The Green Sheet Online Edition
September 9, 2025 • 25:09:02
An accelerated era in payments is here
The payments landscape looks profoundly different from the way it did 25 years ago. From contactless card payments to virtual cards and digital wallets, the 21st century has ushered in relentless innovations, driven by widespread adoption of smartphones and the proliferation of financial technology firms.
Digital payments, once considered "alternative" are now the dominant online payment option and are gaining ground for in-store payments as well. According to the Worldpay Global Payments Report, digital payments have grown from 34 percent of ecommerce value in 2014 to 66 percent in 2024. The mobile payments share of ecommerce tripled from 19 percent to 54 percent during that same period.
Meanwhile, real-time payments, same-day ACH and virtual cards are changing the way businesses transact with other businesses, putting pressure on financial institutions to up their payments games.
"The changing payments landscape, with new rails coming on board, it's important for banks and credit unions [and their clients] to receive as many types of payments and form factors and use as many rails as possible," said Jennifer Geis, senior strategic advisor at Jack Henry, which provides backend technology support for community banks and credit unions.
Jack Henry recently launched a cloud native digital payments solution called Tap2Local, which Robert Hewlett, senior managing director at the company described as "complementary to the ISO and agent channel."
He used the example of a merchant that has a relationship with an ISO or agent for in-person and/or ecommerce sales working a local flea market. Leveraging the NFC technology in the merchant's phone in much the same way they might use Google Pay or Apple Pay, Tap2Local, an app available from the merchant's bank, integrates with banking services and incorporates an automated accounting feature.
The biggest changes to the payments landscape, however, are yet to come, as agentic commerce reshapes the online shopping experience. "Agentic commerce is more disruptive than anything we've seen in 30-plus years," said Richard Crone of Crone Consulting LLC.
Putting things into perspective
The digital wallet market has seen explosive growth, expanding nearly tenfold, from $1.6 trillion in 2014 to $15.7 trillion in 2024, according to Worldpay.
In a new report, Virtual card and digital wallet market report, 2025, UPay Technology Ltd. projects that consumer digital wallet spending will exceed $28 trillion by 2030. Digital wallets are expected to capture 79 percent of online spending and 47 percent of in-person transaction value by 2030.
Digital wallets are no longer just a consumer trend, either. A survey of merchants by the website Pymnts.com found 82 percent plan to increase their use of digital wallets. Consumer expectations for frictionless payments are pushing businesses to mirror those habits in their interactions with other businesses. The reward is reduced administrative costs and real-time spending insights, Pymnts noted.
Virtual cards—temporary, digital versions of credit cards with unique numbers and expiration dates linked to existing credit card accounts—accounted for an estimated $19 trillion in global transaction value in 2024 and are expected to total $60 trillion by 2030, according to Grandview research. B2B payments led the virtual card market with the largest revenue share, 70.3 percent in 2024.
Agentic commerce flips the switch
Until now, individuals and their financial institutions have been in the driver's seat when it comes to where purchases are made and which payment methods are used. Agentic AI flips that switch and creates entirely new use cases for artificial intelligence. As McKinsey & Co. explained in a new report, The end of inertia: agentic AI's disruption of retail and SME banking, agentic AI shifts AI from being a reactive helper to a proactive agent for shopping, payments and investing.
"These developments are expected to shake up the economic foundations of finance, affecting billions in revenue and posing a threat to business models and revenue at banks, small and midsize enterprises, credit card companies and others," McKinsey wrote.
"It's a big disintermediation play," Crone said. Today, when a consumer goes to a merchant's website, the merchant has "complete control," getting credit for "eyeballs" that view specific products, he explained.
"Agentic agents will screen scrape merchant sites, initiate the shopping journey, package baskets across merchants, and steer tender – all before the merchant sees the customer," said Crone, adding that it reduces the merchant to "being a warehouse providing fulfillment."
The economic risk is potentially huge. Crone Consulting LLC projects 8 to 13 percent gross merchandize value erosion, or $84 to $126 million per $1 billion in ecommerce sales. "Merchants who embed agentic rails inside their own apps—closed loop, prepaid, private-label credit or stablecoin wallets—can flip 8-13 percent into a rev share," Crone said.
