A debate broke out on X last week that, by the standards of social media, was refreshingly civil and informed. The topic was whether Visa will continue to dominate payments in the age of agentic commerce, or if that future belongs to blockchain natives wielding stablecoins.
The debate kicked off with the cofounder of a startup called Modern Treasury musing that it’s easy enough for agents to memorize a 16-digit card number, so why is there a need for stablecoins in the first place? Y Combinator cofounder Paul Graham then retorted, “Because then you have to add card fees. Why drag Visa along with us into the future like a software virus?”
My instinct, in these situations that pit a powerful incumbent against a disruptive new technology, is to side with the latter. Just look at what became of once-dominant industry leaders like Nokia, Kodak and Blockbuster. In the case of Visa, though, it’s harder to proclaim the company is doomed to become a dinosaur in an era of agents and stablecoins.
One reason, as some who responded to Graham’s tweet pointed out, is that Visa’s fees are around 12 basis points, which is not particularly high. The 3% to 4% vig that many merchants pay for a credit card transaction is pocketed by banks, not Visa, and a lot of it flows back to consumers in the form of rewards. Meanwhile, Visa has deep lock-in thanks to a five-sided network that offers global reach and a baked-in fraud resolution process. This isn’t just any old monopoly that the stablecoin disruptors are taking on.
The challenge is heightened further by the fact the credit card giants aren’t exactly standing still. As one analyst noted, both Visa and Mastercard “are insuring they will be orchestrators and not casualties of stablecoins and agentic commerce.” Notably, Visa’s crypto guy, Cuy Sheffield, joined the X debate to muse that his company could integrate stablecoins for instant on-chain merchant settlement—a move he implied could obviate the disruptors’ advantage.
All of this shows that Visa is not going away anytime soon. Still, I’m betting on the disruptors all the same. The rise of programmable money and blockchain rails means it’s easy to lower transaction fees to well below 1 basis point, which is a far cry from Visa’s 12 bps—a discrepancy that brings to mind Jeff Bezos’s famous “your margin is my opportunity.” No doubt crypto challengers like MoonPay, Stripe, Coinbase and AgentCash are thinking the same thing.
A final reason not to declare early victory for Visa: New technologies introduce new types of behavior and, in the coming age of agentic commerce, there will be all sorts of novel businesses that emerge around data, APIs and more. It’s unlikely that Visa will be on the cutting edge of any of this. To borrow a too-familiar cliché from the crypto world, when it comes to agentic commerce, we’re still in the first inning.
Jeff John Roberts [email protected] @jeffjohnroberts
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