Visa and Stripe are both working on stablecoins, but their focus is not on payments

Author: Lawyer Liu Honglin

I had a conversation with a friend who works in cross-border payments.

He has been in the industry for many years, and his company has developed well in recent years. When we talked about stablecoins, he asked me a very direct question:

"Now, companies like Airwallex and Lianlian have many cross-border payment routes that can be very cheap and fast. Why do businesses still need stablecoins? What problems do stablecoins actually solve?"

This question is actually better than many questions at industry conferences.

Because it does not start from a conceptual perspective, nor from the narrative of the cryptocurrency world, but from real business needs. Companies will not change their payment systems just because a technical term sounds good. What companies really care about is: can the money be received, how long will it take to arrive, how much will be lost in the process, will banks ask questions, can taxes be explained, can accounting be recorded, and are there any regulatory issues.

These questions may be much more important than the concept of "decentralization."

Stablecoins Are Not Necessary

If a company is doing legitimate cross-border payments between Singapore, Hong Kong, the United States, the United Kingdom, and Australia, both parties have bank accounts, payment institutions have already established local clearing networks, foreign exchange conversion costs are low enough, and compliance documents are complete, then traditional payment solutions are likely sufficient.

This is also why the founder of Airwallex previously expressed skepticism about the use of stablecoins for cross-border payments in major currencies of the G7: if certain mature currency cross-border routes can already achieve near real-time transactions at costs close to 0.01%, stablecoins are not inherently faster or cheaper.

This viewpoint may not cover all scenarios, but it is clearly a significant truth.

Many people, when discussing stablecoins, easily equate "cheap on-chain transfers" with "cheap cross-border payments for businesses." This overlooks many factors: deposit costs, withdrawal costs, foreign exchange conversion costs, wallet and custody costs, compliance review costs, tax and accounting processing costs, bank account stability, and the explanation costs when the source of funds is questioned.

If the payee ultimately needs to receive euros, dollars, or Hong Kong dollars, and the company's finance still needs to complete accounting and auditing in bank accounts, then stablecoins merely replace a segment of the process with on-chain transfers, which does not automatically mean that the entire path is cheaper.

Stablecoins are not a hammer that treats every cross-border funding issue as a nail.

Conversely, we cannot conclude that "stablecoins are meaningless" just because some routes in mature markets are already good enough.

The global payment system is not limited to mature routes like the US dollar, euro, Hong Kong dollar, and Singapore dollar. Living in mainland China for a long time can easily lead to a misunderstanding that payment issues have already been resolved. WeChat, Alipay, UnionPay, and banking applications almost cover all scenarios of daily life. For many Chinese people, the flow of money seems naturally low-cost, instant, and convenient.

However, when we broaden our perspective globally, we find that this is only the experience of a few markets.

The World Bank's remittance price database shows that as of the third quarter of 2025, the average cost of global remittances is still 6.36% of the remittance amount. This is certainly based on personal small remittances and does not equate to all business cross-border payment costs, but it illustrates a basic fact: the friction in global capital flows is still significant today.

In many regions, bank accounts are not widespread, and obtaining US dollar accounts is even more difficult. Local currencies are unstable, cross-border remittances are slow and expensive, and small and medium-sized businesses face agent banks, intermediary banks, foreign exchange conversion, prepayment funding pools, compliance reviews, and banking business day restrictions when engaging in international trade. Often, it is not that money cannot arrive, but that the entire funding chain is too long, slow, and uncontrollable.

Therefore, when discussing stablecoins, the most easily overlooked aspect is the mixing of "payment" and "clearing."

What ordinary users understand as payment is simply scanning a code, swiping a card, or transferring money. This action seems very simple on the front end. However, the truly complex part of the financial system often lies behind the scenes. A cross-border payment may involve the issuing bank, acquiring bank, payment network, agent bank, intermediary bank, local clearing system, foreign exchange conversion, anti-money laundering review, and sanctions screening.

Just because the front end shows "payment successful" does not mean that the backend funds have completed final settlement. The slow, expensive, and complex aspects are often not the payment action itself, but the clearing process.

This diagram can help visualize that cross-border payments have at least four layers.
The four-layer structure behind a cross-border payment

The value of stablecoins mainly lies in the second and third layers.

It does not mean that everyone will use USDC to buy coffee at convenience stores tomorrow, nor does it mean that merchants will immediately use USDT for accounting and tax reporting. What it changes is that the flow of funds that originally needed to coordinate across bank accounts, jurisdictions, and working hours has the opportunity to be partially handled by a 7×24 hour operational on-chain asset transfer system.

This may not be glamorous, but it is crucial.

What Visa Is Interested In Is Not Buying Coffee

If stablecoins were merely a form of self-entertainment within the cryptocurrency world, Visa would have no need to get involved.

Visa is one of the most mature payment networks globally. It lacks concepts, traffic, and traditional financial partners. Its willingness to integrate stablecoins into its settlement system indicates that stablecoins are no longer just trading tools for crypto assets, but are beginning to touch on core issues of traditional payment networks.

