⚠ Wallets That Sit Between Card and MerchantModerate threat

Mastercard (MA) — threat to the moat

The wallet on the phone owns the customer's attention, and every card network has to pay attention to what the wallet wants.

A token held inside somebody else's wallet is still somebody else's customer. Mastercard lists digital wallets and other fintechs among its competitors, warning that it faces increasing competition from fintechs and other emerging payments providers for customers and for data1.

Value-added services growth (%)18%202317%202423%202520%Q2 2026Mastercard Forms 10-K FY2024-FY2025; Q2 2026 10-Q
Still growing about twice as fast as the network.

The risk is not that wallets replace the card; most of them still load one. It is that the wallet decides which card is the default, can route to a bank account instead, and can ask the network or the issuer for a share of the economics. Many of Mastercard's customer relationships are not exclusive2, and a wallet provider can use that to set networks against each other.

Mastercard's defence is that its tokens work across all of them, and that it now lets customers send and receive stablecoin flows through Mastercard Move3. That keeps it useful to the wallets, but useful is not the same as indispensable.

Mastercard's contract structure does not protect it here. Its filing notes that many of its customer relationships are not exclusive and that customers may develop their own services that compete with Mastercard's4. A large wallet does not need a contract with Mastercard at all; it needs the card inside it to work. That leaves Mastercard selling to the wallet's users through their banks while the wallet shapes their behaviour. The balance holds while the card is the default payment method inside the wallet, and it shifts the day the wallet makes a bank transfer the default instead.

Value-added services growth is where this would show. It was 20% in the second quarter of 20265; a sustained fall toward payment-network growth would suggest the data and security the wallets need are being sourced elsewhere.

References
  1. ReportedMastercard lists digital wallets and other fintechs among its competitors, warning that it faces increasing competition from fintechs and other emerging payments providers for customers and for data.
    Mastercard Form 10-K for fiscal 2025 - Item 1 business: the network, competition, tokenization, account-based payments and human capital. — FY2025 · publ. 11 February 2026 · source ↗
  2. ReportedMany of Mastercard's customer relationships are not exclusive, and a wallet provider can use that to set networks against each other.
    Mastercard Form 10-K for fiscal 2025 - Item 1A risk factors and Note 19 legal and regulatory proceedings. — FY2025 · publ. 11 February 2026 · source ↗
  3. ReportedMastercard's defence is that its tokens work across all of them, and that it now lets customers send and receive stablecoin flows through Mastercard Move.
    Mastercard Form 10-K for fiscal 2025 - Item 1 business: the network, competition, tokenization, account-based payments and human capital. — FY2025 · publ. 11 February 2026 · source ↗
  4. ReportedIts filing notes that many of its customer relationships are not exclusive and that customers may develop their own services that compete with Mastercard's.
    Mastercard Form 10-K for fiscal 2025 - Item 1A risk factors and Note 19 legal and regulatory proceedings. — FY2025 · publ. 11 February 2026 · source ↗
  5. ReportedIt was 20% in the second quarter of 2026; a sustained fall toward payment-network growth would suggest the data and security the wallets need are being sourced elsewhere.
    Mastercard Form 10-Q for the quarter ended 30 June 2026 - net revenue by category, rebates, litigation and the BVNK acquisition. — Q2 2026 · publ. 30 July 2026 · source ↗
Sources
Generated September 25, 2026