Payments Reinvention: AI & Agentic Commerce Reshape Fintech

The history of commerce, much like the legendary Hatfield-McCoy feud, often sees long-standing conflicts overshadowing the very innovations that reshape industries. For decades, the payments ecosystem has navigated intricate legal battles, such as the lengthy Visa-Mastercard merchant settlement, reminiscent of ancient grievances. Yet, while legal teams focused on past disputes, an unprecedented wave of digital transformation, fueled by Artificial Intelligence (AI) and agentic commerce, has quietly reshaped the future of payments. This article explores the concept of "creative destruction" within the payments business model, highlighting how entrenched structures are being unbundled and rebuilt to accommodate a new era of consumer-directed, algorithm-driven commerce.

The Dawn of Agentic Commerce

We are standing at the precipice of the most significant transformation in commerce since the advent of the general-purpose credit card 67 years ago. This is not merely a new channel or device, but a fundamental rewiring of how consumers shop and purchase. This paradigm shift can be termed "The Prompt Economy," a world where consumers and merchants are on the verge of losing direct contact. Instead, consumers, via prompts, dictate the 'what,' 'why,' and 'how' of their shopping and payment experiences.

The Prompt Economy: Consumer-Driven Decisions

Agentic commerce is not a distant future; it is already here, albeit in its nascent stages. Major technology companies and platforms are actively developing AI agents designed to act as intermediaries between consumers and merchants. These sophisticated agents will autonomously evaluate options, compare costs, assess merchant reliability, analyze return policies, and complete purchases. All these complex tasks will be executed in milliseconds, with minimal or even no human intervention beyond the initial prompt. PYMNTS Intelligence data underscores this shift, revealing that nearly 70% of consumers are interested in utilizing AI agents to simplify shopping. Furthermore, 41% desire an agent to secure the best deal for every purchase, and a significant one in three would trust an agent to select the merchant. A substantial segment of Gen Z and millennials anticipate AI making purchasing decisions for them within the next five years, indicating a mainstream embrace of this technology.

Shifting Dynamics of Payment Acceptance

For nearly seven decades, the principle guiding merchant-consumer relationships was straightforward: merchants supported payment methods preferred by a critical mass of their customers, as it was deemed good for business. If a consumer’s preferred payment was accepted, a sale ensued; if not, the consumer might choose an alternative or abandon the purchase. Merchant acceptance has always been the lifeblood of any payment method. In the age of AI and agentic commerce, acceptance remains crucial, but its dynamics undergo a subtle yet profound shift. Consumers will continue to prioritize their preferred payment methods. However, instead of making this decision at checkout, they will specify their preferences once, through the agent acting on their behalf at the prompt. These instructions become the governing rules for which merchants an agent considers. If a merchant does not accept the consumer’s directed credential, the agent simply moves to another merchant. Merchants might, therefore, remain unaware of missed sales due to non-acceptance.

Consumer behavior already demonstrates intense payment preference shaping. PYMNTS Intelligence finds that 72% of cardholders cite rewards as influencing their payment choice, and over half strategically choose cards to maximize these benefits. This existing consumer behavior foreshadows a future where payment actions are literally scripted through AI agents, giving consumers unparalleled control with reduced friction. For merchants, this means friction is no longer a mere irritation but a filter determining visibility. Limiting acceptance or introducing fees could eliminate a merchant from an agent's consideration. Conversely, supporting a consumer’s directed preferences, irrespective of the interaction channel, positions merchants for increased selection.

Emerging Business Models in a Transformed Ecosystem

The significance of the proposed merchant settlement lies not in what it concludes, but in the opportunities it initiates. Commerce is transitioning into a phase where the value of a consumer and a transaction can be monetized in unprecedented ways. As consumers navigate digital ecosystems, as AI agents mediate decisions, and as transactions become the outcome of richer behavioral contexts, there is an immense opportunity to rethink how payment credentials anchor value for every participant across the ecosystem.

Programmable Credentials and Retail Media Networks

We are witnessing the early stages of this creative rebuild. The debit card, traditionally a simple access point to funds, is evolving into a programmable financial tool. Consumers increasingly demand credentials that adapt to their cash flow and lifestyles. PYMNTS Intelligence research indicates that 14% of consumers have used BNPL (Buy Now, Pay Later) in the last three months, with adoption highest among high-income consumers who also strategically maximize rewards and expect payment flexibility. Retail media networks further exemplify this shift. The moment of purchase is transforming into a moment of value creation. Platforms such as Amazon, Walmart, Klarna, Affirm, and Chase demonstrate that merchants are willing to invest in reaching high-intent consumers at the precise point of decision. Innovations from players like FIS with Smart Basket, Bilt with Banyan, SKUx, and Lynx power retail media ecosystems, creating new brand-merchant-consumer economics through personalized, brand-funded rewards and promotions. This provides immediate, targeted savings for consumers, measurable conversion improvements for merchants, and novel revenue streams for participating issuers and platforms.

Intelligent Credentials and Data-Driven Value

Simultaneously, new ecosystems are forming around intelligent credentials. Banks and networks are experimenting with dynamic payment instruments that transcend static sixteen-digit numbers. These credentials can seamlessly carry consumer preferences across contexts, automatically apply rules, dynamically authorize and route transactions, and deliver the transparency consumers expect. Item-level and category-level purchase data enable surgically precise merchant-funded offers. Critically, these ecosystems are not reliant on traditional funding structures; their growth stems from addressing consumer needs that legacy models were not designed to fulfill. What unites these developments is a new set of hypotheses: the next phase of commerce will reward participants who create value throughout the consumer journey, not just at the moment of payment. A smart credential emerges as the connective tissue linking discovery, decision-making, fulfillment, and loyalty. The sale becomes a strategic outcome of an ecosystem where merchants, issuers, networks, platforms, and now agents all collaboratively shape consumer value.

The Imperative for Reinvention

What we are observing across these developments is a tangible form of creative destruction. Business models that sustained merchants, issuers, and networks for decades are being unbundled and reconstructed under new economic assumptions. Subsidy structures supporting rewards programs are shifting, merchant acquisition models are evolving as platforms and retail media networks influence discovery, and issuer economics face pressure from new forms of competition for consumer preference. Even networks, traditionally anchored by universal acceptance, are navigating a world where acceptance is not merely a merchant decision but a consumer directive executed by agents. This disruption presents a profound opportunity for reinvention. Obsolete system components are stripped away, while value-generating elements form the foundation for what comes next.

The conclusion of the Hatfield-McCoy feud did not erase its history but paved the way for reconciliation and new beginnings. Similarly, the impending merchant settlement offers the payments ecosystem a parallel opportunity. The creative destruction already reshaping the business models of merchants, issuers, and networks is part of a much larger transformation. As AI and agents redefine consumer shopping behaviors and industry operations, the opportunity arises to rethink how value will be created when discovery, choice, and payment operate under an entirely different logic. All players across the ecosystem share an incentive to rethink, reimagine, and rebuild. The next chapter will determine whether the ecosystem adapts to the emerging world or remains tethered to one that is rapidly disappearing. Indeed, the real work of shaping the future of payments is just beginning.