The GENIUS Act has raised concerns among investors about stablecoins potentially disrupting Visa and Mastercard’s two-sided payment infrastructure—the network rail that connects consumers and merchants. Markets are pricing in the threat of stablecoin rails replacing these networks for consumer, B2B, and cross-border payments. However, a deeper analysis of the stablecoin ecosystem and payment dynamics suggests these fears may be overblown, with the technology presenting more opportunity than existential risk to Visa and Mastercard’s payment networks. Moreover, crypto capital markets, not retail domestic payments, account for the majority of stablecoin activity today.

We don’t foresee stablecoins presenting a material threat to Visa or Mastercard’s long-term business model. While we think stablecoins represent an exciting development, businesses and consumers will need time to adopt them widely. Disrupting Visa and Mastercard’s payment network proves extremely difficult given both consumer friction and behavior patterns when adopting new payment methods, but more importantly, given the challenges in changing the acceptance infrastructure across more than 150 million merchant locations and about 8 billion consumer credentials worldwide.^[3] Moreover, trust serves as the biggest intangible asset of any two-sided payments network, along with extensive distribution, governance, and regulation systems built around them. Given this context, we don’t see stablecoins as threatening Visa or Mastercard’s global payment infrastructure.

Visa and Mastercard’s core consumer payments business faces less exposure given that first, on the credit card side, stablecoins cannot provide credit and consumer rewards, and second, on the debit side (which costs less to accept than credit), stablecoins lack fraud protections. Consumers will not automatically adopt stablecoins without the right value propositions. While merchants have long aimed to reduce acceptance costs, consumers lack meaningful incentives to change their payment preferences. This dynamic has remained consistent across various alternative payment methods including cryptocurrency, open banking, and real-time payments. Stablecoins face the same consumer adoption challenges, particularly since cheaper payment alternatives like automated clearing house (ACH) and real-time payment systems already exist but see limited retail usage.

Merchants must consider the cost of incentives (like cash back and rewards) when trying to shift consumer payment behavior, as consumers generally do not change payment preferences without such motivation. Card payments also bundle many services including chargeback protection, fraud mitigation, and other value-added services that stablecoins cannot easily replicate without significant investment and governance. We believe stablecoins will eventually find their place in moving money around the world with fewer correspondent banking intermediaries, thereby lowering transaction costs. We believe banks and acquirers, not payment networks, face the most risk. Payment networks appear to be winners in our view as stablecoins infrastructure offers them new revenue opportunities. In fact, Visa and Mastercard are actively investing in digital asset infrastructure and integrating stablecoins into their own networks.