Visa and Mastercard report minimal usage of stablecoins
In the rapidly evolving world of digital finance, stablecoins are making a significant impact. These cryptocurrencies, tied to traditional currencies like the U.S. dollar, could potentially facilitate, speed up, and reduce the cost of money transfers, especially internationally.
Two giants in the payment industry, Visa and Mastercard, are keeping a close watch on the development of stablecoins. Neither Visa nor Mastercard consider stablecoins to be a significant threat at the moment. However, this doesn't mean they are ignoring the potential benefits.
Visa, which handles approximately $15,000 billion in transactions each year, is experimenting with a stablecoin called USDC on the Ethereum blockchain. Mastercard, while the exact volume of transactions it manages is not specified, is involved in experimental projects and partnerships with cryptocurrency platforms.
One area where stablecoins could see significant growth is cross-border payments and remittances. By offering fast, secure, low-cost settlement, they could potentially speed up payments and reduce costs compared to legacy systems, enabling real-time settlement globally.
Another promising growth area is the use of stablecoins in e-commerce and retail payments, particularly in high-inflation countries. Businesses can accept stablecoins to protect margins, and merchant payouts can become instantaneous.
Stablecoins could also play a crucial role in supply chain and trade finance, integrating with smart contracts to automate payments tied to delivery confirmations, reducing disputes and improving cash flow.
Capital markets and treasury management are another sector where stablecoins could offer higher efficiency than traditional financial infrastructure, facilitating settlement and liquidity management.
In countries where the local currency is rapidly depreciating, like Venezuela or Argentina, stablecoins might be used to secure money or send it elsewhere. This could be particularly beneficial in areas where access to banking services is limited. Visa agrees, adding that cryptocurrencies could be beneficial in such situations.
However, scaling stablecoins isn't without challenges. Liquidity provisioning, the need for off-ramps to fiat, regulatory clarity, and shifting customer preference toward holding stablecoins instead of fiat currency deposits are just a few of the hurdles that need to be overcome.
Despite these challenges, the year 2025 is seen as an inflection point due to regulatory advancements and increased institutional adoption. The U.S. Genius Act and PayPal’s stablecoin PayPal USD are examples of this shift. This could potentially lead to mainstreaming of stablecoins in payment ecosystems.
While the global volume of stablecoin transactions is far less than that of Visa and Mastercard at the moment, the potential for growth is significant, particularly in cross-border, retail, supply chain, and fintech sectors. As regulatory support and institutional product integration continue to grow, stablecoins could transform the global payments landscape.
In various regions, a faster expansion of stablecoin use could be observed. However, it's important to note that the use of stablecoins is still in its early stages, and it's currently too limited to compete with Visa and Mastercard on a large scale.
In conclusion, stablecoins are transforming global payments by addressing speed, cost, and access issues. With promising growth especially in cross-border, retail, supply chain, and fintech sectors, driven by regulatory support and institutional product integration in 2025, the future of stablecoins looks bright.
Businesses in the technology sector, such as Visa and Mastercard, are exploring the potential of stablecoins in the field of finance. Both companies are experimenting with the use of stablecoins in various areas, including cross-border payments, e-commerce, and supply chain finance, to improve efficiency and reduce costs.
In countries with unstable local currencies, like Venezuela or Argentina, stablecoins could offer a secure and accessible alternative for people to store and transfer money. This is an area where both Visa and Mastercard see potential benefits for stakeholders who may not have access to traditional banking services.
