How payments work now: credit cards, debit cards, and BNPL
Retailers typically pay between 1.1% and 3.5% in processing fees for credit card transactions and an average of 0.73% for debit cards. BNPL transaction fees can be much higher, between 1.5% and 7%, but retailers are willing to accept them in exchange for making more sales.
Credit cards offer the best built-in fraud and chargeback protections, while debit cards and BNPL plans provide fewer safeguards.
Transactions can take one to three days to settle, depending on the method, as funds pass from the customer through networks, processors, and issuing banks.
In addition to security, trust, and seamless integration throughout the economy, consumers also benefit from credit card rewards that are funded, in part, through transaction fees.
How payments could work with stablecoins
The growing popularity of stablecoins has led some major retailers and payment companies to reportedly explore how to integrate them into their operations. There are two ways they could do so:
- Accept existing stablecoins on a public blockchain
- Issue and manage their own stablecoins
Retailers accepting stablecoins on a public blockchain
Retailers could accept existing stablecoins, like Circle’s USDC (USDC -0.02%) or Tether (CRYTO:USDT), via a blockchain designed for high throughput, such as Solana (SOL +11.20%) or Polygon. This would reduce fees to $0.01 per transaction plus potential processor fees between 0.5% and 1%. Settlement would be nearly instantaneous, but the risks are many.
- Fraud risks: Transactions via stablecoin on the blockchain are irreversible, exposing retailers and consumers to scams, purchase errors, and disputes without recourse. Crypto is the second-most-preferred payment method for scammers. Americans lost $472 million via crypto scams in the first quarter of 2025 alone.
- Depegging: Whether stablecoin issuers can ensure their tokens maintain a 1:1 peg with the U.S. dollar while managing the volume of transactions necessary to support major retailers is a major obstacle to tackle. Depegging events have occurred, especially with algorithmic and poorly collateralized coins. Falling off a 1:1 peg with the dollar would create massive losses for both retailers and consumers. Circle and Tether both claim that their stablecoins are backed 1:1 in dollars.
- Redemption fees: Retailers that need to convert stablecoins to fiat currency would need to pay redemption fees, which could increase based on volume. For example, Circle charges a 0.1% fee on redemptions of more than $15 million.
- Regulatory risk: Stablecoin regulation is in its infancy with the passage of the Genius Act in July. The legislation requires stablecoin issuers to have 1:1 dollar or equivalent reserves and undergo regular audits. It orders additional regulation but does not require stablecoin issuers to meet capital requirements that banks are subject to.
- Cash flow: Retailers can’t currently pay vendors or taxes in stablecoins. Lack of liquidity or off-ramp options could freeze operations.
Retailers issuing and accepting their own stablecoins
Amazon (AMZN +2.46%) and Walmart (WMT -0.78%) are reportedly considering issuing their own stablecoins. These would likely operate in a closed-loop system that eliminates gas and processor fees and settles instantly, and they would allow the retailer to set fraud, refund, and redemption rules. That would give retailers greater control over margins and customer data.
This model comes with its own set of risks and complexities.
- Regulatory and legal risks: Issuers might face oversight as money services businesses that come with compliance costs.
- Liquidity and financial exposure: The retailer would need to back redemptions, creating balance sheet risk and financial reporting challenges.
- Cybersecurity and infrastructure: Managing a token system would require enterprise-grade security or outsourcing to a reputable provider, likely at significant expense.
- Integration costs: Payment systems, loyalty programs, and e-commerce would need to be rebuilt or adapted, requiring a large engineering investment.
- Customer adoption: Without compelling incentives, customers might ignore retailer-specific coins. If the stablecoin is usable at only one store or brand family, it risks becoming another layer of friction at checkout.
One way to mitigate those risks is to partner with a crypto firm to manage custody and other aspects of a branded, closed-loop stablecoin operation.
Should retailers consider stablecoin adoption to cut costs?
Stablecoins might eventually offer retailers a faster and cheaper alternative to credit and debit cards. Currently, however, merchants face some risks and challenges in scaling to handle the massive volume of transactions that banks and card companies process.
For stablecoins to compete with the likes of Visa (V +0.35%), Mastercard (MA -0.10%), and banks, they’ll need clear and strong federal oversight and regulation, consumer protections, consistent standards, and robust integrations – not just the promise of low fees.
The Genius Act and the requirements it sets out for stablecoin issuers and regulators make a promising start. The legislation lays a foundation for the industry to build and for watchdogs to monitor. For now, though, questions about stablecoin adoption remain, from how future regulation will evolve to whether consumers will buy into a new payment method and whether payment processors will give up their lucrative position in the financial system by innovating in the stablecoin space themselves.
Other stablecoin research
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