Why Are Stablecoins a Growing Threat to Visa and Mastercard’s Revenue Model?

NEW YORK— Why are stablecoins emerging as a significant threat to the revenue models of Visa and Mastercard, whose shares closed at $352.85 and $562.03, respectively, after a $60 billion market capitalization loss? Reports that major retailers like Walmart and Amazon are exploring stablecoin options to bypass traditional credit card fees, which range from 1.5% to 3% per transaction, have sparked a 5-7% stock dip, indicating the potential for digital currencies to disrupt the payment giants’ fee-driven business amid intensifying market and regulatory pressures.

What Are Stablecoins and Their Appeal?

Stablecoins, digital tokens pegged 1:1 to the U.S. dollar, offer retailers lower transaction costs and faster settlement times—seconds versus days—compared to Visa and Mastercard’s networks. U.S. merchants paid $172 billion in card fees in 2024, with Walmart alone processing $650 billion in sales. Saving even 1% could yield millions annually, prompting retailers to develop proprietary stablecoins or partner with providers like Tether, pending regulatory approval like the Genius Act.

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Why Are Retailers Exploring Stablecoins?

Retail giants aim to create closed-loop payment systems, keeping transactions within their ecosystems. Amazon’s trials with blockchain-based payments and Walmart’s talks with stablecoin issuers signal a shift to bypass traditional rails, reducing reliance on Visa and Mastercard, which processed 66% of U.S. card transactions in 2024. Stablecoins also streamline cross-border payments and supplier settlements, cutting delays that cost retailers $15 billion yearly in lost interest.

How Have Markets Reacted?

Visa’s stock fell 5.4% and Mastercard’s 4.6% after stablecoin news, erasing $60 billion in combined market value, with Visa at $352.85 and Mastercard at $562.03 on June 13, 2025. Despite this, Visa’s 24.4% six-month gain outpaces the S&P 500, and Mastercard’s 12.4% projected EPS growth for 2025 reflects resilience. Analysts view the dip as a buying opportunity, citing robust transaction volumes, but warn stablecoin adoption could erode fee revenue long-term.

What Regulatory Factors Influence Stablecoin Adoption?

The Genius Act, advancing in Congress, could legitimize stablecoins by 2026, enabling retailers to scale adoption. However, uncertainty around taxation and anti-money laundering rules delays progress, with only 4% of U.S. merchants accepting crypto in 2025. Visa and Mastercard’s lobbying against favorable stablecoin laws, alongside a $30 billion swipe-fee settlement, complicates their defense, while the EU’s digital euro push adds competitive pressure.

Can Visa and Mastercard Counter the Threat?

Visa has processed $12 trillion annually, with 215 billion transactions in 2024, and Mastercard handles 143 billion. Both are piloting stablecoin settlements—Visa with USDC on Solana and Mastercard with Paxos—aiming to integrate blockchain without losing control. However, their 1.5-3% fees remain a target for cost-conscious retailers. Failure to match stablecoins’ speed and cost could cede market share, especially in e-commerce, projected to hit $8 trillion by 2027.

Did you know?
Stablecoins, eyed by Walmart and Amazon, could cut Visa ($352.85) and Mastercard ($562.03) fees, threatening $172 billion in annual merchant revenue.

What Are the Broader Industry Implications?

A stablecoin shift could disrupt banking, reducing deposit flows as retailers hold digital reserves. Small merchants, unable to develop proprietary systems, may face higher costs if Visa and Mastercard raise fees to offset losses. Consumers could benefit from lower prices if savings pass through, but widespread adoption risks systemic instability if unregulated stablecoins fail, as seen in past crypto crashes.

How Significant Is the Long-Term Risk?

Stablecoins processed $7 trillion in 2024, just 5% of Visa and Mastercard’s volume, but their 300% annual growth alarms analysts. If retailers like Amazon, with 20% of U.S. e-commerce, adopt stablecoins, fee revenue could drop 15-20% by 2030, per industry forecasts. Visa’s lower debt-to-capital ratio (34.99%) versus Mastercard’s (73.67%) offers flexibility to adapt, but both must innovate swiftly to retain dominance.