Mastercard touts the importance of agentic tokens

• Key insights: Masercard CEO Michael Miebach said during the company’s third-quarter earnings call that one-time virtual cards as a go-between between agents and merchants were not a long-term solution to facilitate agentic payments.
• What’s at stake: Visa, Mastercard and American Express have taken the position that tokenization is the best technology to capture consumer intent and maintain trust within agentic commerce transactions. 

Mastercard isn’t too keen on using one-time virtual cards to facilitate agentic transactions — at least in the long term. 

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CEO Michael Miebach stressed Mastercard’s position that tokenization was the best technology to make widespread agentic commerce possible during the company’s third-quarter earnings call on Thursday. 

An agentic token is similar to other payment tokens used in e-commerce and near-field communication. It substitutes payment credentials for a randomly generated number to authorize a transaction, but it also carries information about what the agent is allowed to do based on predefined rules or permissions, according to VGS, a data security and compliance fintech. 

“It is in everybody’s best interest to use Agent Pay and equivalents,” Miebach said. Agent Pay is Mastercard’s agentic commerce infrastructure that uses tokens to verify intent and other transactions specifications. Visa and American Express also have frameworks — called Visa Intelligent Commerce and Intent Intelligence, respectively — that use tokens to send information between the issuer, merchant and the consumer’s AI agent. 

“We are not supporting solutions that take a one-time [virtual card number] as fronting a transaction,” Miebach said. “That fundamentally breaks the transaction.” 

Miebach said that Mastercard would support one-time virtual cards as a stopgap. “If a VCN is a processor decision that is a bridge to get ready for a fully tokenized transaction all the way through for a period of time, we’re cognizant that this ecosystem needs to get there, no question about it, but that’s not a long-term solution that we will support,” he said. 

Personal agentic assistants such as Muse and Instinct are helping ramp agentic transactions at “impressive weekly growth rates,” Miebach said, but he stressed that it was still “early days” and the numbers were “not yet significant in the grand scheme. 

“We’re now seeing the early stages of consumer adoption,” he said, but noted that many merchants were still working to make their products discoverable by AI. 

“For this type of agentic commerce to function at scale, we need four things: trust in the payment, the agent, the ecosystem, and ubiquitous reach,” Miebach said. “Even if everybody uses Agent Pay, that doesn’t mean that every merchant is still discoverable.”  

For the third quarter ended Sept. 30, Mastercard posted a “solid 3Q beat,” led by outperformance in payment network revenue and value-added service revenue, according to Keybanc analysts. Net revenue increased 14% from the prior year to $9.8 billion, with payment network revenue rising 11% to $5.8 billion and value-added service revenue increasing 19% to $4.1 billion. Cross-border volume grew 11%. 

“Increased payment volumes were driven by strong U.S. volumes, and intra-quarter trends show continued stability across spend metrics,” Keefe Bruyette & Woods analyst Sanjay Sakhrani said in a research note.

Analysts at William Blair were also bullish on Mastercard following the company’s earnings report. “Although macro has been a steady tailwind, we believe Mastercard can maintain consistent financial performance, owing to secular digital payments growth, share gains, pricing power, and leading [value-added services],” they said in a note.