How Stax is battling agentic AI's incursion into payment processing

• Key insight: Stax has expanded to full-fledged payment processing. 
• What's at stake: The company is competing with large payment processors and tech firms like Stripe, PayPal and Block. 
• Forward look: Stax hopes the growth of agentic AI will improve its ability to route payments. 

Stax's expansion has been just as much a declaration of independence as a series of technology upgrades. 
"We determined we wanted to control our own destiny," Paulette Rowe, CEO of Stax, told American Banker. "So we moved beyond being a software and sales and marketing to a processor." 

Stax has released Stax Processing, which expands the company from a payment provider to a payment processor, meaning it can control the entire payment process, from origination through settlement.

The move enables Stax, which focuses on small businesses, to act as an alternative to larger payment processors such as Fiserv, Adyen, FIS, Global Payments and payment-focused technology companies including Stripe, Block and PayPal. It also gives Stax more control over the data used for artificial intelligence and the growth in agentic commerce, or the use of new forms of AI that can perform tasks with little or no human supervision.

Agentic commerce, which can automatically route transactions, is threatening traditional processing models, making agentic AI a key part of new upgrades, according to payment experts. 

"'With the rise of agentic commerce, there is an increased role for the processor in supporting the various protocols, and consequently revenue opportunities," Aaron McPherson, principal at AFM Consulting, told American Banker. "This is one reason why a processor like Stax would want to handle more of the process."

Stax's path

Stax, which was founded in 2014 as Fattmerchant, has used an alternative pricing model in which it charges a monthly fee rather than a fee-per-payment. Its original role was as a payment technology and marketing firm, and it has added pieces in the years since.

"When Stax was founded it was an ISO, just like a lot of other smaller payment providers," said Rowe, who joined Stax two years ago, noting that the company has traditionally relied on larger processors, what Rowe calls "supertankers," to fill gaps in transaction processing. 

To plug those holes internally, Stax in 2023 acquired Atlantic-Pacific Processing Systems, a merchant acquiring company that allowed Stax to expand from accepting payments and digitizing the point of sale to adding more merchant services. 

"We became a PayFac, which gives you a little more freedom, but we still worked with third parties for processing," Rowe said. A PayFac, or payment facilitator, routes transactions to the best option based on cost, speed and other factors. The growth of AI is a big part of Stax's plans, including as a means to bolster its payments facilitator role. Like most payment companies, Stax is looking for ways to improve product development, internal workflows and user experience through a mix of agentic AI and generative AI. 

"If you are building AI models you want to make sure you have the right data," Rowe said. "We would have to go to other vendors to pull that data, but now it's coming from our in-house platform." 

Stax's AI agents include "Benji," a support assistant that now resolves nearly 70% of customer chat inquiries in real time and communicates in 17 languages. 

The company is also  developing and investing in agentic AI as part of a shift from large, monolithic AI models toward orchestrated, purpose-built agents that can autonomously assess, plan, and execute tasks—from customer support and onboarding to risk management and payments orchestration. 

This includes the adoption of open-source protocols like the Model Context Protocol (MCP), enabling Stax's AI agents to collaborate across systems and act in real time to improve decision-making, efficiency, and user experience, according to the company.

Why agentic AI challenges traditional PayFacs

Agentic payments, which can route payments automatically, will disintermediate PayFacs faster than AI will empower them, according to Richard Crone, a payments consultant, noting that Mastercard's Agent Pay is launching before Black Friday without a single merchant integration required, reaching Mastercard's full base of cardholders.

"Stax Processing completes the firm's vertical integration as a payment facilitator," Crone told American Banker. "Payment Facilitators and other payment service providers are racing to get ahead of payment initiation being controlled offsite by third-party intermediaries."

Payment facilitator economics are "fragile," Crone said, noting signature debit, low-reward and prepaid balance cards having "near zero" cost, while high-reward cards like Amex Platinum or Chase Sapphire Reserve carry higher processing cost. "Agentic routing changes that," Crone said. "Agents 'interrogate' all tenders in nanoseconds, steering to lower-cost rails." 

Additionally, newer payment facilitators such as the agentic AI-powered Skyfire, are using tokenized credentials and stablecoins as a base, combining zero-cost payment types with programmable routing. "That's a direct challenge to legacy PayFac models," Crone said. 

Stax, which has long relied on its unusual pricing model, says the growth of AI and its status as a full payment processor will enable more "pricing flexibility," Rowe said. 

"Pricing in payments is key. Everyone wants to shave a little bit of margin where you can," Rowe said. "If you have multiple third-party relationships you have to share that pie in many ways. What we're seeing is very large pressure putting pressure on the smaller companies."