by Matt Rej
Visa and Mastercard both reported earnings last week, on January 29, 2026.
Combined, these two networks control over 75% of card purchases in the US. So when they report earnings, merchants should be paying attention.
While designed for investors, earnings calls can be a useful tool for businesses, as they can often predict future processing rates. And I definitely found some insights in these calls that can impact what you’re paying at the interchange level.
Key Takeaways
- Value-added services are driving higher merchant costs.
- Cross-border transactions are growing (and expensive to process).
- Commercial and B2B card usage is accelerating, often with higher interchange fees attached.
- Tokenization is expanding and likely bringing new network fees with it.
- AI-driven commerce is coming faster than we realize.
- Legal and regulatory pressure doesn’t appear to be slowing down profits from the card networks.
Value-Added Services Are Surging
One thing that immediately jumped out at me in listening to these calls and reviewing the numbers is that both networks are seeing massive growth in value-added services (VAS).
- Visa F1Q26 VAS revenue up 28% (vs. 23% last qtr)
- Mastercard 4Q25 VAS revenue up 22% (same as last qtr)
Why is this important?
Value-added services are products and tools that Visa and Mastercard sell to banks, processors, and other players in the payment ecosystem. They include stuff like fraud detection systems, tokenization services, authentication tools, data analytics, and more.
While the networks sell these services directly to their customers (banks and processors), the costs often flow downstream to merchants in the form of higher fees on their statements.
If your processor is paying more money to Visa and Mastercard (which they must be, if revenues are soaring), they aren’t going to just take that cost on the chin. It’s 100% going to be passed through to you either in the form of new line items, new service fees, or increased discount rates.
Mastercard explicitly said that 60% of their VAS revenue is linked to their network. And they are actively trying to sell more Mastercard Threat Intelligence service, which was just launched last quarter.
Cross-Border Volume Continues to Grow
Cross-border transactions are among the most expensive card payments that merchants process.
This is particularly important for high-volume ecommerce shops with international customers, and business in the travel or hospitality space (hotels, cruises, car rentals, etc.). But it also impacts any brick-and-mortar merchant in tourist-heavy areas.
Let’s look at the numbers:
Visa F1Q26
- Total cross-border volume is up 11%
- Cross-border ecommerce volume is up 12%
- Travel cross-border is up 10%
- Cross-border volume (excluding intra-Europe) is up 16%
Mastercard 4Q25
- Cross-border volume is up 14%
- Cross-border assessment revenue is up 17%
- Cross-border CNP volume (excluding travel) is up 19%
- Cross-border travel volume is up 11%
The earnings data clearly shows that cross-border volume is growing much faster than overall payment volume flowing through these networks.
And if your business accepts cards that were issued in another country from where you’re located, then you are directly contributing to this increase. You’re paying a higher interchange rate compared to the domestic card, plus international assessment fees on top of standard assessment costs.
The key to keep costs low here is by ensuring your processor isn’t marking up your cross-border transactions even more. You can’t change what’s established at the network level, but you definitely have a say in what your processor is charging you.
There’s a Focus on Commercial Cards
Last week’s earnings calls show that both networks are aggressively pushing commercial card adoption, particularly for small and medium-sized businesses.
What stands out to me here is that the growth numbers have significantly outpaced overall commercial payment volume (meaning it’s very profitable for the networks).
Visa’s commercial revenue grew 20% in 1Q26 (compared to 14% previous quarter), while its commercial payment volume increased by 10%. Mastercard reported 11% growth in its commercial credit and debit volume, with commercial transactions now representing 13% of their total gross dollar volume.
What’s driving this?
- Both networks are trying to convert B2B payments onto card rails (instead of ACH or check).
- Visa specifically mentioned they are having success converting SMB commercial spend to cards and virtual payable use cases.
- Mastercard noted that small and medium-sized businesses represent more than half of the opportunity in their commercial markets.
This matters for merchants because commercial cards can be more expensive to process, especially if you’re not capturing and submitting accurate Level 2 or Level 3 data with those transactions.
Visa already tightened its data submission requirements last year with its CEDP program, and I’m expecting to see this commercial card revenue continue to soar on the network side throughout the year. Especially once Visa eliminates its Level 2 interchange program in April 2026.
