Stablecoin Revolution: Crypto Assets Challenge the Dominance of Visa and Mastercard, Can They Reshape the Global Payment Industry Landscape?

Traditional payment giants Visa and Mastercard are facing strong challenges from tech companies and crypto startups! Stablecoins, with their ultra-low fees, instant settlement, and core advantages of bypassing intermediaries, are making strong inroads into the $100s of billions payment market. How will this transformation affect merchant costs, consumer experience, and the practical application of crypto assets? This article will deeply analyze this "great change" in the payment field.

According to Bloomberg, a disruptive "territorial battle" is unfolding in the global digital payment space - former giants Visa Inc. and Mastercard Inc. are being forced into a defensive position.

Tech giants and crypto startups are making a strong entry into the payments sector, long dominated by Visa and Mastercard, with a new type of currency — stablecoin. They have thrown an irresistible enticing proposal to merchants: lower fees, faster fund settlement (instant settlement), and a completely new payment channel that bypasses the two giants.

This is not only a technical challenge, but also a financial threat. Stablecoins (usually pegged to the US dollar) allow consumers to pay merchants directly from their crypto wallets without going through banks or traditional card organization networks. In just the last year, US businesses paid approximately $187 billion in swipe fees, most of which flowed through Visa and MasterCard systems. Stablecoins are expected to significantly reduce or even completely eliminate this "toll."

"It is clear that stablecoins could ultimately pose a threat to the entire traditional financial (TradFi) services sector," said Christian Catalini, founder of the MIT Digital Currency Initiative. "But credit card networks will not sit idly by. Card organizations will actively promote collaborations with multiple stablecoins to maintain their core position."

This pressure is prompting Visa and Mastercard to reposition themselves - no longer as old-fashioned "toll booths", but as the underlying infrastructure for all types of digital transactions (including those initially designed to bypass them). With U.S. President Trump set to sign a bill implementing formal federal regulation on stablecoin issuers, the two companies are vigorously promoting their long-term investments in areas such as Stablecoin Settlement and Crypto-Linked Cards. At the same time, they are also emphasizing their initiatives in Cross-Border Payments Solution, which is one of the hottest application scenarios for stablecoins.

The Giants' "Star-Absorbing Technique": Embrace or Digest? Visa and MasterCard have a long history of "reconciliation" - resolving crises by integrating competitive threats into their own networks while striving to maintain their pricing power. Bringing stablecoins closer today may just be another successful "recruitment" performance by the giants. Currently, the stablecoin market size has reached $253 billion, and U.S. Treasury Secretary Scott Bessent predicts it will reach $2 trillion in the coming years.

Stablecoin: The "Pragmatic" Breakthrough of Crypto Assets Stablecoins have become the protagonists of the financial disruption story, marking a rare departure for the Crypto Assets industry from its inherent image of speculation and gambling. In this sense, stablecoins provide a tool that truly improves the efficiency of the financial system, finally endowing the crypto community with a function of social practical value.

Corporate behavior begins to shift According to The Wall Street Journal, large retailers such as Walmart Inc. are considering piloting stablecoin payments. Earlier this month, banking technology service provider Fiserv Inc. launched its own Fiat-Backed Token to help small and medium-sized financial institutions keep up with the pace of payment innovations.

Huge Challenge: User Habits and Trust Barriers However, replacing card organization networks is no easy task, especially in the United States. Consumers have become accustomed to Credit Card Rewards, Fraud Protection, and Credit Access—advantages that are not easily replaced. At the checkout, the direct benefits provided by stablecoins are limited, and for many, Crypto Assets still feel unfamiliar or suspicious. Stablecoin balances do not enjoy FDIC deposit insurance, and consumer protection measures may differ significantly from those of conventional debit cards. For merchants, new technologies may bring compliance, tax, and operational risks.

Digital payment pioneers are pushing forward with full force Nevertheless, proponents of digital payments continue to move forward resolutely. Shopify Inc. has recently partnered with companies like Stripe Inc. to allow merchants to accept USDC (a dollar stablecoin issued by Circle). In the background, the entire payment process is completely unaffected by card organization networks, and is instead processed entirely on the Blockchain Protocol. Merchants can directly receive USDC into their own crypto wallets or instantaneously exchange it for fiat currency and settle it to their bank accounts.

Shopify will offer customers a 1% cash-back for payments made with USDC, and the cash-back will also be paid in USDC. A mainstream CEX has also launched its own payment platform, supporting more e-commerce platforms to integrate stablecoin payments.

"Changing consumer payment habits is certainly difficult, but unlike the past, a dramatic shift in consumer payment preferences is now underway," said Richard Crone, CEO of payment consulting firm Crone Consulting.

Visa and Mastercard's Counterattack Faced with pressure, Visa and MasterCard, which together account for more than 85% of U.S. credit card transaction volume, have to take the initiative. Both companies emphasize their global merchant coverage network, fraud protection capabilities, consumer privacy protection, and brand trust. For example, their Tokenization Technology can hide sensitive account information during online shopping to protect consumers.

"We have been tokenizing value access for a long time," said Visa's Chief Product and Strategy Officer Jack Forestell. "Currently, the value represented by these tokens mainly comes from bank accounts, credit lines, debit cards, and credit cards. But the underlying value can completely be stablecoins or other Crypto Assets."

Embrace the Digital Future The two giants have been trying to integrate stablecoins into their ecosystems since at least 2021. Today, the renewed enthusiasm surrounding stablecoin technology has brought these efforts back into the spotlight and has driven greater investment. For example, Visa Ventures invested in the stablecoin infrastructure provider BVNK earlier this year. Financial institutions can use the platform to issue fiat-backed digital tokens.

Mastercard recently announced its participation in the Paxos Global Dollar Network, allowing Paxos to assist institutions on its network in minting and redeeming a stablecoin called USDG, while supporting various stablecoins including Fiserv's FIUSD, PayPal's PYUSD, and Circle's USDC.

The network also grants users fine control over payment routing. A transaction below $100 may be deducted from a checking account, larger amounts use a credit line, while payments to specific merchants are made from a crypto wallet—all of which are tied under the Single Payment Identity.

"We should not assume that stablecoins will replace existing bank card payments or fiat currency overnight," said Mastercard Chief Product Officer Jorn Lambert. "We believe this is more about new use cases and new opportunities, rather than replacing existing systems, especially in the areas of remittances, disbursements, and B2B payments."

Visa's Forestell pointed out that every previous disruption—from mobile wallets to buy now, pay later (BNPL)—has raised similar warnings. In the end, the adaptability of businesses prevailed.

"As native crypto users, you can transfer funds to each other," Forestell said, "but if you want to use it at scale for daily payments, you need Hyperscale Connectivity, and we provide the best on-ramp to achieve that goal."