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Analysts upbeat on Visa, MasterCard after new card fee

(Reuters) - The revised Federal Reserve rules governing how much banks charge retailers to process debit card purchases was given a big thumbs-up by analysts, who see the rules being a huge boost to card networks Visa and MasterCard .

"We believe the most significant threat to Visa and MasterCard profitability has been dramatically reduced," Chris Brendler of Stifel Nicolaus said.

Banks pay card networks like Visa and MasterCard for processing debit transactions, and the softened rule is a victory for big banks like Bank of America and JPMorgan Chase , and card networks like Visa and MasterCard.

Under the new rule, banks would be allowed to charge as much as 22 cents per debit card transaction, which includes a one-cent allowance for meeting certain fraud prevention standards.

The market capitalization of four largest U.S. card networks -- Visa , MasterCard , American Express and Discover -- gained roughly $14 billion on Wednesday after the Fed's vote.

"The final rules are a clear positive as a higher interchange cap could lessen pricing pressure from large bank issuers," Robert W. Baird analyst David Koning said.

"We believe Visa and MasterCard become more investable again, as the regulatory cloud lifts.

(Reporting by Brenton Cordeiro in Bangalore; Editing by Gopakumar Warrier)

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