Agent usefulness depends on wallet reach

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 12:28

   we've had this huge leap from agents being what I would call spectators to agents being actors. And how do they act on my behalf? Well, if you give them a payment credential in a safe way, I can go from recommending the flowers for your wife to buying the flowers for your wife. So, like, I'll give you an example. Just last night, my wife and I have been talking about getting a piano teacher for our seven-year-old son.

2. 12:55

   And it's complicated because you have to know our schedule, and he has soccer three days a week, and we want somebody who can come to the house. We have to know the schedule of the piano teacher. And, you know, I asked ChatGPT about this a while ago, and I got some recommendations. But just last night, I asked an agent, and it did the entire transaction task for me. It found a bunch of people, asked me a few questions, checked the schedule, and booked someone for the very first lesson.

3. 13:24

   So that is infinitely more useful than dumping yet another task on my doorstep. So agents have all of a sudden become significantly more helpful and useful because they effectively have arms and legs, which are payment credentials. And so what's happened with the rise of Muse and Instinct and Town and other AI agents is once they have access to payment credentials, their utility increases. And so we sort of have kicked off what I kind of call the wallet wars, where every wallet is now rushing to connect to the agents.

4. 14:01

   And of course, as an agent, I want a wallet that has sort of two things. One, the most number of consumers that already have a credential at that wallet, and a wallet that has a very broad merchant reach. And so, you know, right now this is sort of companies like Stripe Link. They have about 300 million consumers who have an account at Link. about a million merchants use Link. You have Shopify with ShopPay, similar is, you know, consumer size, probably more like 1.7 million merchants.

5. 14:31

   Then you have PayPal, which has got, you know, over 400 million accounts, depends on how you kind of, you know, sort of, you know, how that's actually measured. But they have on the order of 30 million merchants. So these wallets are connecting to the agents and I think are providing a lot more utility. So it's interesting, though, because wallet wars have been around for a while. So remember, not to speak ill of our old employer, remember Vime?

6. 14:58

   Yes, V.me. V.me, but it was something before that. I forgot, they changed the name to Vime. But there have been many attempts, like why were there wallet wars 10 or 15 years ago? Because it turns out that being the default stored credential for a consumer, right? Like if I can get trained in a Pavlovian way where it's like, oh, I see flowers, I use PayPal. Well, PayPal is better off for that. That's correct.

7. 15:21

   Or one of the things that we worked on at TrialPay was how does a Visa, it's very good for Visa, it's very good for Visa's issuing banks, if the default card in your Uber wallet, because Uber is a wallet too. Yeah. You can store eight different cards or credentials within Uber. Being the top of wallet is very, very important because when digital wallets came out, like, I kind of like to think before digital wallets, you had what I like to call dead cow wallets, you know, an actual, I think I have one here.

8. 15:48

   I'll give a demo to our audience. This is called a dead cow wallet. It has lots of credentials in there. But before Capital One would pay Samuel L. Jackson to say what's in your wallet, But why would they do that? Because when you go to Chipotle, they want you to pull out your dead cow wallet and say, like, I'm going to pay with my Capital One card. Yeah. Right? And that was, whereas for when digital wallets emerged, it's like, I'm ShopPay, I'm PayPal.

9. 16:13

   I want to be your default. And then actually what the interesting thing is, like, within that wallet, there were other credentials and those guys were competing to be the number one. Like, if you recall at Visa, when we were dealing with Uber and Airbnb, there was tens of millions of dollars paid by the issuers so like Chase and Amex to prefer their cards on those platforms so that's one war which is like this is my card I want to sort of promote this to the top of wallet you're talking about the actual network war where Visa and we helped Visa become a default card at Uber and now you have this other layer, this abstraction layer of I am a wallet that actually processes the transaction, the shop pays, the links, and the PayPals.

10. 17:03

    And so we talked about how a checkout looks a bit like NASCAR because you have multiple different buttons. Pay with PayPal, pay with Google. Remember Google Checkout came out? They were yet another, but they're consumer wallets and then they're merchant. Because the interesting thing is that I kind of think of VGS as a merchant wallet to an extent. I mean, it's a strange metaphor to use because a merchant isn't paying for things.

11. 17:27

    A merchant is receiving payments. But once I receive the payment, where do I put it, especially if I'm billing this customer again and again and again? And again, for PCI reasons and whatnot, I don't want to store scraps of paper with that secret three-digit code that, of course, is not secret because it's on the back of your card, but I need it to process it. I don't want to store your 16-digit credential and just keep it in scraps of paper in, like, my original cash register.

12. 17:56

    Like, I need something to go receive that for me. On the consumer side, it's like, I don't want to remember. Like, what was the original purpose of a consumer wallet? It's that it's 2 o'clock in the morning. I want to buy flowers for my wife. My wallet's downstairs. Like, I don't know where my wallet is. I want to go pay on 1-800-Flowers right now, and if I just enter my PayPal credentials, they were a wrapper and linked to all of my kind of, all the credentials in my dead cow wallet.

13. 18:23

    That was the purpose back then. But what I find interesting with all of agentic commerce is it's kind of the same thing. It's like, you know, it's still 2 o'clock in the morning. You know, you still want to buy flowers for your wife for something bad that you did or, you know, Mother's Day or whatever. Something good, Alex. Something good, right? You know, I always tend to buy flowers. I mean, make sure we're sponsored by 1-800-Flowers, so make sure to buy there.

14. 18:45

    So you want to go buy, and your agent doesn't have access. Like, it's the same problem, right? It's like the agent could say, hey, Terry, where's your credit card number? And that's more work and more friction versus it has access to it in the same way that you just gave access to all of your cards,