In September 2023, Visa announced the expansion of USDC stablecoin settlement capabilities, supporting the Solana blockchain, and collaborated with major acquiring institutions like Worldpay and Nuvei to test stablecoin settlements. Visa defined this as "modernizing cross-border capital flows."

Note that what Visa was doing at that time was not "allowing consumers to directly use USDC to buy things."

What it was doing was settlement.

Visa officially disclosed that in the pilot, it had already moved millions of dollars in USDC between partners through Solana and Ethereum for settling fiat-denominated payments authorized on VisaNet. In other words, the front end can still be ordinary card payments, while the backend settlement between certain institutions can be completed using USDC.

By December 2025, Visa announced the launch of USDC settlement capabilities in the United States, allowing US issuers and acquirers to settle with Visa using USDC issued by Circle. At that time, Visa disclosed that as of November 30, 2025, its stablecoin settlement monthly volume had exceeded an annualized level of $3.5 billion and emphasized a very specific benefit: the settlement window could be extended from the traditional five business days to seven days.

By April 2026, Visa expanded this pilot further, announcing that its global stablecoin settlement pilot now supports nine blockchains, with an annualized settlement operating scale reaching $7 billion.

$7 billion sounds large, but it is still small within Visa's overall network. The total volume of payments and cash transactions disclosed by Visa for the fiscal year 2025 is in the range of $170 trillion.

So the key point here is not that stablecoins have transformed Visa today.

The key point is: why is Visa starting to integrate it into the settlement layer?

Because Visa's moat has never been just "card swiping." It is more like a global financial collaboration network that connects issuing banks, acquiring banks, merchants, payment service providers, and consumers, providing transaction rules, risk control systems, dispute resolution, authorization networks, and clearing and settlement capabilities.

Therefore, what Visa cares about is not whether users can use USDC to buy a cup of coffee in the future.

What it is concerned about is: if in the future, global capital clearing is increasingly handled by stablecoins and blockchain, can Visa continue to maintain a key position in the new clearing network.

This is also why Visa is focused on stablecoin settlements rather than simple crypto payments.

This distinction is important.

Many people, upon seeing "Visa + stablecoin," imagine consumers directly using USDC for payments and merchants directly receiving USDC.

The commercial path in reality is: users still use familiar wallets, bank cards, or fintech applications on the front end; merchants still receive dollars, euros, or local fiat currencies on the backend; and the on-chain transfer, fiat conversion, merchant accounting, and compliance review are jointly completed by payment networks, stablecoin issuers, partner banks, acquiring institutions, exchange service providers, and compliance service providers.
The position of stablecoins in the cross-border payment chain

For example, a European user holds USDC and pays an American merchant through a compliant wallet or stablecoin-linked card. The front-end experience may be similar to ordinary card swiping. Merchants do not want a sudden influx of USDC on their balance sheets; they still prefer to receive dollars because they need to account for dollars, pay taxes, issue salaries, and procure.

Thus, USDC can be transferred on-chain to a US partner institution, which is then converted to dollars by a local partner bank or licensed institution, and finally settled to the merchant.

The merchant still receives dollars. However, the cross-border segment no longer relies entirely on the layered transfers of the traditional banking system.

What has changed is the intermediate clearing layer.

Why is this change important?

Because the past global US dollar system is essentially built on the banking account system. The cross-border flow of dollars heavily relies on commercial bank accounts, agent bank networks, SWIFT messages, clearing accounts, and banking business hours. This system is very powerful and mature, but it is not designed for the small, high-frequency, real-time capital flows of the internet era.

The change brought by stablecoins is that dollar assets can now be transferred in real-time globally using internet asset methods for the first time.

Understanding this statement is crucial.

USDC and USDT are not central bank currencies issued by the Federal Reserve, nor are they bank deposits. For example, Circle officially emphasizes that USDC is 100% backed by highly liquid cash and cash equivalents and can be redeemed for dollars on a 1:1 basis; most of its reserves are invested in the Circle Reserve Fund, which is a government money market fund managed by BlackRock and registered with the U.S. Securities and Exchange Commission.

Therefore, USDC is not "real dollars"; more accurately, it is an on-chain dollar debt certificate supported by reserve assets, promising 1:1 redemption. But its uniqueness lies in the fact that this debt certificate can flow in real-time on-chain.

From this perspective, compliant stablecoins like USDC are essentially closer to an "internet-based dollar money market fund share." Behind it are short-term U.S. Treasury bonds, cash, custody accounts, redemption mechanisms, and compliance disclosures; on the front end, it is a digital dollar that can flow on the blockchain.

This is also the key to Circle's business model.

Circle did not become a stablecoin giant by relying on "transfer fees." An analysis of Circle's listing documents by Coin Metrics shows that Circle's revenue in 2024 is about $1.7 billion, of which 99% comes from USDC reserve interest income; at the same time, it paid about $1.01 billion in distribution costs to distribution partners like Coinbase and Binance.

