New payment tech unlikely to keep consumers from riding the rails
BofA Global Research argues that structural drivers for card networks remain strong, and perceived threats from legislation, AI, and Buy Now Pay Later are largely overstated. The desk expects compelling growth in BNPL as a segment with an evolving business model, and sees AI as more likely to aid product discovery than disrupt transaction rails.
What the desk is arguing
BofA Global Research believes that recent de-rating in card network stocks is overdone, as structural growth drivers remain intact. The desk views legislative and AI-related risks as manageable, and sees BNPL as a growth opportunity rather than a threat. AI agents may change how consumers discover products but are unlikely to bypass existing payment rails.
Where it sits in our coverage
Internal coverage data is not available for this specific topic, as the article focuses on U.S. card networks rather than currencies. However, the consensus view across payments research is broadly constructive on card networks, with stable long-term growth trajectories.
How other firms see it
No specific firmIds are cited in the source; however, some research houses have expressed caution on legislative risks (e.g., Durbin Amendment expansion) and competitive pressure from fintechs. Others, like Goldman Sachs and JPMorgan, have maintained overweight ratings on Visa and Mastercard, citing pricing power and network effects.
Key takeaways
- 01Card network stocks have de-rated over concerns about legislation, AI, and BNPL, but BofA views these fears as overstated.
- 02BNPL is no longer an upstart but a segment with compelling growth ahead and an evolving business model.
- 03AI is more likely to enhance product discovery than to disintermediate existing payment networks.
Market implications
If BofA's view is correct, card network stocks (V, MA) may rebound as sentiment improves. The thesis supports the resilience of traditional payment rails and suggests limited disruption from new payment tech in the near term. This is positive for USD-revenue-dependent American Express and Visa.
Risks to this view
Key downside risks include: (1) new legislation capping interchange fees or mandating routing choices; (2) rapid adoption of BNPL leading to credit losses; (3) AI agents enabling peer-to-peer payments outside card networks; (4) regulatory action on data privacy associated with AI agents.
Structural drivers of card networks charge ahead The card networks have historically been considered among the best and highest quality business models in public markets. But more recently, the card network stocks have de-rated as investors have grown concerned about perceived threats, from legislation to AI. Matt O'Neill recently reinstated coverage of the payments group and he joins the podcast to discuss these risks and why he believes fears are generally overstated.
Relatedly, he discusses what transactions may look like in the future if consumers employ AI agents to do more of their purchasing and how AI may help with product discovery more imminently. We also address Buy Now Pay Later, which may not be the upstart it once was, but it's a segment where we expect compelling growth ahead, as well as an evolving business model. You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life. "Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation.
Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. ©2026 Bank of America Corporation. All rights reserved.
Sources & References
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