Mastercard embraces agentic AI; ups cross-border investment

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Ahead of its quarterly earnings release on Thursday, Mastercard made two major moves this week, including a new artificial intelligence-powered payment feature and an investment aimed at streamlining global B2B transactions. 

The card network released Mastercard Agent Pay, a program that generates personalized payment experiences to consumers, merchants and issuers. The platform expands Mastercard's existing generative AI technology, which enhances customer service, security and onboarding, generating automated responses to customers. Agent Pay digs deeper into the card network's data and AI tools to help shoppers curate a mix of purchases for an event, aid merchants on supply chain management or help a retailer build a marketing or sales program.

The card network is partnering with Microsoft to scale the platform, with other partners including IBM, which is contributing B2B technology, and payment firms like PayPal's Braintree and Checkout.com for security. Security and authentication use tokenization, a process that replaces existing account numbers with one-off numbers that make the card useless if stolen. Mastercard is also using Databricks software to train the card network's gen AI engine to produce responses to users with less human interaction. 

Banks and other large organizations are pursuing similar forms of AI that are considered to be a new generation of digital assistants. Often referred to as "agentic AI," these programs respond to instructions or prompts to produce an original or suggested solution. In its early stages, banks are using the technology to improve customer service, risk assessments, onboarding and fraud protection. In another move, Mastercard has expanded an existing partnership with payment firm Corpay, including a 3% stake for Mastercard. 

Corpay will be a preferred provider of currency risk management and integrated payment technology for Mastercard's financial institution clients. Mastercard and Corpay will also extend an existing collaboration on virtual cards. And Mastercard's Move disbursement service will be available to Corpay's customers, including small to medium-size businesses. —John Adams

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UK advances crypto regulations

U.K. financial regulators have released a consultation paper for rules that will govern cryptocurrency exchanges and stablecoin issuance. The rules will establish security standards, disclosures and ways to mitigate market abuse. It will expand the Financial Services and Market Act, a 2023 law that empowers the Treasury to establish cryptocurrency rules.

The U.K. could add to the Markets in Crypto Assets legislation in the European Union, which went into effect in 2024. MiCA requires that stablecoin issuers hold at least 60% of their reserve assets in European banks to protect against cryptocurrency volatility. The U.S. is also developing stablecoin and broader cryptocurrency regulations. Stablecoin issuers such as Circle have pushed the U.S. to implement regulations similar to MiCA, believing it's the best option to support a global payments market for stablecoins. —John Adams  

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European card alternative automates, recruits new members

The European Payments Initiative plans to expand into e-commerce payments. It is also putting out a call for other local payment schemes to join forces. EPI, which includes about a dozen large European banks such as Rabobank, ABN Amro, ING and others, will launch e-commerce payments in the summer of 2025, starting in Belgium, Germany and France, with other countries to follow. EPI plans to support e-commerce and in-store payments including NFC and QR codes.

EPI has positioned itself as an alternative to Visa and Mastercard, which control more than 80% of the European payments market. While EPI has not become mainstream, partly due to a fragmented European payment market, the coalition is making its latest moves amid Trump's trade war, which has created concerns about an economic downturn and a de-emphasis of U.S. payment systems.

"Europe must find its way to sovereignty and independence in payments. It is no longer a project for the future but a necessity all countries across Europe are facing," EPI said in a release. —John Adams

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Payment firms ally to expand corporate BNPL in the Nordics

European B2B payments firm Two and Nordic fintech Qliro have developed a buy now/pay later feature for small businesses in the region, hoping to take advantage of a trend toward extending installment payments beyond consumers.

The loans will be integrated into Qliro's existing checkout and will have terms such as 30, 60 or 90 days. Two and Qliro are trying to tap a growing local market. The B2B installment market is projected to reach $670 billion by 2029, a 27.4% yearly growth rate, according to Allianz.

BNPL is more widely known as a consumer product, but it has grown among businesses in recent years, particularly during the inflation wave in 2022 and 2024. The market is attracting BNPL lenders such as PayPal and Affirm. —John Adams  

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Checkout.com adds AI-powered selfie identity

International payment firm Checkout.com has added an artificial intelligence extension to its identity verification system. 

The addition enables businesses to verify and authenticate users using video and facial matching, combined with AI technology that detects spoofing attempts, deepfakes and other workarounds. IDV does not require passwords, codes or manual review. Clients at launch include DocuSign, Uber Eats and European fintech Swan. Payment companies have added facial recognition and similar biometrics as an authentication tool that is commonly deployed as an alternative to other security methods.  

Checkout.com enables merchants to offer payments via their own site or through links to mobile wallets. The firm has entered into a series of partnerships to fuel an international expansion, including Xiaomi, a mobile technology company based in China, to cover the full payment processing path for merchants in Hong Kong and Macau. Checkout.com's other recent partner announcements include Splitit and Alipay to gain access to merchants and consumers in Western and Asian markets. —John Adams  

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Commerzbank uses gen AI and an avatar to create an 'agent'

Frankfurt-based Commerzbank has added a feature to its app that uses advanced artificial intelligence to support a virtual assistant.

Called Ava, the assistant uses generative AI and digitalization technology from Microsoft Azure to create Ava, a "human" avatar that is "modeled after the likeness of an actress," according to a release. The assistant can be accessed anytime and can provide support "instantly," the bank said. Ava can answer questions about the bank's products and general questions about balance, credit card limits and comparisons of different products. 

"Our goal is to provide our customers with suitable solutions that make their everyday banking transactions as quick, easy, and convenient as possible," said Thomas Schaufler, board member for private and small-business customers at Commerzbank, in a release. —John Adams

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Flywire expands education payments in India

Boston-based payment firm Flywire is collaborating with Avanse Financial Services, an India-based education-focused financial institution. The collaboration will support education loan payments for Indian students pursuing education in other countries. Avanse disburses funds in Indian pupees, or INR, and will use Flywire's existing bank integrations in India to process payment. 

India is the largest country of origin for foreign-born U.S. students, with more than 330,000 currently enrolled, according to Statista. China is second with about 278,000. Flywire also processes payments in health care and other industries, though cross-border tuition payments account for about 65% of the company's payment volume. —John Adams 

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IndusInd Bank CEO resigns over $230 million derivatives hole

IndusInd Bank's Chief Executive Officer Sumant Kathpalia resigned with immediate effect over a 19.6 billion-rupee ($230 million) accounting discrepancy in the bank's derivatives book, according to an exchange filing.

Kathpalia said in his resignation letter that he took "moral responsibility, given the various acts of commission/omission that have been brought to my notice." He has been with the bank for 17 years and was made managing director and CEO in March 2020.

The Mumbai-based bank's board has sought the Reserve Bank of India's approval to create a "committee of executives" to take on the role of the chief executive for an interim period until a permanent CEO is appointed, according to the Tuesday filing.

Kathpalia's resignation follows the departure of the bank's deputy CEO Arun Khurana Monday over the derivatives issue.

An independent professional firm appointed to conduct an investigation concluded that the accounting issue would cause 19.6 billion rupees impact to its finances, the bank said in an exchange filing on Sunday. —Advait Palepu, Bloomberg News