Key takeaways
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Stablecoins reduce settlement time, cross-border costs and enable programmable rewards. They outpace traditional credit card systems.
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US merchants pay over $100 billion in card fees yearly. In comparison, stablecoins offer much cheaper, faster payments.
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Ripple’s RLUSD, Gemini’s XRP Card and Moca’s Air Shop show stablecoins moving into mainstream commerce.
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With big players exploring adoption, stablecoins are positioned to become central to US payment systems.
Since stablecoins first emerged in 2014 to provide price stability in the volatile cryptocurrency market, they have redefined traditional banking. They have separated the core functions of storing and transferring money, which allows fintechs to build programmable services on a global digital currency system.
Traditionally, businesses accepted card payments, while the remaining functions, including holding deposits and offering additional services and tools, were the banks’ domain.
Stablecoins have largely replaced this with an ecosystem where most are centrally issued but operate on decentralized networks rather than a centralized entity. Moreover, it reduces cross-border transfer times, lowers costs, stabilizes fund values and introduces flexible reward systems that outpace credit cards.
Each time a credit card is used in the US, banks and payment networks take a small portion of the transaction, typically 1.5%-3.5%. This significantly reduces profits of merchants and contributes to higher prices for consumers. This is starting to change thanks to stablecoins.
This article discusses the costs associated with credit cards, how stablecoins compare with credit cards, stablecoin use cases in the industry and how stablecoins are disrupting the credit card industry for the better.
The cost you pay for credit cards
Credit cards are widely used for payments, not just in the US, but across the world. However, this convenience has a high cost. Each transaction involves hidden fees, such as interchange fees paid by merchants to banks, network fees collected by Visa and Mastercard and other processing costs. These fees, typically between 1.5% and 3.5%, cut directly into merchants’ profits.
Businesses like airlines, retailers and small shops often raise prices to cover these costs, which ultimately affects consumers. The payment system favors card networks, leaving merchants with little control. Meanwhile, consumers end up indirectly paying for the networks’ profits.
Stablecoins, pegged to a fiat currency like the US dollar, offer a solution with faster, cheaper and clearer transactions. By avoiding card networks and lowering fees, stablecoins could help businesses save money and provide better value to consumers.
Did you know? Unlike rigid cashback or points systems, stablecoins enable programmable loyalty programs. Merchants can customize rewards across brands, let customers trade or save them and ensure tokens maintain value, reshaping how loyalty is earned and spent.
What are stablecoins?
Stablecoins are a type of cryptocurrency created to hold a steady value by pegging to stable assets, usually the US dollar. Unlike unpredictable cryptocurrencies like Bitcoin (BTC) or Ether (ETH), stablecoins offer stability, making them suitable for daily transactions.
Their value is typically supported by reserves of cash, short-term US Treasury securities or similar assets, designed to maintain one token at roughly one dollar. They combine the speed and efficiency of blockchain technology with the reliability of traditional currency.
USDC (USDC), issued by Circle, is a dollar-pegged stablecoin that operates under US money-services-business registration and publishes regular, third-party attestations of its reserves. In December 2024, Ripple launched Ripple USD (RLUSD), making the coin available on global exchanges after receiving regulatory approval from the New York Department of Financial Services. These US dollar-linked stablecoins are transforming the payment system, providing businesses and consumers with a cost-effective, fast, global alternative to traditional payment methods.
Stablecoins vs. credit cards: The case for a better payment system
Stablecoins present an alternative to credit cards by addressing two of the biggest pain points in US payments: high fees and slow settlements.
Credit card payments may feel instant, but merchants usually wait one to three business days to receive funds. During that delay, they also pay fees of 1.5%-3.5% per transaction, which cut into margins and often get passed on to consumers. Stablecoins settle on blockchain networks, usually within seconds to minutes, at a fraction of the cost, giving both merchants and customers a faster and cheaper option.
No wonder stablecoins have caught the attention of merchants, airlines and large retailers that are eager to reduce their dependence on Visa and Mastercard’s entrenched networks. By adopting stablecoins, they can reclaim lost revenue, protect tight margins and still maintain…
cointelegraph.com