Breno Oliveira, Head of Product, payabl.
As crypto slips into the mainstream, merchants are keen to take advantage of the growth opportunities on offer. And the most topical variant – and most intriguing for merchants – is stablecoins.
A stablecoin is a type of cryptocurrency whose value is pegged to a more stable asset, such as the US dollar or gold. Unlike Bitcoin, Ethereum, and countless other volatile cryptocurrencies, which fluctuate significantly in value, stablecoins have been designed to offer a much more predictable medium of exchange and store of value.
This has led many to perceive them as a bridge between traditional and decentralised finance (or DeFi), and they’re more suitable for everyday transactions. They’re also now getting a real boost from regulatory developments.
With the passing of the GENIUS Act, America has established a regulatory benchmark in the evolving stablecoin story. Other jurisdictions are now drafting or refining their own regulations in response. The European Union’s (EU’s) Markets in Crypto-Assets Regulation (MiCAR), for example, requires stablecoin issuers to be established within the EU and authorised by an EU supervisory authority.
With the regulatory lens tightening, here’s how businesses are harnessing stablecoins to modernise their payments processes.
Stablecoins facilitate faster and cheaper cross-border payments
Traditional cross-border payments have long been a pain point for merchants operating internationally. They can be slow and expensive as a result of intermediary fees and different time zones.
Stablecoins, especially those pegged to the US dollar like Tether (USDT) and USDC, can bypass the incumbent banking system and operate 24/7.
They leverage blockchain technology for instant transaction settlements, often with significantly lower fees than those associated with the traditional payment systems, especially when it comes to international transfers. Merchants can choose to receive settlements directly in stablecoins or have them converted to their preferred local currency, providing flexibility in managing their exposure to price volatility.
Given the advantages on offer, it’s no surprise the major card networks are taking a closer look. Visa became a pioneer in stablecoins when it enabled some clients to fulfil their settlement obligations in USDC. To date, more than $225 million in stablecoin volume has been settled through Visa across participating clients. The company has said it believes that “every institution that moves money will need a stablecoin strategy”.
Stablecoins enable retailers to attract new customers
As well as helping merchants and platforms reduce payments costs and support profit margins, stablecoins can also help to attract more tech-savvy customers.
It’s well documented that Gen Z in particular values speed, efficiency, and cost savings, and they’re also becoming more comfortable with crypto. So offering stablecoins as a payment option at the checkout will pay off.
The gaming and e-commerce industries in particular are now adopting stablecoins to facilitate in-game purchases, online transactions, and other digital payments. Recent research shows 85% of businesses making over $1 billion annually are already accepting stablecoins and other cryptocurrencies, but mid-sized retailers are lagging with only 23% adoption.
But there’s evidence of smaller businesses starting to embrace stablecoins. Compass Coffee in the US, for example, offers patrons the option to pay for drinks using USDC. This helps the company save on credit card fees while also opening up its business to customers comfortable with blockchain technology and crypto.
Industry commentators agree stablecoins are set to play an increasing part in payments. In a recent episode of our podcast Pay it forward, Consult Hyperion’s Dave Birch said: “Stablecoins, for a variety of reasons, are becoming a preferred payment option in a number of jurisdictions. I think there’s an inevitability that global businesses will all start accepting stablecoins fairly soon.”
Stablecoins enhance liquidity and ease access into emerging markets
Stablecoins improve liquidity for businesses by enabling quicker access to funds while reducing the need for the complex currency conversions that haunt many merchants.
And in countries with volatile currencies, they provide a more stable store of value. As a means of settling invoices instantly, they can also help to remove risk from supply chain management.
Importantly, stablecoins can also help merchants to tap into emerging markets with a high underbanked population who may not have access to more traditional payments infrastructure. USDT usage in particular has seen significant adoption by consumers in many emerging markets around the world, including Vietnam and parts of Africa where consumers value stablecoins as a low-cost, accessible alternative for daily transactions and remittances.
Unlocking the true value of stablecoins
Stablecoins transcend banking and borders alike, providing merchants with a number of advantages over traditional payment methods, such as increased speed, reduced costs, and the inclusion of previously excluded customers.
While different markets are at different stages of their journey, it’s clear stablecoins have emerged as a significant force that will impact the future of payments. Merchants will need to keep a close eye on developments to ensure their checkout properly reflects their growing prominence in markets around the world.
Breno Oliveira is Head of Product at payabl., a European fintech company offering acquiring, multi-currency business accounts, and card issuing solutions. With more than a decade of experience in product engineering and leadership, Breno worked across banking, financial services, and communications, managing product builds from strategy through to delivery.
At payabl., he leads product strategy and development across the company’s modular platform, focusing on user experience, technical performance, and scalability.
