How Mastercard plans to compete in agentic commerce

• Key insight: Mastercard discussed its agentic AI strategy during its earnings call. 
• Expert quote: "It's early days, but engagement across the globe is energizing. The rise of agentic commerce also brings about an entirely new class of payment use cases." —Mastercard CEO Michael Miebach 
• Forward look: The card network is recruiting clients to its machine-to-machine AI product. 

With agentic commerce becoming a major part of the future of financial services, Mastercard made its competitive pitch during Thursday's earnings call.   

"We expect cards will prevail in an agentic world," Mastercard CEO Miebach said, noting Mastercard's scale, access to data, range of products that support agentic commerce, and existing and future risk management capabilities. Miebach addressed agentic AI as large technology companies and banks develop products such as pay-by-bank (a credit card alternative) to support the burgeoning technology, which enables shopping and payments with little or no human supervision.

"It's early days, but engagement across the globe is energizing. The rise of agentic commerce also brings about an entirely new class of payment use cases," Miebach said. 

Mastercard's earnings

For the quarter ending June 30, Mastercard reported net revenue of $9.3 billion, up 12% from the prior year, and net income of $4.4 billion, up 19%. 

Cross-border payment volume was up 12%, gross dollar volume 8% (to $2.9 trillion), and overall payments up 9%. For value-added services, or non-payment processing functions, net revenue was up 18% on a currency neutral basis. Earnings per share were $4.97, up from $4.07. Zacks research analyst expectations were EPS of $4.77 and $9.06 billion in net revenue. Mastercard raised its outlook for the full year, projecting revenue growth in the "low teens" from "low double-digit to low-teen" range. 

Analysts from Keefe Bruyette & Woods said "all metrics are trending in the right direction" at  Mastercard. Among other large card companies, Visa and American Express also reported strong earnings in recent days, citing resilient consumer spending. 

"Mastercard delivered solid top- and bottom-line upside, with outperformance in both payment network and value added services," KeyBanc Capital Markets said in a research note. 

Rise of the machines

The card network's  embrace of "agentic commerce" includes Mastercard's Agent Pay platform, an agentic payments program; and Agentic Tokens, a security protocol that leans on Mastercard's established tokenization capabilities to secure mobile contactless payments, secure card-on-file, and programmable payments such as recurring expenses and subscriptions.

Mastercard earlier this year deployed a new AI model in partnership with Nvidia, which Miebach said can improve the ability to anticipate shifts in consumer behaviors.

Ahead of its earnings report, Mastercard released Agent Pay for Machines, which is designed to execute "machine to machine" payments, or the use of AI agents to purchase low-value digital services such as application programming interfaces. It also supports data analysis and blockchain-powered payments. 

At launch, Agent Pay for Machines had more than 30 users, including Adyen, Checkout.com, Coinbase and Cloudflare. The agentic payment services also enable traditional currency and digital assets such as stablecoins to process AI transactions.

"We believe stablecoins have great potential but to work there are a few essential principles for it to scale: Reliability, security and interoperability and that's what Mastercard delivers," Miebach said. "There's clear utility for stablecoins for example in some B2B and P2P flows."

Mastercard does not issue its own stablecoin or trade cryptocurrencies, but has pledged to support stablecoins and other digital assets such as tokenized deposits as the card issuers and merchants in its global payments network evolve their use of digital assets to facilitate the movement of funds, rather than storing digital currencies.

The card network's other moves in digital assets include its recent receipt of a BitLicense from New York's Department of Financial Services. While federal rules for digital assets are still emerging, the state license covers any entity engaging in "virtual currency business activity" involving New York or a New York resident to obtain a specific license to operate legally. Most crypto companies do business in New York, so the license covers activity in and outside of the state. 

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The New York license comes as Mastercard accelerates its stablecoin and digital-asset strategy, with notable recent moves including a $1.8 billion deal to acquire stablecoin-technology firm BVNK. The card network says the license will help expand its value-added service strategy, noting there are growing opportunities to embed stablecoins in many uses, such as settlement and cross-border transfers.

"The market continues to view stablecoins and agentic commerce as potential disintermediation risks, but recent developments suggest the card networks are becoming key beneficiaries instead," BofA Global Research said in a note.