Speaker 1:
From the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, welcome Inside the ICE House. Our podcast from Intercontinental Exchange is your go-to for the latest on markets, leadership, vision, and business. For over 230 years, the NYSE has been the beating heart of global growth. Each week we bring you inspiring stories of innovators, job creators, and the movers and shakers of capitalism, here at the NYSE and ICE's exchanges around the world. Now, let's go inside the ICE House, here's your host, Lance Glinn.
Lance Glinn:
The way we shop is on the brink of another revolution. Just as e-commerce reshaped brick-and-mortar shopping, and mobile transformed e-commerce, artificial intelligence is set to redefine the very act of buying and selling. AI won't just help us find products, it will anticipate our needs, negotiate prices, and even complete purchases on our behalves, all in ways tailored to our personal preferences. For consumers, this means a world of frictionless payments, smarter recommendations, and unprecedented control over how and when we spend. Mathieu Altwegg, SVP and head of product and solutions for Europe at Visa, that's NY ticker symbol V, is at the forefront of redefining how consumers will shop in an AI-driven world. Through initiatives like Visa Intelligent Commerce and partnerships with notable brands, including Klarna, he's helping to shape a future where AI commerce is as trusted and universal as a swipe or a tap today. Mathieu, thanks so much for joining us inside the ICE House.
Mathieu Altwegg:
Thanks for having me, Lance, it's a pleasure to be here.
Lance Glinn:
So, this conversation and the desire to have it spawned from the unveiling of the Klarna card and Visa's partnership with Klarna announced that Money 2020 Europe, in June. Now Visa's flexible credential technology is at the heart of this collaboration, so for listeners not deep in payments tech, what first makes flexible credentials so different from a traditional debit or a traditional credit card?
Mathieu Altwegg:
Thanks Lance, that is a very good question, and indeed, we're very excited about that Klarna partnership. The Visa flexible credential is what we call our future platform, it's really enabling a single card to act in multiple words. And historically you used to have one card, one use case, you mentioned debit and credit, these were very much siloed into one construct, and now one single credential can act very much as a consumer ultimately wants that card to act, and by tapping into multiple funding source or payment options. So, the same card can be a debit transaction, a credit transaction, pay little collections, and we can discuss more use cases.
Lance Glinn:
And I would assume that's sort of what makes it such a game changer for consumers who really want control and choice in how they pay, that ability for one card to do really everything you would say.
Mathieu Altwegg:
Yeah, that's exactly right. I think at the heart of it is the fact that consumers all the time want to express choice, but the truth is that they want to express that choice in a very digitally native way, and historically that choice, you had to express it in an analog way. You have to have multiple cards inside of your wallet, and you would do that choice pre-transactions. Now, you can do that choice pre-transactions, you could do that choice post-transactions as well, and you can do that obviously very [inaudible 00:03:47] natively in this case of the cloud now environment.
Lance Glinn:
So, Klarna has built a reputation on giving consumers flexibility from paying now to spreading payments over time, Visa's network already powers more than 150 million merchant locations worldwide, how does bringing these two strengths together unlock opportunities for consumers that maybe neither company may have previously had?
Mathieu Altwegg:
I think it's the beauty of it is that you can build on a platform that then gives you access to 150 million merchants rather than having to build your own network of merchants, and that obviously limits then the choice and the expression of that choice for the end consumer. And so, I think the choice of Klarna to build on the Visa network enables them to focus on what do I want to give to my consumer, e.g. the flexibility that you talked about. In this case, they have a debit card that's connected to a buy now, pay later option, you can pay in full or you can pay later, but then not to worry about where does that choice can be expressed, at which types of purchase, at which type of merchant? And so, I think that's really the power of it.
And we also know that consumers express and shop across these 150 million merchant endpoints and so enabling them to have the same value proposition portable across multiple [inaudible 00:05:15] but also geographics, right? Because the cost model is also a very interesting use case as and when people travel. And typically you tend to have bigger purchases where you need that flexibility of payment options on bigger items. Travel is a great example, you tend to save money for these one times, bigger travel moments, and this also comes with bigger purchases where flexibility like pay later or paying in full that [inaudible 00:05:44] offers applies really well.
Lance Glinn:
So, a lot of people I think might hear this one card for all your payment needs and immediately think about security and think about trust, how is Visa making sure that as the payment gets more flexible and the experience gets more flexible, it also remains as secure if not more secure than traditional methods?
Mathieu Altwegg:
I think I would say that in this case it's built on top of the existing network and standards, and so the transactions are equally identifiable in the network. Without going into too much details, we obviously have the right messaging that's following the transaction, and so I think security remains paramount but maintained because it's built on top of existing standards. I would also say that in addition to that, we created additional visibility across the network so that the merchant in this case could understand also what type of transaction was actually being used at their point of sale. And so, this is also part of what the platform had to do is to create, to ensure that extra visibility for the receiving end of the transaction, in this case the merchant.
