Stablecoin vs. the Payment Ecosystem

A breakdown of why past payment rails failed—and why stablecoins, despite similar flaws, can be disruptive.

We’re watching crypto and fintech collide—there are lots of debates around whether stablecoins can truly dent the dominance of card networks.

Fintech camp says: no chance.

• Credit cards are sticky. Perks are too good for consumers to switch.

• Merchants always flirt with cheaper rails. Debit, ACH, RTP—they’ve all existed. None replaced credit.

• Crypto rails have existed via Stripe, Shopify, etc. for years—yet traction is near zero.

• For most C2B retail payments in developed markets, stablecoins are a “solution looking for a problem.”

• Any traction will take years, and likely be limited to cross-border or unstable-currency markets.

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Crypto camp says: LFG

• Cheaper. Faster. Programmable.

• V/MA are dead. Take rates compress. Everyone wins—except the incumbents.

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Meanwhile, in the real world:

• WSJ reports Amazon, Walmart, Expedia, and airlines are exploring issuing their own stablecoins

• Stripe x Shopify just launched stablecoin payments

• Visa, Mastercard, PayPal are making moves too

• All while stablecoin legislation inches forward in Congress

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First principles: what does a retail payment rail need to work?

1. Instant “yes/no” authorization — so the merchant knows immediately whether to ship.

2. Irrevocable or network-guaranteed funds — once approved, the payment is either final or the network guarantees it. Even if the shopper later disputes the charge, the network resolves it internally; the merchant doesn’t risk a clawback.

3. A liability-shift framework — to protect the shopper. Under Reg Z and Visa/MC rules, the issuer refunds the cardholder first and only then seeks repayment from the merchant if needed.

4. Ubiquitous tooling and a strong economic loop — one-button integration, seamless APIs, and enough margin to keep banks, PSPs, and merchants engaged.

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Why didn’t other payment rails break through?

ACH was never an option:

• ❌ No instant authorization (fails #1)

• ❌ No guaranteed funds (fails #2) – Credits can be recalled; debits can be reversed up to 60 days if marked “unauthorized.” Merchants who already shipped can lose the money.

RTP had promise but never took off:

• ❌ No liability shift (fails #3) - No fraud protection – Get tricked? The loss is yours. Banks may “try to help,” but they’re not liable.

• ❌ Poor UX/tooling (fails #4) – Consumers are used to cards that autofill. RTP’s “push” model (scan a QR, approve) feels clunky.

• But i think the real issue was No economics. A few cents per payment won’t fund rewards or fraud ops. So banks bury RTP deep inside bill pay.

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Now comes stablecoin. On paper, it’s no better than RTP—it lacks 2/, 3/, 4/. So why might it win?

One word: incentives.
Every $100 in stablecoins can earn ~$5/year in yield (via T-bills). That’s new economic fuel.

Issuers can share that yield with PSPs, merchants, and even fund buyer protection.

That’s a real engine.

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The missed revenue under card rails is enormous:

• Total U.S. card volume: ~$12T annually

  • $5T debit (avg. 0.8%)

  • $7T credit (avg. 2.3%)

• Gross fees: ~$200B

• Rewards back to consumers: ~$50–100B (points, cashback, miles).

  Likely, much of it goes unused

If stablecoins captured just 20% of card volume and yielded 5%—
→ that’s $120B/year in incentives to share with the ecosystem.

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The rest of crypto’s appeal is real, but secondary:

• Global by default

• Programmable payments

• Composability + wallet-native UX

Missing features? All of those can be fixed / layered on:

• Push vs. pull? Push is native, but "pull" can be mimicked via wallet allowances

• Fraud & liability? Not native, but buildable—via escrow, insurance pools, dispute layers

• “I want card rewards” → What if the item is 3% cheaper instead?

• Consumer wallets? Merchant tools? Yes—still friction points. But solvable.

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So why is this time different?
🔴 Clear incentives + 🔴 Regulatory clarity
The technical readiness has always been there.

Sometimes disruption needs a breakthrough technology.
Other times, all it takes is decent tech—plus the right incentives and regulatory greenlight.

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Imagine a world where you can either:

• Get 1–2% cashback
  or

• Just pay 2–3% less

Both are frictionless. Which do you choose?

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I have a soft spot for real tech disruption. So yes—I believe crypto and fintech stacks will converge. And yes—I’ll be the first to pay with stablecoin. :)