SoFi has entrusted that the future of merchant settlement in the US will be on stablecoin payment rails by joining forces with Mastercard to move its entire debit and credit card programmes on the global card networks’s stablecoin-supported rails.
SoFi has moved its entire $25bn card program to Mastercard’s stablecoin settlement rails in a bid to allow US merchants to settle transactions instantly.
Through SoFi’s federally regulated SoFi Bank, the US-based digital finance firm will allow its debit and credit card programs to process transactions for merchants without them needing to hold a stablecoin.
SoFi will use its native SoFiUSD stablecoin to process transactions on Mastercard’s payment rails and networks which support stablecoin payments. This is designed to accelerate settlements and access to liquidity for issuers, acquirers and merchants.
Both SoFi and Mastercard are also seeking to broaden the adoption of bank-issued stablecoins like SoFiUSD by placing settlements on secure rails operated by trusted processors such as Mastercard, while also bridging the gap between traditional and decentralised-based networks.
Sherri Haymond, Global Head of Digital Commercialisation at Mastercard, said: “Stablecoins become meaningful when they solve real problems that businesses face every day.
“With SoFi, we’re moving beyond exploration to implementation, bringing regulated stablecoin settlement into a live production environment while preserving the trust, scale and safeguards expected from Mastercard. This is another step toward giving businesses more choice in how money moves.”
The partnership builds off the announcement in March which revealed SoFi struck a deal with Mastercard to integrate SoFiUSD into Mastercard’s Multi-Token Network to support interoperability between stablecoins, fiat currencies and tokenised deposits.
Why SoFi wants its stablecoin at the heart of the settlement
SoFiUSD is issued by SoFi Bank, regulated by the Office of the Comptroller of the Currency, and is a nationally chartered bank. The stablecoin is fully redeemable 1:1 for US dollars and supported by reserves consisting primarily of cash.
Stablecoin settlement with SoFiUSD is not limited to SoFi Bank. The company revealed it is in active discussions with large merchants across the US regarding stablecoin-based settlement arrangements.
Anthony Noto, CEO of SoFi, said: “Merchants do not need to hold stablecoins, build new infrastructure or change how they operate. Through SoFi’s Big Business Banking platform, any merchant can receive settlement funds instantly in a SoFi Bank account and withdraw cash around the clock and at zero cost.
“That means businesses have faster access to their money via the speed of blockchain, with the safeguards of a bank.”
SoFi is the latest financial firm to launch its own native stablecoin, joining the likes of Revolut and Fiserv.
Stablecoin payments, particularly business-to-business payments, have surged in usage amongst traditional financial firms as the digital currencies have opened up a new revenue stream for the likes of SoFi to benefit from by issuing their own stablecoins to retain interest from the underlying fiat currency.
Due to increasing regulatory clarity regarding stablecoin issuance and classification in regions such as the US and Europe, traditional firms which typically rely on regulatory compliance have grown in confidence of the benefits of issuing their own stablecoins.
With the ability to process stablecoin settlement outside traditional banking hours, 24/7/365, and becoming a significantly more cost-effective method of settling cross-border payments, firms like SoFi want their stablecoins to be the predominant currency in which to send, receive and settle their payments as rails become more mature.