Lance Glinn:
So, I want to look down the road just a few years, when you think about just the combination of AI, flexible credentials, and these kinds of integrated payment tools, what does the everyday checkout experience look like in your mind, in your foreshadowing for the average consumer? Whether they're where I am in New York or whether they're where you are in Switzerland,
Mathieu Altwegg:
I think that's the big topic you opening up here when we think about the future of checkout. I would say there are two probably areas where we could spend a bit of time, when we bring the two pieces together, first of all, on the expression of that choice, I think this is where you could already have generative intelligence that supports you as a consumer. The choice of, I want pay this with a debit card or a debit account, and I want to pay this with a pay later or a pay in full instance, this choice can be supported by generative intelligence and AI. And so, I think we see that the way that expression is being today, we thinking about a toggle inside of a digital environment, here, your personal agent will be able to help you make this choice and potentially do some of this choice on your behalf, understanding your typical patterns, your budget, your available spend, or available budget.
So, that's one aspect of it. When it comes to the actual checkout moment itself, and that's the whole exciting topic that we've introduced with Visa Intelligent Commerce, where we do really believe that we are on the cusp for that deep next generation of what commerce would look like, and primarily powered by AI agent and act as your personal shopping assistant, and really take some of that cognitive load of shopping, browsing, discovering, so that whole discovery to buy journey, which can be quite complex, as you need to do that now across 150 million merchants, but then also can take care on your behalf of the checkout moment.
We do say that if there is only a great discovery to buy experience, it's not really commerce, it's only window shopping. And so, having this agent being powered to act on your behalf all the way to payment is really what Visa intelligence Commerce is about and not as beautiful because if that agent is powered to act on your behalf, but also as a flexible credential, then of course it can express that choice that we talked about at the time of checkout. And so it will share that flexible credential to the merchant, but also would've decided which types of funding, source of payment option to be used for that specific transaction.
Lance Glinn:
So, you mentioned Visa Intelligence Commerce, and I want to now pivot our conversation to that.
Mathieu Altwegg:
That'd be great.
Lance Glinn:
So, last spring, this was introduced, it's been described as a new standard for this next era, where AI can browse, select purchase, even manage transactions for the consumer. So, for just someone hearing this for the first time, what exactly does AI commerce mean in practice and why is Visa betting so strongly on it?
Mathieu Altwegg:
So, I mentioned it briefly, but AI commerce in practice means that an AI agent act on your behalf to execute your shopping tasks. And these guys can be complex multi-choice, multi-item type purchases, or more recurring chores, simplified tasks on your behalf. So, it's really someone who acts on your behalf, shop, discover, identifying the items, put them into a shopping cart, and then actually execute the payment on your behalf. That's what agent e-commerce is about. Now, your second question, remind me?
Lance Glinn:
Why is Visa betting so strongly on AI commerce and its future?
Mathieu Altwegg:
Yeah. So, a couple of things. We take that view that this is, we just at the beginning of a transformative phase, the same way e-commerce and then mobile was in the last 20 years, we think that generative AI has the power to completely transform the discovery to buy journey. And if you look at the last 30 years, and the first two phases of e-commerce, e-commerce first or internet, and then mobile commerce, the one thing that hasn't really been disrupted or changed is that discovery to buy journey. You, as a user, doing it from web initially, now on your mobile, still need to go on different platforms, identifying the items that you want, compare items, all the way to choosing these items, and then executing the checkout moment, and executing the transaction. I think that the power of GenAIs and GenAI platforms are already changing the discovery to buy journey fundamentally.
And so, we think that this is the direction of travel and we are going to see more of that. If you look at some of the data, there is more than a billion user across these GenAI consumer platforms, and that's only over the last 30 months. And so, it's a very short span of time, yet we see a tremendous amount of usage. The other thing that we do observe is that the type of prompt being used on this, that is also moving to commerce fundamentally. And there is a disproportionate increase over the last six months actually, a strong acceleration towards commerce. Meaning that the actual prompts are asking the GenAI, these agents, to help the user in their shopping tasks, by better understanding, by comparing products, by helping them select products. And then, we see the same traffic moving to the actual commerce websites to finalize the payment. And so, these are the signs that for us are the precursor of a transformative phase in GenAI.
Lance Glinn:
And so, a lot of listeners might think that AI, or might think of AI, as something happening mostly behind the scenes, but how do you see Visa Intelligent Commerce just changing the way someone experiences shopping in their daily life, whether it's booking a trip, restocking their fridge on a daily basis, or weekly basis, or finding that perfect gift, how is this really going to just transform the user shopping experience?
Mathieu Altwegg:
Yeah, so I think it's a good question, because we need to bring that a little bit into the consumer shoes, right? What would they experience tomorrow? I think today, the video user that I talked about and the prompt that they're using that is linked towards commerce, looks like, please help me understand or help me book a trip to Miami, and the GenAI, the agent, will be able to compare trips on your behalf, and then come back to you with a selection, and then you will need to move into that website in order to complete that transaction. You need to find or connect yourself to that website [inaudible 00:14:22]. Tomorrow, and what we are piloting now, because the API that we've introduced are live and we have these GenAI platforms that are put in to them, tomorrow, the same agent will be able to capture your payment instruction and then finalize that selection, and finalize the shopping experience on your behalf.
