During Mastercard’s third-quarter earnings call Thursday (Oct. 29), CEO Michael Miebach took note of arrangements that insert a separate, one-time virtual card into an agent’s purchase. Mastercard views those arrangements as temporary accommodations while processors prepare for payments that retain the original card credential through network tokens.
“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,” Miebach said.
Network tokens replace sensitive card details while keeping the purchase connected to the underlying card. Processors need time to adapt.
“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,” Miebach said.
His comments described a continuing role for cards when agents handle checkout. They also hinted at the work that needs to be done. Payment providers must accommodate tokenized transactions, merchants must make their products accessible to agents, and buyers must authorize the software acting for them.
Mastercard Agent Pay incorporates tokenization and verifies that agents are authorized by buyers. Shopify’s Shop Pay is using Agent Pay and Mastercard network tokens to preserve consumers’ credentials throughout the payment, Miebach said. A new OpenAI agreement also includes Agent Pay, alongside collaboration on services and AI transformation.
Miebach said he expects consumer use to build during holiday shopping.
Mastercard Chief Financial Officer Ling Hai identified additional token functionality for agents as an area for development and pricing.
Spending Continues Into October
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In the third quarter, Mastercard saw growth across credit and debit, with different patterns by geography, Hai said. U.S. gross dollar volume rose 6% in local currencies, comprising 10% credit growth and 1% debit growth. The debit result included the effect of Capital One’s portfolio migration.
Outside the United States, credit volume increased 6% and debit 10%, Hai said. Contactless accounted for 81% of in-person switched purchase transactions, up 5 percentage points from a year earlier.
Through October’s first three weeks, spending remained strong, Hai said. U.S. switched volume improved as comparisons began to include periods affected by the Capital One migration. Recent commercial wins and higher gasoline spending also contributed.
Quarterly cross-border volume grew 11%, Hai said. Online cross-border growth excluding travel slowed from 20% to 15%, principally reflecting intra-European activity, due to a European Union customs fee, promotional timing and comparisons with higher cryptocurrency purchases a year earlier. Holiday timing during the quarter contributed to a slight deceleration in cross-border travel.
Value-added services revenue increased 19% on a currency-neutral basis, supported by security, marketing insights, authentication and pricing, management said. Some services projects and deal signings moved up from the fourth quarter, creating a corresponding offset ahead.
In stablecoins, the newly acquired BVNK supports Mastercard’s Global Money Platform, enabling financial institutions and FinTechs to offer accounts for holding, converting, sending and receiving fiat currencies and stablecoins. Nuvei and Marqeta are among the first planned integrations, Miebach said.
Net revenue rose 14% to $9.8 billion, according to a Thursday earnings presentation. Mastercard maintained its full-year outlook and forecast fourth-quarter currency-neutral revenue growth, excluding acquisitions and dispositions, at the high end of low double digits.
Mastercard shares were up 4% in early trading Thursday.
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