To The Moon

Stablecoins, digital currencies pegged to assets like the U.S. dollar, pose both opportunities and risks to Visa’s business model. Below are the key risks:Disintermediation of Traditional Payment Networks:Stablecoins enable direct, near-instant transactions on blockchain networks, potentially bypassing Visa’s payment rails. Merchants and retailers like Walmart and Amazon are exploring issuing their own stablecoins to avoid interchange fees (1-3% per transaction), which could erode Visa’s revenue, particularly in high-margin cross-border payments. For instance, analysts estimate Walmart and Amazon could save $14 billion annually by using stablecoins.

Competitive Pressure from Retailers and Fintechs:Major retailers and fintechs (e.g., Coinbase, Shopify) are integrating stablecoin payment platforms, targeting cost-sensitive small and medium-sized businesses. Coinbase’s platform, for example, simplifies USDC payments, mimicking credit card ease without the fees.

If retailers issue their own stablecoins, they could negotiate lower fees with Visa or bypass it entirely, threatening Visa’s market dominance.

Regulatory and Market Shifts:The U.S. GENIUS Act, passed in 2025, provides a framework for stablecoin regulation, encouraging adoption by non-financial entities. This could accelerate stablecoin use, increasing competitive pressure on Visa.

Regulatory clarity may empower new entrants to offer lower-cost payment solutions, challenging Visa’s high-margin fee structure.

Limited Consumer Incentives:Stablecoins lack the credit access, rewards programs, and fraud protections offered by Visa’s credit and debit cards. This limits their appeal for retail consumers, but businesses prioritizing cost savings may still adopt them, reducing Visa’s transaction volume.

Visa’s Response:

Visa is mitigating these risks by integrating stablecoins into its infrastructure:Settlement Modernization: Visa has piloted USDC settlements on Solana and Ethereum, processing $225 million in stablecoin volume via its Visa Tokenized Asset Platform (VTAP).

Partnerships: Collaborations with fintechs like Stripe, Baanx, Rain, and BVNK enhance stablecoin-linked card programs and cross-border payments.

Programmability: Visa is exploring smart contracts for automated financial products, like stablecoin-based loans, to stay competitive.

Regulatory Alignment: Visa aligns with regulations like the GENIUS Act and EU’s MiCA to foster trust and institutional adoption.

By integrating stablecoins, Visa aims to remain indispensable, creating switching costs for merchants and maintaining its network’s relevance.

Efficiency of Stablecoins as a Means of PaymentStablecoins offer significant efficiency advantages over traditional payment systems, but they also face challenges:Speed:Stablecoins enable near-instant settlements, often within seconds, compared to multi-day delays for traditional cross-border payments. For example, Solana-based stablecoin transactions take 1-2 seconds to process and 30 seconds to become irreversible, with fees as low as $0.01.

Visa’s stablecoin settlements allow 24/7 processing, unlike banking systems limited to business hours.

Cost:Stablecoin transactions bypass interchange fees, offering significant savings. For instance, a 2021 study in Kenya showed stablecoin fees at 2.02%, compared to higher PayPal fees.

Stripe charges half its card transaction fees for stablecoin payments to U.S. merchants.

However, fees for moving stablecoins in and out of broader payment systems (e.g., gas fees or conversion costs) can still be high, limiting liquidity.

Accessibility and Inclusion:Stablecoins require only an internet connection and a digital wallet, making them accessible in underbanked regions. They’re widely used in countries like Argentina and Nigeria for remittances and wealth preservation due to volatile local currencies.

Cross-border remittances, a $45 trillion market in 2023, benefit from stablecoins’ low costs (e.g., $1-2 vs. $9.61 for a $200 transfer via traditional systems).