The global payments industry continues to evolve, driven by the growing adoption of digital transactions, expanding cross-border spending and changing consumer payment preferences. As businesses and consumers increasingly shift toward cashless transactions, payment companies are focusing on strengthening their networks, enhancing technological capabilities and diversifying revenue streams. American Express Company (AXP Quick QuoteAXP - Free Report) and Mastercard Incorporated (MA Quick QuoteMA - Free Report) are two prominent players navigating these industry trends through distinct business models.

American Express follows an integrated payments model that combines card issuance, merchant acquiring and lending with a strong emphasis on premium customers and travel-related spending. In contrast, Mastercard operates a global payments network, generating revenues primarily from transaction processing and related services without directly assuming consumer credit risk. While both companies benefit from rising electronic payment volumes, their differing revenue structures, credit exposure and growth strategies create distinct opportunities and risks for investors.

Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.

The Case for American Express

American Express' premium-focused business model continues to benefit from resilient consumer spending and rising demand for fee-based card products. In the third quarter of 2026, its billed business increased 8% year over year to $454 billion, while U.S. consumer spending advanced 9.4%. Travel and entertainment spending rose 10%, supported by 13% growth in airline spending. Net card fees increased 16.4% year over year, reflecting the success of its refreshed Platinum Card offerings. The combination of spending growth, recurring membership fees and customer retention supports revenue visibility.

Customer acquisition and international expansion represent key growth opportunities for AXP. The company added 3.1 million new cards during the third quarter, with fee-paying products accounting for 76% of new accounts. International billed business increased 11%, marking 22 consecutive quarters of double-digit growth. Meanwhile, merchant acceptance expanded to more than 190 million locations globally from 160 million a year earlier. Greater merchant coverage, particularly outside the United States, could improve card utility and encourage additional spending among existing and prospective customers.

AXP is strengthening its membership ecosystem through travel, dining and lifestyle partnerships. Its expanded relationship with Airbnb will bring more than 1 million listings into Amex Travel, while investments in Centurion Lounges, Resy and premium hotel programs are aimed at increasing cardholder engagement. Spending at Resy restaurants grew 18% during the third quarter, while spending through Fine Hotels + Resorts and The Hotel Collection increased 50%. These initiatives could support customer retention, higher spending and continued demand for premium card products.

Commercial payments and technology investments provide American Express with additional avenues for expansion. Its Graphite Card, Corporate Cashback Card and integrated expense management capabilities are designed to strengthen its position among small and midsized businesses. The acquisition of Center supports its efforts to automate business spending and expense reporting. The company is also using artificial intelligence to personalize customer experiences, improve acquisition efficiency and develop secure agentic payment capabilities. These investments, alongside disciplined expansion of its lending portfolio, could support broader revenue growth over time. It beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 3.3%.

American Express Company Price, Consensus and EPS Surprise

American Express Company price-consensus-eps-surprise-chart | American Express Company Quote

As of Sept. 30, 2026, the company had $43.2 billion in cash and cash equivalents against just $1.4 billion in short-term borrowings. AXP returned $2.2 billion to its shareholders in the third quarter of 2026 through dividends and buybacks. Its dividend yield of 1.2% is higher than MA’s 0.6%.

However, AXP faces headwinds from intensifying competition in the premium credit card market, rising customer acquisition costs and elevated spending on rewards and cardholder benefits. Its exposure to discretionary travel and entertainment spending makes it vulnerable to economic uncertainty and changes in consumer behavior. Meanwhile, commercial spending growth remains relatively subdued, while increased regulatory scrutiny and compliance-related expenses could pressure profitability.

The Case for Mastercard

Mastercard's growth prospects are supported by rising digital payment adoption, cross-border spending and continued expansion of its global payment network. In the third quarter of 2026, gross dollar volume increased 7% year over year on a local-currency basis, while cross-border volume advanced 11% and switched transactions grew 9%. Contactless payments accounted for 81% of in-person switched purchase transactions. The network also reached 3.8 billion Mastercard and Maestro-branded cards, expanding its transaction base.

