Are BuildingHigh threat
Visa (V) — threat to the moat
A merchant with a genuinely free alternative acquires the one thing forty years of litigation failed to manufacture — leverage.
The commercial case against Visa has never worked. The political one keeps working, and it is now working in more places at once than at any time in the company's history.
Brazil's Pix went from launch to a majority of the country's transactions within a few years1 because the central bank required the banks to offer it and set the consumer price at nothing. India's UPI did the same at a larger scale. Neither had to persuade merchants and cardholders simultaneously — the deadlock that has defeated every private entrant for fifty years — because a regulator can simply dissolve it.
Against a zero-cost rail, Visa's defence cannot be price. Twenty-nine basis points2 is already close enough to nothing that undercutting it commercially is pointless, and a state rail is closer still. The defence has to be everything account-to-account transfer does not provide: revolving credit, chargeback rights, fraud liability sitting with somebody other than the merchant, rewards funded by the issuer, and acceptance in the other two hundred countries. Those are real, and they explain the observed pattern — Pix took the low-value everyday payment in Brazil and did not take the aspirational one or the cross-border one.
But the direction is one-way and the list is lengthening. FedNow exists in the United States. The European Central Bank is building a digital euro. Essentially every large emerging market now has a domestic scheme or a stated plan for one. Each takes the cheapest, highest-frequency transactions first — which are exactly the ones that make a fixed-cost network's economics work, because the marginal transaction is free and the marginal margin is therefore total.
There is a second-order effect that gets less attention. A merchant with a genuinely free alternative at the point of sale acquires something it has never had: a reason to steer, and a credible threat in any negotiation about rules. Forty years of merchant litigation has been an attempt to manufacture that leverage. A state rail hands it over.
Watch Visa's payments volume growth in the markets that have launched a state rail against those that have not. If the gap widens beyond what local economic conditions explain, this stops being a structural argument and becomes a line in the accounts.
The measurable footprint of rules that require an alternative to be present. American debit routing produced this one; every state rail launched elsewhere works the same way. If the ratio keeps falling, the threat is arriving.
Source: Visa Form 10-K, fiscal year ended September 30, 2025 ↗- ReportedBrazil's Pix went from launch to a majority of the country's transactions within a few yearsStoneCo Ltd. Form 20-F for FY2025 (CIK 1745431) — active payment clients of 4,803.5 thousand at 31 December 2025, against 4,172.7 thousand in 2024 and 3,522.1 thousand in 2023; TPV of R$560.9 billion, against R$516.2 billion and R$438.3 billion; revenue of R$14,153.8 million and adjusted net income from continuing operations of R$2,477.2 million; more than 3.6 million banking active clients, the majority of whom are also payment clients; retail deposits of R$11,091.0 million against R$8,704.8 million and R$6,119.5 million; a credit portfolio of R$2,836 million with expected credit losses of R$389.7 million, against R$1,207.6 million and R$144.5 million a year earlier; clients divided into MSMBs (micro-merchants and SMBs) and Key Accounts, 'comprised of platform services and sub-acquirers'; StoneCo became in 2017 the first non-banking entity authorised by the Central Bank to operate as an Acquirer through a payments-institution licence, and is among the six largest players by total card volume per ABECS; distribution through proprietary and franchised hubs sold on 'service differentiation as the main driver', digital channels, and more than 500 Strategic Partners at December 2025; per the Central Bank, Pix's share of the total number of transactions rose from 1% in Q4 2020 to 52% in H1 2025 and its share of monetary volume from 1% to more than 26%; the filing warns that 'the concentration of our clients by geography and economic sector may increase our risk' and that the company experiences churn from business closures and account transfers; interest rates directly affect both revenue generation and cost of funds, most third-party funding being linked to the Brazilian interbank rate; StoneCo's own analysis notes that US MSMB take rates have been stable over five years despite penetration around 120% of consumption, and finds no indication of saturation-driven price reductions in Brazilian cities with low cash usage — FY2025 · publ. 2026 · source ↗
- ReportedTwenty-nine basis pointsVisa Inc. Form 10-K for FY2025, Item 7 Management's Discussion and Analysis — net revenue of $40,000 million, up 11%, comprising service revenue $17,539 million (+9%), data processing revenue $19,993 million (+13%), international transaction revenue $14,166 million (+12%) and other revenue $4,053 million (+27%), less client incentives of $15,751 million (+14%); operating expenses of $16,006 million (+30%) and operating income of $23,994 million; nominal payments volume of $13,894 billion and total nominal volume including cash of $16,383 billion for the twelve months ended 30 June 2025; 257,545 million processed transactions, up 10%; payments volume growth of 7% and cash volume growth of (1)%; cross-border volume growth of 13%; diluted earnings per share of $10.20 — FY2025 · publ. 6 November 2025 · source ↗