The networks' race to own and control the Value-Added Services stack reveals direction of travel for the payments market as a whole

This month I decided to select a slightly longer viewfinder to understand why networks are pivoting from building volume to increasing the depth of their value-added services stack.

Processing volume is no longer the key growth yardstick for networks

Sometimes it is worth taking a longer look at the largest scheme or network providers over a few years to gain a better understanding of the changes that are taking place right across the payments space.

My prediction is that by 2029, value-added services revenue will overtake core payments processing revenues generated by the largest payment network Visa, with Mastercard hot on its rival's heels. Already today, if you are judging the success of these networks by the volume and value of transactions they process alone, you are using the wrong growth yardstick.

That said, this is not because payments volumes on card rails are declining. Quite the reverse: over the last five years the volume of domestic and cross-border transactions that Visa and Mastercard have processed has continued increasing at a healthy rate.

Visa's FY2021 annual report shows $9.97tn of nominal payments volume and 165bn transactions processed on its rails. While four years later (as reported in its FY2025 annual report) Visa processed $14.2tn of payments volume and 257.5bn processed transactions. Its latest quarterly results (Q2 2026) show payments volume for the quarter ended 31 March 2026 increased 9% year-on-year on a constant-dollar basis. Last quarter, Visa processed 66.1bn transactions, also up 9%. Visa's Compound Annual Growth Rate (CAGR) for Gross Dollar Volume (GDV) across the last four years from 2021 to 2025 is 9.5% — all very healthy.

Mastercard's processing revenue reveals similar growth. It reported full-year 2021 GDV of $7.7tn, up 21% on a local-currency basis. Four years later in 2025, it reported $10.6tn of GDV, translating to growth of 9%, with cross-border volume growth of 15%, and switched-transaction growth of 10%. And in Q1 2026, Mastercard reported $2.7tn of GDV, up 7% on a local-currency basis, with cross-border volume up 13%, and switched transactions up 9%. So, in GDV terms, the core card schemes are still growing strongly as they continue to benefit from a combination of six key growth drivers:

1. Continued shift from cash to digital payments
2. E-commerce and mobile wallet growth
3. Increasing contactless usage
4. Cross-border travel recovery since the Pandemic
5. Commercial card and B2B digitisation
6. Tokenisation and embedded payments.

Tighter processing margins

However, the big networks are increasingly measuring themselves by the range of value-added services (VAS) they offer and eyeing the higher margins generated by them.

They need to build out their VAS suites to protect margins as a combination of interchange regulations, merchant resistance, growth of domestic schemes, real-time payments, account-to-account (A2A) payments, wallets, open banking, and lower-cost domestic payment rails is eroding margins on transaction processing alone.

Mastercard itself flags competition and potential disintermediation from A2A payments, processors, regulation and alternative routing as key risks to transaction processing revenue growth. So, what value-added services are the networks buying, building, shaping and offering, and how are they managing that transition?

Payment security and digitalisation services boom

Key service targets for the networks over the same timeframe have included:

1. Fraud prevention
2. Identity
3. Authentication
4. Tokenisation
5. Cyber intelligence
6. Issuer processing
7. Open banking
8. Data analytics
9. Loyalty and personalisation
10. Dispute management
11. Payment orchestration
12. Cross-rail trust services.

McKinsey notes that B2B payments are digitising but often through low-margin channels, making the value-added services listed above (and others closer to the merchant like invoice automation, reconciliation and working-capital tools) increasingly important.

Services growth already showing in financials

The focus on services in the last five years has been significant, both in terms of the wave of innovation it has generated, and the volume of M&As and mega capital raises completed over this time period.

The result is strong growth and increase in higher margin revenues from the sale of value-added services by the major networks. Visa's directly disclosed VAS services revenue rose from $6bn in FY2022 to $10.9bn in FY2025. Visa already describes these services as higher margin than core transaction processing. The key point is that VASs give Visa and other networks "a faster-growing, more defensible and more diversified revenue pool around payments" as traditional processing proves increasingly competitive.

Payments ecosystem disruption and amalgamation

There was a period where everyone stayed 'in their lane'. The scheme providers enabled transactions, the PSPs provided POS payment terminals to merchants and the tech firms like Mypinpad provided vital compliant software for authentication, identification, Tap to Pay capability, fraud prevention, and much else besides.

However, the rush to offer payment services is simultaneously disrupting and collapsing the neat boxes of the payments ecosystem, as we have seen with the Capital One acquisition of Discover network in 2024.

Capital One previously relied on Visa and Mastercard. By acquiring Discover's payment network, Capital One bypassed these competitors, drastically reducing interchange fees and keeping more processing revenue in-house. The merger also promised to generate billions through streamlined operations and shared paytech ecosystems. More importantly, Capital One instantly gained access to a full-scale, worldwide payment infrastructure to compete against the Visa-Mastercard duopoly.

However, as those in the mega M&A world know all too well, it's critical to use acquisitions to better serve the customer, not simply defend the market status quo and protect margins of existing businesses. The goal in these deals must be to use them to unlock innovation and build a deeper value-added services stack, rather than risking being positioned as a slow-growth, low margin, integration-heavy payments processor.

For the major networks, issuers and fintech platform builders, value-added services is a hedge against declining margins from pure processing revenues, not just an opportunity for increased sales. If long-run card volume growth is being contested as it surely is now, the rational move which Visa and Mastercard are beginning to prove, is to monetise the intelligence around transactions (fraud, identity, tokenisation, etc.) to command those higher VAS margins which domestic schemes will find harder to copy than networks' rails.

Services from the payments intelligence layer

The conclusion then is that increasingly, consolidation in our market isn't about seeing fewer players operating in your part of the ecosystem, it's about re-drawing who gets to participate in adding value to consumers and merchants alike. The winners in the payments space in 10 years' time will not be those that are processing more transactions and moving more money, but those who own and control the intelligence layer which enables those payments to be completed securely.

The only other question is whether anyone beyond the two North America-based networks will be able to participate and provide innovative services based on that intelligence layer. My view is that by 2029 — we will know the answer to that question.