# Large merchants use several processors to route payments

Markdown copy of https://realalpha.app/s/large-merchants-use-several-processors-to-route-payments/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Terry Angelos](https://realalpha.app/people/terry-angelos/) · Terry Angelos is chief strategy officer and board member of VGS. · Co-founded TrialPay, ran DriveWealth, and led Visa's fintech and crypto teams; now VGS chief strategy officer.
- Host: [Erik Torenberg](https://realalpha.app/people/erik-torenberg/) · General partner, Andreessen Horowitz · Helped build Product Hunt; founded On Deck, Village Global and Turpentine.
- Show: a16z Podcast
- Episode: [Agentic Commerce: Why Your Wallet Is About to Change](https://realalpha.app/v/q8cb1XL9sXA/), Oct 15, 2026
- Moment: 6:27 to 10:16 of the episode (4 min), playing on https://realalpha.app/s/large-merchants-use-several-processors-to-route-payments/; the episode from there: https://realalpha.app/v/q8cb1XL9sXA/?t=387

## Quote

> “Yeah, so about **a third of all cards** get turned over every single year.”
> — [Terry Angelos](https://realalpha.app/people/terry-angelos/) at [7:57](https://realalpha.app/v/q8cb1XL9sXA/?t=477) · a16z Podcast

## Takeaways

1. Billion-dollar merchants average three to five payment processors.
2. About a third of cards turn over each year.
3. Multiple processors multiply credential storage and update work.

## About this segment

Terry Angelos gives the processor count for billion-dollar merchants and explains how multiple processors multiply credential updates. A neutral vault lets merchants route payments without duplicating that work.

From “Agentic Commerce: Why Your Wallet Is About to Change”, Oct 15, 2026. [Watch the full episode](https://realalpha.app/v/q8cb1XL9sXA/)

## Transcript

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

[6:39](https://realalpha.app/v/q8cb1XL9sXA/?t=399) If you're a merchant with over a billion dollars in GMV, how many payment processors do you have on the back end? Well, it depends. There are plenty that just have one, but you are better. I mean, but this goes to the use case of VGS, which is rather than being locked into one payment processor, you'd rather unbundle that, and you'd rather be able to pick and choose which payment processor you use.

[7:04](https://realalpha.app/v/q8cb1XL9sXA/?t=424) But also, if you have kind of a shared infrastructure that is storing credentials, what if one credential goes bad? What if my, I just had a Capital One card. Great example. Capital One bought Discover Card, or Discover Network. And then my fancy Capital One cashback rewards, 1.5% Visa card, it became a Discover card. And every week, I get notifications from very sad merchants. We are unable to process your card.

[7:32](https://realalpha.app/v/q8cb1XL9sXA/?t=452) Why are they unable to process my card? Because that old card number doesn't exist anymore. Even though I still have a relationship with Capital One, I just got a new card number from them. Granted, it's a little bit complicated. It's on a new network. There's also the possibility, like merchants can't just say, oh, we know that this card became that card. One merchant cannot do that. But a large vault can do that.

[7:54](https://realalpha.app/v/q8cb1XL9sXA/?t=474) And then the actual networks themselves, like Visa and MasterCard, and actually Discover, too, they have these. account updating tools. So you could say, hey, I'm a merchant, I have all of these card numbers, and I think, what is it, every year like 10% of cards expire? Yeah, so about a third of all cards get turned over every single year. No, even more. Like 25% mathematically, because it's a four-year expiration, and another 5% due to, in this case, Capital One buying Discover or Fraud or something else.

[8:23](https://realalpha.app/v/q8cb1XL9sXA/?t=503) So back to that question, by the way, for a merchant of a billion dollars, It's about three to five processors that Merchant will have. So now... They don't have to. They don't have to, but they should. No, no, that is the average that we see across the ecosystem. But there's a reason for them to do that because different costs, different approval rates, different regions, like you want to shard...

[8:44](https://realalpha.app/v/q8cb1XL9sXA/?t=524) Correct. In kind of computer science terms, you have all of your cards, and if you just say I use the same processor every single time, that's just not a good idea, or it's not as good of an idea as I can have multiple processors. But in order to do that, I have to be able to securely send the card number to the processor that I've chosen. Yeah, that's right. And in fact, once you have multiple processors, then the job of vaulting and getting updates is multiplied by the number of processors.

[9:13](https://realalpha.app/v/q8cb1XL9sXA/?t=553) So maybe I have 100 million cards as a merchant, but I have to store 100 million with Chase and 100 million with Stripe and 100 million with Braintree. And each of those vaults have to be updated at their networks. And so what VGS does is serve as an independent vault, neutral infrastructure on behalf of the merchants for the vaulting and the updates such that the merchant can then send a Visa token to the merchant via Stripe.

[9:41](https://realalpha.app/v/q8cb1XL9sXA/?t=581) Back to your kind of annoying Capital One issue, if you're a VGS merchant, that should not happen. So there are mechanisms when Capital One is switching from Visa to Discover to get those updates. And certainly that's the case if there's fraud or something else, and that's the role that VGS is playing. Yeah, exactly. So hopefully everybody has a good understanding now of what very good security does, VGS does.