Retail Giants Bank On Stablecoin To Escape Visa & Mastercard’s Grip

Can stablecoins really shake up how consumers pay for things? It is starting to look that way. Stablecoins are emerging as one of the most credible crypto use cases for real-world payments, and some of the world’s largest retailers, including Walmart (NYSE:WMT), are taking notice. While credit and debit cards offer convenience and rewards to consumers, they also come with hefty interchange fees for merchants – typically about 2% – and settlement times that can stretch over a couple of days. Stablecoins, in contrast, offer near-instant settlement, lower transaction costs, and much greater control over the payment process. That makes them a direct challenge to Visa (NYSE:V) and Mastercard’s (NYSE:MA) core business model.

Image by Roman Ivanyshyn from Pixabay

What Are Stablecoins?

Stablecoins are a type of cryptocurrency that are designed to maintain a stable value against government-issued currencies, such as the U.S. dollar. In effect, they bring the dollar onto the blockchain, combining the stability of a fiat currency with the speed, transparency, and programmability that cryptocurrencies offer. Stablecoins aren’t merely a digital cash equivalent. They’re increasingly being positioned as a payment mechanism, especially following the passage of the new U.S. Stablecoin bill in the Senate last month. The legislation sets guardrails around stablecoin issuance, including full reserve backing, mandatory monthly audits, and anti-money laundering compliance. These moves are expected to legitimize the asset class and drive mainstream acceptance. related: Are Stablecoins A Real Threat to Visa and Mastercard Stock?

How Will Retailers Use Stablecoins?

In theory, large retailers could either issue their own dollar-backed stablecoins or adopt popular ones like USDC, enabling closed-loop ecosystems that resemble in-store credit systems albeit backed by blockchain infrastructure. For example, customers could load funds or receive cashback in these retailer-issued tokens. Merchants would stand to benefit from instant settlement, reduced reliance on intermediaries, and significant savings on interchange fees.  These fees have long been a point of friction between retailers and card networks.

Even if stablecoins are not adopted at scale, they could serve as a bargaining chip for retailers in negotiations with Visa and Mastercard to help lower fees and improve terms.  Stablecoins could also enable programmable rewards and flexible discounts. For instance, a retailer could automatically offer a certain cashback in tokens for repeat purchases or trigger limited-time discounts based on wallet activity. Some early moves are already visible. For instance, Shopify now allows merchants to accept stablecoins via integrations with Coinbase and Stripe. Walmart and Amazon are reportedly exploring issuing their own dollar-backed stablecoins.

Will Customers Embrace Stablecoin?

Still, adoption won’t be frictionless. Cards remain the preferred option for most consumers. They are ubiquitous, easy to use, tie into the current banking system, and come with strong fraud protections and rewards. Meanwhile, stablecoin usage might require customers to set up a separate crypto wallet, adding extra steps to the checkout experience. That might create a lot more friction, making it a hard sell for most shoppers. Moreover, the key benefits of stablecoins, which are speed and cost, will largely accrue to merchants and not to consumers.

Retailers have tried to pivot away from cards in the past with limited success.  For instance, pay-by-bank solutions, which allow customers to pay merchants directly from their bank accounts, have struggled to gain traction in the U.S., despite offering cost advantages. Stablecoins could face similar headwinds. Furthermore, Visa and Mastercard are exploring their own innovations in the stablecoin arena. Visa has already tested settling transactions in USDC, and both networks are seeking ways to modernize cross-border payments using blockchain-based systems. Overall, these companies are looking to position themselves as stablecoin infrastructure players, aggressively embedding them into their networks.

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