Payment Industry's "Self-Revolution"! Visa and Mastercard Accelerate Stablecoin Deployment

Visa and Mastercard are accelerating their adoption of cryptocurrency payments, betting on the growth potential of stablecoins in developing countries while defending against competitive threats from merchants bypassing their networks. According to The Information on Monday, the two payment giants have recently expanded their overseas crypto payment businesses and are actively seeking acquisition and investment opportunities. Mastercard is negotiating to acquire Zerohash, a provider of stablecoin payment infrastructure, for at least $1.5 billion. Visa invested in British stablecoin payment company BVNK in May and indicated it hopes to invest in more stablecoin startups. This acceleration was triggered by a wake-up call in spring. Previous reports revealed that Amazon and Walmart were exploring launching stablecoins, and as soon as the news broke, Visa and Mastercard’s stock prices dropped. In July, Washington’s passage of stablecoin legislation provided legitimacy for the industry, prompting its growth in traditional finance. Mark Nelsen, Visa’s global head of business and money movement products, said the company had been waiting for the law to pass, “So most of the real work was actually done in the past two months.” Emerging Markets as a Growth Engine Visa’s stablecoin-based prepaid card business is growing rapidly. Launched two years ago, it is gaining strong momentum in emerging markets such as Latin America. In countries with unstable currencies, consumers and businesses use stablecoins to access U.S. dollars, and these prepaid cards make it easy for people to hold and spend dollars. In the quarter ended September 30, spending using Visa cards linked to stablecoins tripled year-on-year, Visa CEO Ryan Mclnerney said on last month’s earnings call. Visa currently has more than 130 stablecoin-linked card issuer programs in over 40 countries, with Mastercard operating over 100 crypto card projects globally. Startups Rain, backed by Sapphire Ventures, and Bridge, part of Stripe, are major card suppliers for these apps. Rain said its annualized card spend has exceeded $2 billion, doubling since August. Argentine crypto app Lemon Cash said 70% of its users’ total payments come from Visa cards. Cuy Sheffield, Visa’s head of crypto, commented: “In five years, I think this will be a very important product category for us.” Challenging the Role of Traditional Banks Stablecoin business is rather delicate for Visa and Mastercard, as it may alienate banks, their traditional debit and credit card customers. Neither company has issued its own stablecoin; instead, they help banks launch stablecoins. However, the promotion of stablecoin cards may threaten banks because their role in stablecoin-based transactions is smaller and their revenue lower than with traditional debit card payments. Merchants pay the same fees but favor stablecoin transactions because funds settle faster. James Wester, co-head of payments at Javelin Strategy, said, “What’s really important about stablecoins for Visa and Mastercard is that it changes the settlement plumbing after transactions, not much else”—something consumers don’t notice. If more payments shift to stablecoins, it could impact settlement processes traditionally completed via Fedwire, ACH transfers, or internal transfers. Credit Cards Are Still an Untapped Area Direct payments between businesses and individuals remain the largest type of stablecoin transaction in the real world, followed by card payments. According to Artemis data, Visa and Mastercard’s involvement appears to have boosted card adoption, while other experiments have progressed slowly. In June, Shopify launched a feature allowing some merchants to accept stablecoins directly from consumers via the Stripe payment platform and the Coinbase blockchain. According to crypto data platform Dune, only 2,143 payments have been completed so far, totaling $305,402. Stablecoin-linked credit cards are still in their early stages. Charlie Sandor, an investor at crypto venture fund CMT Digital, said, “Stablecoins can’t really replace credit cards yet, and that’s the core business for Mastercard and Visa. Someone has to be willing to grant you credit, and that capability hasn’t been built on-chain yet.” Risk Warning and Disclaimer The market has risks; be prudent in investing. This article does not constitute personal investment advice and does not take into account individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. All investments made based on this article are at the user’s own risk.