Payment Apocalypse: Will AI Agents End Credit Cards?

Investing.com - Visa (NYSE:V) and MasterCard (NYSE:MA) have spent decades building a fortress around our spending habits. They attract us with sleek metal cards, airport lounge access, and enticing 2% cash back. But a recent report from Bernstein raises an unsettling question: what happens when humans no longer make purchasing decisions? If autonomous AI agents take over buying, this “plastic” empire could face serious trouble.

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The core issue is that AI is highly rational. AI agents don’t care about “wallet preferences” or earning travel points for a vacation they’ll never take. They only care about efficiency and cost.

Bernstein warns that these digital assistants are likely to bypass expensive card networks entirely, opting instead for “bank payments” or account-to-account (A2A) transfers. When AI can transfer for a few cents, why pay a 3% interchange fee?

Erosion of the “value-based” moat

For years, the “big two” have relied on earning a percentage of every dollar spent. This “value-based” model is a gold mine, but it depends on consumer loyalty to physical cards.

AI agents could trigger a “payment apocalypse,” shifting many transactions to low-cost channels. If humans integrate AI agents into daily life, the high-margin revenue supporting these networks’ massive valuations could evaporate entirely.

But for payment giants, it’s not all bad news. Bernstein notes that about one-third of their revenue is related to transaction volume, not transaction value. This provides a decent safety net. Moreover, even AI needs to know that transactions are secure. Visa and MasterCard are already shifting toward “value-added services” (VAS), betting they can become an important security and identity layer for AI-to-AI commerce.

A bigger slice or a smaller share?

From a macro perspective, there is still hope. If AI truly delivers on promises of massive increases in global productivity, total transaction volume could surge. These networks might end up with a smaller slice of a much larger pie, which could grow tenfold.

So, will AI destroy these networks? It’s too early to tell. But the “moats” that have protected Visa and MasterCard for forty years are definitely being breached. These networks are no longer just competing with each other; they are fighting against algorithms that don’t care about brands. To survive in this shift toward autonomous commerce, they must prove they are more than just a “rail.”

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