Major merchants Walmart Inc. and Amazon.com Inc. are mulling the use of stablecoins, potentially shifting high volumes of card transactions and cash they handle outside the traditional financial system and saving billions of dollars in fees.
The companies headline a growing legion of multinational giants exploring the idea of launching their own digital currencies or partnering with existing stablecoin providers, according to a Wall Street Journal report. Online travel behemoth Expedia Inc. and some airlines are also looking into potentially issuing their own stablecoin — a type of cryptocurrency pegged to a government-issued currency, most often the U.S. dollar — the Journal reported.
Even more companies and banks are considering joining a merchant-led consortium that would adopt an existing stablecoin platform to sidestep traditional payment rails without the regulatory hurdles of building their own currency, the Journal reported.
Retailers are strongly considering stablecoin as a way to wean dependence on credit card networks like Visa Inc. and Mastercard Inc. The Fed calculated $32 billion in total interchange fees on prepaid and debit card transactions in 2021, the most recent year for available information.
Stablecoin, a close equivalent to cash designed to maintain a fixed value, is backed by cash reserves or short-term U.S. Treasuries that make it less volatile than tokens such as Bitcoin and Ethereum. For that reason, it is gaining favor among merchants as an option for instant, low-cost transfers seeking faster settlement and lower fees, especially in cross-border transactions.
Stablecoin transactions could potentially clear instantly — a huge advantage for companies with global supply chains or large volumes of transactions — while traditional credit card payments can take days to settle.
“Running payment operations on outdated systems is a bit like driving a car built in the ’90s: it technically still runs, but you’re burning more fuel, missing modern safety features, and holding yourself back from peak performance,” Josh Fischer, vice president of product management at Cin7. “The road has changed, and your tools should too. Yet, many businesses assume their existing payment processors are ‘good enough’ — even when those systems haven’t evolved in years.”
Retailers are particularly emboldened as legislation that would open the door for merchants to adopt stablecoins works its way through Congress. The Genius Act would create a legal framework for stablecoin use in the U.S. Nonetheless, skeptics of stablecoins warn of potential security risks and regulatory uncertainty.
For years, merchants have unsuccessfully sought alternatives to traditional payment systems.
In 2019, then-Facebook Inc. (since renamed Meta Platforms Inc.) toyed with the idea of issuing its own cryptocurrency, called Libra, under a new entity christened Calibra. Legislators, however, pushed back: The House Committee on Financial Services and the Senate Banking Committee held hearings, and critics belittled the concept as a scam, and Facebook ultimately scrapped the plan.
