Finance Jack
Equity Research
New payment technologies such as stablecoins and agentic payments are being built on top of Mastercard and Visa rather than disrupting them. Building an entirely new system makes no sense when large, secure and widely accepted networks already exist. Incentives now align with Mastercard and Visa more than ever, making these innovations a tailwind. x.comÂ
Visa and Mastercard are harder to disrupt than ever because their four-party model gives consumers and banks strong reasons to stay, and new rails get absorbed as features, not replacements. Consumers get fraud protection, acceptance and rewards funded by interchange, so merchants must accept cards; stablecoins and account-to-account payments mostly help merchants alone. Mastercard agreed to buy stablecoin firm BVNK, and Visa adds A2A Protect fraud detection to bank transfers. x.com x.comÂ
Growing stablecoin payments and business adoption position Visa, Mastercard, Coinbase, Circle and PayPal for a massive shift in global payments. Stablecoins are moving from crypto speculation into real-world financial infrastructure; payments reached $482B year to date, up 45%. Autonomous AI-agent transactions may be the next frontier. x.comÂ
Visa and Mastercard win agentic payments whichever AI wins agentic commerce, because the five competing agent payment protocols from Visa, Mastercard, Google, Stripe and Coinbase all settle on the same rails. OpenAI and Visa have just let AI agents check out with users' cards and permission. The open question is how agents will compare goods, since they skip banners, sponsored listings and checkout displays, which raises questions for AppLovin and The Trade Desk. x.comÂ
Card networks like Visa and Mastercard and percentage-fee processors like PayPal face long-term disruption markets aren't pricing in, as AI agent payments settle in stablecoins. Per Circle's global markets head, AI agents completed 140 million payments worth $43 million in nine months, 98.6% settled in USDC, averaging $0.31. Visa and Mastercard won't disappear, but fee-free rails and USDC may cannibalize most of their future growth, while the market assumes Visa compounds forever. x.com x.comÂ
Mastercard may be the only scaled, capital-light network benefiting from AI, with bloated technical debt uniquely addressable by coding tools. Nominal inflation-linked recurring revenues and hardware attach add to the case at low-teens free-cash-flow yields. While payments getting bid in a red market probably signals the rally is over, these traits could mean it is not. x.comÂ
Visa and Mastercard stand to benefit as AI agents begin searching and buying on users' behalf through their payment networks. Per @EhrmantrautCap_, Qualcomm is teaming with Google and Mastercard to build agentic AI from search to payment. That points to armies of agents searching thousands of websites and markets with autonomy to transact over Mastercard, and Visa will likely sign similar collaborations. Their joining agentic commerce is giga bullish for the duopoly. x.com x.comÂ
Visa's pricing power and duopoly are in trouble as merchants resist 3%+ interchange fees and new ways to shop emerge. If Visa loses the CCCA fight, its entire moat is at stake: opening rails to another network would be a big push toward stablecoins, with agent commerce an even greater push. Australia's fee cut adds global pressure. China's opening is positive but incremental and years away if China follows through, amid domestic competition. x.comÂ
Visa is no longer just a bet on card payments growing with GDP, because it is building the data, risk and settlement infrastructure that makes new payment rails usable at scale. It has 160+ live stablecoin-linked card programs, and stablecoin settlement recently passed a $20B annualized run rate, up more than 15x a year. It is also linking VisaNet settlement data with onchain lending and building AI fraud tools for account-to-account payments. Its moat is trust at global scale. x.comÂ
Mastercard benefits as cash payments keep moving to cards worldwide, making it a five-year buy at today's valuation. It keeps about 60 cents of each revenue dollar as operating profit; revenue grew 14% and EPS 21% last quarter. Stablecoins and bank-to-bank apps could bypass the network, but stablecoins might instead drive growth. x.comÂ
Visa's roughly 30x earnings multiple and $750 billion valuation leave less upside than other opportunities, even if it keeps executing; the best case may be another doubling over a few years. Its once-impenetrable moat may look different in five years, while its reputation as a safe compounder is already priced in. This is a relative judgment, not a prediction that Visa cannot keep rising. x.com x.com x.com x.com x.comÂ
Visa and Mastercard run the most powerful business model ever built: operational efficiency wins market share, share lifts profitability, profits are reinvested at high returns, and that deepens efficiency, repeating forever. As a duopoly, they crush the weakest rivals rather than competing with the best, and the market is split only two ways. x.comÂ
