Last Friday, shares of major US payment companies, including $Visa(V)$ , $MasterCard(MA)$ and $PayPal(PYPL)$, experienced significant declines.
Visa's stock fell by 5.4%, while Mastercard dropped by 4.6%, and PayPal declined by 2.6%. This downturn was primarily driven by concerns over the potential impact of stablecoins on traditional payment networks.
Data as of June 16th
Retail Giants Exploring Stablecoins
According to a report by The Wall Street Journal, major retailers such as $Wal-Mart(WMT)$ and $Amazon.com(AMZN)$ are exploring the issuance of their own stablecoins to bypass traditional card payment fees. This move could potentially save them billions in transaction fees and improve payment efficiency. Other companies, including $Expedia(EXPE)$ and several large airlines, are also reportedly considering similar options.
Walmart, Amazon mull creating their own stablecoins
Threat to Traditional Payment Networks
Stablecoins offer several advantages over traditional payment methods, including lower transaction costs, faster settlement times, and increased transparency. In 2024, the total volume of stablecoin transactions reached $27.6 trillion, surpassing the annual payment volumes of $Visa(V)$ and $MasterCard(MA)$. This rapid growth has raised concerns that stablecoins could disrupt the business models of traditional payment networks, which rely heavily on transaction fees.
Regulatory Uncertainty
The future adoption of stablecoins by major retailers hinges on regulatory clarity. The Genius Act, a pending legislation that aims to establish a regulatory framework for stablecoins, is currently under review in the US Congress. The final version of the bill and its requirements for reserve ratios and bankruptcy isolation will significantly impact the speed and scale of stablecoin adoption.
Payment Companies' Responses
In response to the growing threat, traditional payment companies are actively exploring ways to integrate stablecoins into their networks. $Visa(V)$ is piloting stablecoin settlements on the Solana blockchain, while $MasterCard(MA)$ has partnered with MoonPay to enable stablecoin payments via Mastercard-branded cards. $PayPal(PYPL)$ has also launched its own stablecoin, PYUSD, which has gained some adoption. However, these efforts may not be enough to offset the potential loss of transaction fees.
Long-term Implications
The rise of stablecoins poses a significant long-term threat to the pricing power and profitability of traditional payment networks. As more retailers and businesses adopt stablecoins, the demand for traditional payment services may decline, leading to a potential shift in the payment industry landscape.
The ability of $Visa(V)$ , $MasterCard(MA)$ , and $PayPal(PYPL)$ to adapt to this new environment will be crucial in determining their future success.
Responses and opportunities for traditional payment companies
Active layout and cooperation: $Visa(V)$ and $MasterCard(MA)$ are already exploring the integration of stablecoin technology into their own networks. For example, Visa is working with stablecoin issuer Circle to promote the use of US dollar stablecoins in merchant clearing. This cooperation and integration may enable traditional payment networks to remain competitive in the new payment environment.
Buffer from regulatory uncertainty: The development of stablecoins still faces regulatory uncertainty, such as the GENIUS Act, which has not yet been fully implemented. Before the regulation is clear, traditional payment networks still have the opportunity to consolidate their market position.
Current price technical analysis shows that $Visa(V)$ and $MasterCard(MA)$ stocks are currently overbought and may be at risk of a correction, but in the long term, the widespread use of their payment networks and brand value still have certain support.
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