Tokenization Features Will Ultimately Result in Higher Merchant Fees
Tokenization has become a major focus for both Visa and Mastercard, and the adoption numbers show how aggressively they’re pushing it into the market.
- Visa reported having 17.5 billion tokens globally (3x the number of physical cards in circulation).
- Mastercard said that nearly 40% of all transactions are tokenized.
- Visa says their goal is to fully replace ecommerce PAN technology with tokens.
- They mentioned using “performance compliance programs” and incentives to encourage tokenization.
- Mastercard said that tokenization enables “further services growth.”
I think the fact that Visa specifically used the term “performance compliance program” is very telling. This is network-speak for tying tokenization adoption to authorization performance. And if tokenization becomes the standard, merchants can expect to see more token-related charges appearing on their statements.
And while tokens do provide legitimate security benefits (which is good for both merchants and networks), make no mistake, Visa and Mastercard will obviously look to generate new revenue opportunities wherever possible.
Agentic Commerce is the Next Big Wave
The term “agentic commerce” has been trending up over the last year or so as AI technology continues to evolve. This is effectively the next wave of online shopping in which AI agents can act on behalf of customers to research and buy products through different AI-powered tools.
But for this to work seamlessly, the payment ecosystem obviously needs to keep pace and be secure.
As expected, Visa and Mastercard are both helping to pioneer this wave, and each network emphasized agentic commerce during their latest earnings calls.
Visa
- Attempting to enable agentic commerce with over 100 partners globally.
- They have over 30 partners actively building in their sandbox.
- Working to make Visa Intelligent Commerce available on AWS marketplace.
- Building interoperability with Google’s Universal Commerce Protocol.
Mastercard
- Launched Mastercard Agent Pay in 2025.
- US issuer participation is already enabled, and aiming for global issuer enablement by the end of 1Q26.
- Working with Elavon, Santander, and Lloyds Banking in the UK.
- Piloting in the UAE and Asia.
What’s interesting about this trend is that agentic commerce is built on top of tokenization infrastructure, which we’ve already discussed is a profit center of the card networks.
There’s no immediate change, threat, or fee structure that’s currently in the pipeline. But merchants need to keep a close eye on this in the coming months and years. Both Visa and Mastercard are positioning themselves as gatekeeper and standard setters for agentic commerce. And once this becomes more widely adopted and moves out of the sandbox, I’m expecting entirely new fee structures at the network level.
Both Networks Are Unfazed by Legal Settlements and Regulatory Changes
Beyond what was said in these earnings calls, I think one of the most noteworthy takeaways is what wasn’t covered.
- Visa vaguely briefly referred to “legal settlements” without going into detail (Mastercard did not).
- I find this incredibly interesting as the latest $38 billion Visa/Mastercard settlement proposal was huge news when it broke less than 3 months ago.
- This tells me that if it’s approved by the courts (which I don’t think it will be), Visa and Mastercard think it’s so negligible to their bottom line that they aren’t even discussing it with investors.
- Both discussed the Credit Card Competition Act (CCCA) being reintroduced.
- But neither made it seem like a threat to their revenue or margins, and share the sentiment that it would adversely affect consumers.
As usual, these calls were focused entirely on growth, volume, and new revenue streams. There’s no mention of merchant costs or concerns at all.
So despite businesses being hit with higher merchant fees from practically every angle, things are just business as usual at Visa and Mastercard. These giants will continue to prosper at your expense.
Final Thoughts and What Merchants Should Do About This
It’s important to understand that you can’t do anything to change interchange rates and assessment fees at the card network level. That said, it doesn’t mean that costs are totally out of your control on the network side.
Beyond staying informed and planning for changes ahead based on this information, here are a few things you can do right now to stay on top of your merchant fees:
- See if you can identify how value-added services from the networks have trickled down to your statements in the form of more processor fees or rate increases.
- These are completely negotiable if they’re charged by your merchant services provider.
- Assess your cross-border volume, and if it’s significant, look for ways to cut any extra processor markups on these transactions.
- Make sure you’re capturing and submitting accurate L2/L3 commercial card data to keep costs low on these transactions.
- If you don’t have “verified” status with Visa, you won’t even qualify for reduced CEDP rates, and there’s only a couple months left where L2 data is acceptable.
It definitely takes some “reading between the lines” to identify how these card network changes are impacting your total processing costs. So if you need help with any of this, just contact me or my team, and we’ll audit your statements for free.