MA's growing value-added services business offers another avenue for revenue diversification. Revenues from these services increased 19% year over year in the third quarter, supported by demand for cybersecurity, fraud prevention, data analytics and customer engagement solutions, and pricing. Approximately 60% of its services business is linked to the payment network, creating opportunities to generate additional revenues from existing transaction flows. The integration of Recorded Future and RiskRecon capabilities further strengthens its cybersecurity portfolio, allowing Mastercard to expand its presence beyond conventional payment processing. It beat earnings estimates in each of the past four quarters, with an average surprise of 6.3%.

Mastercard Incorporated Price, Consensus and EPS Surprise

Mastercard Incorporated price-consensus-eps-surprise-chart | Mastercard Incorporated Quote

Strategic partnerships and commercial payment solutions are widening the company's addressable market. Its agreement with HDFC Bank is expected to bring approximately 3 million small-business cards onto the network, while the migration of Pinnacle Financial Partners' issuing portfolio beginning in 2027 offers additional transaction opportunities. MA is also integrating virtual cards into corporate payment workflows through partnerships with Tungsten Automation and Coupa. Growing adoption of automated supplier payments could support incremental transaction volumes and strengthen its position in business-to-business payments.

Mastercard is investing in emerging payment technologies to diversify its longer-term growth opportunities. Its Agent Pay and Agent Connect solutions aim to facilitate secure AI-powered transactions, supported by partnerships with Shopify and OpenAI. The acquisition of BVNK has strengthened its stablecoin infrastructure capabilities, enabling the launch of the Mastercard Global Money Platform. The platform’s integration with Mastercard Move's 17 billion endpoints could create additional opportunities in cross-border transfers, digital assets and enterprise money movement.

MA balances investments in innovation with shareholder returns through dividends and buybacks, supporting sustainable long-term growth despite regulatory and competitive pressures. In third-quarter 2026, it repurchased $3 billion of stock and bought an additional $0.6 billion through Oct. 26, 2026, while paying $763 million in dividends for the quarter. The company maintains a solid capital position with $10.1 billion in cash and cash equivalents, while short-term debt amounted to $1.7 billion as of Sept. 30, 2026. Its return on capital of 61.3% is significantly higher than AXP’s 12.4% and the industry’s 28.8%.

How Do the Estimates Compare for AXP & MA?

The Zacks Consensus Estimate favors MA at this stage. The consensus estimate for MA’s 2026 earnings indicates a 17.1% increase from a year ago. Meanwhile, the consensus estimate for revenues suggests 13.6% growth. On the other hand, the consensus estimate for AXP’s 2026 earnings indicates 16% growth from a year ago, while the same for revenues suggests a 10% rise.

Price Performance Comparison

Over the past six months, AXP’s shares have gained 1.2%, underperforming MA’s 28.3% growth. Meanwhile, the S&P 500 has increased 5.3% during this time.

Price Performance – AXP, MA & S&P 500

Image Source: Zacks Investment Research

Valuation: AXP vs. MA

Valuation-wise, Mastercard trades at a premium forward price-to-earnings multiple relative to AXP, reflecting its capital-light structure and lower risk profile. MA currently trades at a forward P/E of 28.34X, higher than AXP’s 16.37X. The valuation gap reflects the market’s preference for Mastercard’s stability and diversified growth prospects.

Image Source: Zacks Investment Research

Conclusion

Both American Express and Mastercard are well-positioned to benefit from the ongoing shift toward digital payments. AXP’s premium-focused business model, growing membership base and attractive valuation support its long-term prospects. However, its exposure to consumer credit risk, rising rewards costs and discretionary spending creates potential headwinds.

MA appears to be the better investment choice at present. Its capital-light business model, stronger earnings and revenue growth expectations, expanding value-added services portfolio and growing presence in commercial and emerging payment technologies provide a competitive edge. Although MA trades at a premium valuation, its diversified growth drivers, strong profitability and lower direct credit exposure make it a more compelling bet for investors seeking long-term growth.

MA currently carries a Zacks Rank #2 (Buy), while AXP has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.