So, you will not only have someone who helps you discover, compare, and browse the large inventory that's available out there, but you'll have an agent that will be able to transact on your behalf, and execute on your behalf. And it will look like a relatively simple prompt, I need to book a trip to Miami, and then probably one or two iterations based on selection that your agent is coming back with, and once you confirm, which we capture as what we call a payment instruction, once you confirm, then the agent has your blessing, and the level of security that comes with the Visa Intelligent Commerce platform to execute this transaction on your behalf. And these executions happens in the background, across multiple websites, multiple merchants, one of the 150 million that we have, can happen all simultaneously or can happen asynchronously because the agent needs to find the right time to make the right booking on your behalf, flight seats not available for that plane necessarily at the exact time that you were making that call.
And that's the beauty is that a lot of commerce also as a time dimension, that in this case you don't need to be associated with this as a user, this can happen in the background, for the right price, at the right time, when the seats or the tickets for that show are available. And that's the beauty, the agent is always on, always working for you based on that instruction that you've given in the first place. So, we see really an interesting lift and sure transformation of what the consumer experience would look like, and be very excited about it.
Lance Glinn:
Yeah, that's absolutely fascinating. So, that's how AI commerce could improve the way we buy what's already out there, but just in your overall opinion, do you think this AI commerce and the movement towards it could open up just entirely new categories of products and services that may not exist today? Could it allow or could the ability to transact through AI unlock new opportunities for subscriptions, for bundles, or entirely new types of business models? What can this do, not just for how the consumer currently buys, but for what is out there for the consumer to buy, for the consumer to do in the next 5, 10, 15, 20 years as this grows?
Mathieu Altwegg:
Yeah, I think we see already some of that, and that's the other side of AI, right? AI is not just transforming commerce, to your point, it's transforming categories, and we see that. And so, I think the types of product and services that the individual users will start buying will also be empowered by AI. The way that you can now be a quarter on your own, and can start building a business is a service that was not available before. And we see transaction on the network, where a lot of people starting to use websites where, in this case, it's AI powered, and it's a new category on its own. You no longer buy a website provider or book to learn how to code, you actually buy a service that's AI powered that generates a website for you. And that's just one super simple examples, but there'll be new categories.
One, I think we will also see interesting test and learns on new business models, where we think that the phase one is an agent that shops on your behalf, but there will be an equal response on the merchant side, where merchants will also start adopting agents to better interact with user, and eventually to better interact with the agent of the user. And that's when I think you mentioned bundling or group buying, I think that's also where agent starts to see multiple signals that go into the same direction on both sides, on the consumer side and on the merchant side. And that could lead to interesting agent to agent discussions.
So, we quite excited, I think we need to go through use case, the ones that are probably more realistic because there's still an ecosystem that needs to be put in place, but what we do see for sure is that the pace of change is clearly accelerated, and so it's not going to be years, but months until you can see first use cases, first implementation, and then of course there'll be quick reaction on both sides of the ecosystem. So, interesting models should come up.
Lance Glinn:
So, Mathieu, as we wrap up our conversation, if we were to sit down again in 2030, even before then, let's say 2026, 2027, 2028, but if we were to sit down again in 2030, what do you hope we'd be discussing about Visa's role in shaping AI commerce and how it impacts the consumer as a whole?
Mathieu Altwegg:
I think we would've reached a point where these Visa Intelligent Commerce would've scaled, I think the platform itself will have continued to evolve. I think we would see a real application of agents acting on behalf. I think this convergence that we talked about earlier around multiple funding source options on the flexible credential, the credential size or the payment type, combined with agents, it would be a reality, and there is more, but I think... It's funny, agentic, it will become much more normal for transactions to happen when they are agent powered, and we are going to be, if we stretch into '27 already facing new categories, new business models that are AI powered.
But yeah, and I think it's also going to be more [inaudible 00:20:25], right? In the sense of multiple markets, it's not going to be a US only thing, we're going to see multiple realities. By 2027, I also expect multiple market response, and so it's not just going to be a series of platform, but you're going to see the emergence of multi-agents type ecosystem, where as a user you'd be comfortable with potentially multiple agents supporting you in different types of tasks, the same way we thought that maybe at some point we will end up having only a series of apps on our phones, and what we actually see on the user side is that you tend to be multi-app, and this complexity is something that you're happy to navigate with. So, I imagine with what we see currently with [inaudible 00:21:11] agent, [inaudible 00:21:12] agent more specialized in certain world, that we as a consumer will get comfortable working with multiple agents based on our needs.
Lance Glinn:
Well, Mathieu it's incredible what Visa is doing with its flexible credential technology as well as Visa Intelligent Commerce, and I thank you so much for joining us inside the Ice House.
Mathieu Altwegg:
Of course, thanks for the time, Lance.
Speaker 1:
That's our conversation for this week. Remember to rate, review, and subscribe wherever you listen, and follow us on X at Ice House Podcast, from the New York Stock Exchange, we'll talk to you again next week inside the Ice House. Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the information, and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.
