Stablecoin cross-border payments usher in new opportunities; Bernstein favors Visa (V.US) and Mastercard (MA.US) competitive advantages.

Bernstein released a research report after attending this week's Money20/20 fintech conference in Las Vegas, noting that the global payments industry is undergoing a significant transformation. As AI agents gradually enter commercial transaction scenarios and stablecoins become increasingly mature in cross-border fund flows, the focus of industry competition is shifting from traditional payment processing capabilities to identity verification, transaction trust systems, payment infrastructure, and related software services. Bernstein analyst Harshita Rawat said that unlike previous years' heated discussions about blockchain and AI comprehensively disrupting financial services, this year's conference agenda was more pragmatic, focusing mainly on how to establish unified standards for AI agent commercial transactions and in which practical payment scenarios stablecoins can actually create value. The firm believes that AI agent commercial transactions, stablecoin payment infrastructure, and identity verification and anti-fraud services will become important development directions for the payments industry in the future, and may reshape the competitive landscape among payment companies such as Visa (V.US), Mastercard (MA.US), PayPal (PYPL.US), and Adyen. First, AI agent commercial transactions are moving from the stage of exploring technical feasibility to the stage of building trust mechanisms. So-called AI agent commercial transactions refer to consumers authorizing AI systems to autonomously complete shopping processes such as product search, selection, ordering, and payment. As related technologies gradually mature, the market's focus is no longer whether AI can complete transactions, but whether merchants and payment institutions can confirm the identity of AI agents and whether their transaction behavior has been authorized by consumers. Bernstein noted that agent identity, transaction permissions, consumers' true intent, identity authentication, fraud prevention, and liability attribution are currently the most intensively discussed issues in the industry. For merchants, merely confirming that a transaction was initiated by a legitimate AI agent is not enough; they also need to clarify which consumer the agent represents, what permissions it has, and whether the relevant purchase decisions truly align with the consumer's wishes. Therefore, for the foreseeable future, human participation in review or authorization will remain an important component of the AI agent payment system. At the same time, the growing number of AI agent payment protocols and technical standards launched by different companies has further increased the complexity for merchants to integrate. Bernstein specifically mentioned that Visa and Mastercard are promoting payment token technology dedicated to AI agents, but some AI shopping products, including Muse and Instinct, do not yet appear to have adopted the agent tokens launched by the two card networks. The firm believes that whether Visa and Mastercard can control the AI agent payment token system will directly affect their competitive position in the future payment ecosystem. On the other hand, fragmentation of payment protocols may also create opportunities for modern payment service providers such as Adyen. Such companies are expected to help merchants reduce the complexity of integrating AI agent transaction systems by consolidating different technical standards and payment channels. In the stablecoin space, the trend Bernstein observed is clearer: stablecoins are finding application scenarios with genuine commercial value, but their main growth driver is not consumers directly using stablecoins for shopping, but rather areas such as cross-border remittances, fund settlement, and corporate payments. The research report noted that in Latin America, Africa, and parts of Asia, where access to US dollars is limited and cross-border transfer costs are high, stablecoins can solve real difficulties in fund flows. Especially in scenarios such as cross-border settlement, remittances, corporate payments, and access to US dollar assets, stablecoins can provide more efficient ways to transfer funds, and are therefore gradually gaining attention from Financial Institutions, Inc. and payment service providers. Bernstein believes that stablecoins are more likely to become underlying payment infrastructure in the future rather than directly replacing bank cards or other consumer payment methods. This also means that important competition in the stablecoin industry in the future will revolve around who can control the fund settlement and flow infrastructure. Currently, companies including BVNK, Bridge, Circle (CRCL.US), Zero Hash, and Coinbase (COIN.US) are all competing for potential growth opportunities in this market. It is worth noting that although stablecoins are regarded as a technology that may change traditional payment models, Bernstein found that their most attractive practical application in consumer payments is actually integration with traditional bank card networks. The research report noted that stablecoin-linked card products were ubiquitous at this year's conference, most of which use the Visa network. Such products allow users to hold or use stablecoin funds while completing purchases through existing bank card payment networks, preserving the merchant coverage advantages of the traditional payment system while also using stablecoins to improve the efficiency of cross-border fund flows. Bernstein believes that the business model of such products has similar economic characteristics to traditional bank card business, and may even generate higher returns in some transactions involving foreign exchange conversion. Therefore, the popularity of stablecoins does not necessarily mean that traditional bank card networks will be replaced; instead, it may bring new transaction volume and payment service opportunities to Visa and Mastercard. In addition to AI agents and stablecoins, identity verification and anti-fraud services are also becoming a NEW FOCUS AUTO of competition in the payments industry. Bernstein said that at this year's Money20/20 conference, the number of companies providing fraud prevention, identity authentication, and security services increased significantly, but the relevant market remains highly fragmented, with many companies solving similar problems. As AI agent commercial transactions gradually become widespread, risks such as identity impersonation, unauthorized transactions, and automated fraud may become more complex, and payment companies also need to establish a complete trust system covering pre-transaction, in-transaction, and post-transaction stages. Bernstein believes that Visa and Mastercard currently have cybersecurity services closely integrated with payment transactions, as well as unique transaction data resources and mature customer channels, and therefore have the foundation to further expand into identity verification and security services. The firm noted that competition in the payments industry in the future will increasingly resemble not a pure transaction processing business, but rather comprehensive competition centered on identity, trust, transaction coordination, and software services. Bernstein also offered different judgments on specific payment companies. Regarding Adyen, the firm remains more cautious about competition from Checkout.com in its digital payments business, but is more optimistic about the development opportunities in its platform business, especially the potential for cooperation with AI platforms and Orb. Bernstein expects that Adyen may further strengthen its platform service capabilities through small-scale acquisitions in the future. For PayPal, Bernstein believes that the development of AI agent commercial transactions is putting it at a critical turning point. The company needs to re-establish its two-sided network advantage between consumers and merchants in order to regain competitiveness in the new generation of intelligent payment systems. In addition, Bernstein also noted that discussion of OUSD at this year's conference was hotter than expected, and the yield generated by stablecoin reserve assets and how it is distributed are becoming important business model issues of industry concern. In terms of investment ratings, Bernstein maintained "Outperform" ratings on Visa, Mastercard, Adyen, Block (XYZ.US), Affirm (AFRM.US), and Toast (TOST.US); and maintained "Market Perform" ratings on PayPal, FIS (FIS.US), Fiserv (FISV.US), Global Payments (GPN.US), and Klarna (KLAR.US). Overall, Bernstein believes that the payments industry is shifting from traditional transaction processing competition to more complex fintech infrastructure competition. AI agent commercial transactions need to solve identity and authorization issues, while stablecoins need to prove their economic value in real fund flow scenarios. For traditional payment giants such as Visa and Mastercard, as well as Adyen, PayPal, and stablecoin infrastructure companies, the key to future competition is not just whether they can process more transactions, but who can control the core infrastructure connecting consumers, AI agents, merchants, and fund flow networks.