Google saw this coming and introduced AI Mode for online shopping this year. "AI is making Google Search radically more helpful, so you can ask any question on your mind and get things done," Google wrote in an August blog post. "For example, you can now ask about getting a dinner reservation with friends that includes multiple constraints and preferences – like party size, date, time, location and preferred cuisine – and AI Mode will streamline this process.
"Searching across multiple reservation platforms and websites, it will find real-time availability for restaurants that meet your specific needs – and then present you with a curated list of restaurants with available reservation slots to choose from. AI Mode does the legwork and links you directly to the booking page, so you can easily take the last step and finalize your reservation.
"You're in control of what context you share with Google and can adjust your personalization settings in your Google Account at any time."
Visa and Mastercard on the case
Visa and Mastercard are on the case as well. In April, Mastercard launched its agentic payments program, Mastercard Agent Pay, collaborating to scale agentic commerce with Microsoft, other leading AI platforms, IBM, Braintree and Checkout.com.
The program introduced Mastercard Agentic Tokens, which build upon proven tokenization capabilities that today power global commerce solutions like mobile contactless payments, secure card-on-file and Mastercard Payment Passkeys, as well as programmable payments like recurring expenses and subscriptions.
"Mastercard is transforming the way the world pays for the better by anticipating consumer needs on the horizon," said Jorn Lambert, Mastercard's chief product officer. "The launch of Mastercard Agent Pay marks our initial steps in redefining commerce in the AI era, including new merchant interfaces to distinguish trust agents from bad actors using agentic technology.
"Recognizing the seismic implications of this evolution, we are keen to collaborate with industry players to advance the standards for agentic payments. This lays the foundation for scale and builds trust in agentic commerce."
Also in April, Visa took steps to bring trust and security to AI-driven commerce with Visa Intelligent Commerce, which it described as a "groundbreaking new initiative that opens Visa's payment network to the developers and engineers building the foundational AI engines transforming commerce." Anthropic, IBM, Microsoft, Mistral AI, Open AI, Samsung and Stripe are just some of the companies working with Visa on this.
"Soon people will have AI agents browse, select, purchase and manage on their behalf," Jack Forestell, Visa's chief product and strategy officer, said in a statement. "These agents will need to be trusted with payments, not only by users, but by banks and sellers as well."
Visa Intelligent Commerce offers:
- AI-ready cards, with card details replaced with digital credentials
- AI-powered personalization, with consumers sharing basic spend and purchase insights
- Simple and secure AI payments, with consumers providing clear guidelines, and Visa effecting transaction controls and managing disputes.
Even PayPal is getting into the scene, introducing PayPal Agentic Toolkit, a library designed to simplify the integration of PayPal's core commerce functionalities into AI agent workflows.
'Greenfield opportunity' for ISOs, agents
For ISOs and agents merchant sales is no longer about selling terminals, assigning merchant IDs and routing, Crone pointed out. "Now they have to help them implement agentic commerce," he said. "Their value shifts to helping merchants embed agent payments inside their own branded digital platforms and preserving acknowledgment of the attribution, audit trails and the tokenized payload that will happen in agent-to-agent communication and sales."
It's more than just about acceptance. "It's enabling a merchant's branded app or site to start the journey, tokenize SKU-level content, attach manufacturer-funded offers, and enforce least-cost routing logic before the agentic wallet takes over," Crone added.
The ISO and agent serves as the "merchant integrator for know-your-agent frameworks," Crone said, adding they will support provisioning agent-to-merchant APIs, embedding attribution tokens in the authorization process, ensuring loyalty and closed-loop rails—think private-label credit cards, prepaid and gift, even merchant-issued stablecoins—that appear in the tender menu.
He sees it as a "greenfield opportunity" that could generate an $850 million uplift in revenues for the ISO/agent channel.
Here's McKinsey's advice: "Merchant acquirers and payment services providers (PSPs) operate in a world where agents run mini-auctions at checkout, picking the least-cost rail in milliseconds, much like today's online advertising auctions. To stay relevant, they should expose real-time fee quotes via APIs, surface agent-visible promos or rebates, and integrate with wallets to offer built-in, least-cost routing logic." 
Patti Murphy is senior editor at The Green Sheet, president of ProScribes Ink (www.proscribes.net) and self-described payments maven of the fourth estate. Her Today in Payments reports are a regular feature of the Merchant Sales Podcast.
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