The view that stablecoins might be a challenge to the Visa payment network if Amazon or Walmart create their own stablecoin payment systems is logical enough. Such payment systems would benefit the retailers by potentially lowering their payment transaction costs, currently represented by the interchange fees Visa earns when consumers pay using its affiliated bank cards.
Stablecoins offer the potential advantage of lower transaction fees (typically under one percent compared to two percent to three percent for card processing.
But what is not clear are consumer incentives to switch payment methods. There are, in other words, consumer “lock in" issues; incentives (cash back) for using the Visa system; switching costs; habits and complexity issues that will work against stablecoin usage.
Consumers likely will not want to give up the “cash back” feature of using Visa-branded credit cards for payments. After all, that is a tangible benefit of using the cards, at no real cost, assuming all balances are paid off regularly, so that no finance charges are accrued.
From a consumer's perspective, using a Visa card effectively means getting paid to spend money, while switching to stablecoins often means giving up that immediate financial benefit, unless merchants pass along some of their savings to consumers. But that weakens the business case for switching to stablecoin payment.
The issue then is asymmetry in the value proposition: stablecoins benefit merchants but not consumers.
Of course, retailers include the cost of payment system fees in the general pricing of all goods they sell, so the consumer benefit of “cash back” is offset by higher retail product costs. But those costs are hidden; the cash back benefit is obvious.
So the stablecoin adoption process might initially focus on use cases where card rewards matter less, such as peer-to-peer transfers, international remittances, or purchases where cards aren't accepted.
No comments:
Post a Comment