This set of data is very interesting. It illustrates that Circle is not just a blockchain technology company but a financial infrastructure company that internetizes, products, and globally distributes dollar assets. The larger the circulation scale of USDC, the more reserve assets it has, and the higher the interest income. However, the expansion of USDC is highly dependent on exchanges, wallets, payment networks, banks, merchants, and various ecosystem partners, so Circle must share a significant portion of its revenue with distribution channels.

This also explains why Circle needs Visa.

Circle has digital dollars but lacks a global merchant acceptance network like Visa. Visa has a global payment network but lacks its mainstream on-chain dollar assets. Therefore, they are not in a simple competitive relationship but rather complement each other.

Circle solves "where the on-chain dollars come from." Visa solves "how the on-chain dollars enter the real world." One is responsible for assets, and the other is responsible for the network; one is responsible for issuance and redemption, while the other connects issuing banks, acquiring banks, and merchants; one puts dollars on-chain, while the other brings on-chain dollars back to the traditional financial system.

Stripe and PayPal

Stripe's acquisition of Bridge is also filling the same puzzle piece.

Stripe is already one of the most important internet payment infrastructure companies globally. In February 2025, Stripe announced the completion of its acquisition of the stablecoin infrastructure company Bridge. Bridge's positioning is straightforward: to provide businesses with an end-to-end platform for receiving, storing, exchanging, issuing, and spending stablecoins.

Why did Stripe buy Bridge?

Because internet commerce is becoming increasingly globalized. Creators, developers, merchants, platforms, AI entities, and cross-border service providers all need faster, cheaper, and more flexible ways to move capital globally. If stablecoins begin to become a new generation of clearing tools, Stripe cannot just stand by and watch.

PayPal's launch of PYUSD follows a similar logic. In August 2023, PayPal launched the dollar stablecoin PYUSD, clearly stating that PYUSD is backed by dollar deposits, short-term U.S. Treasury bonds, and similar cash equivalents, and can be redeemed for dollars on a 1:1 basis.

Why are these companies all moving towards stablecoins? It is not because they suddenly believe in the idealism of the cryptocurrency world. Rather, it is because they see a real trend: the future global payment network may gradually transform from a "credit card network + bank account network" to a hybrid structure of "traditional account network + stablecoin clearing network."

This is also why I believe stablecoins are worth serious study. It is not because the concept is attractive, but because it addresses a very specific issue in the global financial system: the flow of money globally is still too slow, too expensive, and too fragmented.

Risks Are Not Just On-Chain

Of course, the risks of stablecoins cannot be ignored. The Bank for International Settlements took a restrained attitude towards stablecoins in its 2025 annual economic report: it acknowledges that stablecoins have certain potential in the direction of tokenization and notes that stablecoins have been used in crypto assets and some emerging market cross-border payment scenarios lacking access to dollars; but it also emphasizes that from the perspective of the unity, resilience, and integrity of the monetary system, stablecoins cannot yet become the backbone of the future monetary system.

The Financial Stability Board released global stablecoin regulatory recommendations in 2023, also emphasizing the need for consistent, effective regulation, supervision, and cross-border coordination of global stablecoin arrangements to address the financial stability risks they may pose.

What does this indicate? It indicates that once stablecoins enter the global clearing infrastructure, they are no longer merely a technical issue but rather a financial regulatory issue, a monetary sovereignty issue, an anti-money laundering issue, a sanctions compliance issue, a reserve asset management issue, and a cross-border collaboration issue.

In the narrative of the cryptocurrency world, stablecoins are often portrayed as "bypassing banks." However, in the commercial paths of companies like Visa, Stripe, and PayPal, stablecoins are precisely not meant to bypass regulation but to be integrated into it. Many Chinese entrepreneurs understand stablecoins as "bypassing regulation." But what Visa understands stablecoins to be is "upgrading clearing."

These two logics are completely different.

This is also something that Chinese companies, in particular, need to pay attention to.

In the context of mainland China, stablecoins cannot be simply understood as "better cross-border payment tools."

In 2021, the People's Bank of China and ten other departments issued a notice titled "Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading Speculation" (Yin Fa [2021] No. 237), clearly stating that virtual currencies do not have the same legal status as legal tender, do not have legal compensation, and should not and cannot circulate in the market as currency; engaging in activities such as exchanging legal currency for virtual currency, exchanging between virtual currencies, and providing information intermediary and pricing services for virtual currency trading is considered illegal financial activity.

On February 6, 2026, the People's Bank of China, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the Financial Regulatory Bureau, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange issued another notice titled "Notice on Further Preventing and Dealing with Risks Related to Virtual Currencies" (Yin Fa [2026] No. 42), reiterating that activities related to virtual currencies are illegal financial activities and are strictly prohibited within the territory; and made more specific regulatory arrangements regarding yuan-pegged stablecoins, domestic entities issuing virtual currencies, and the tokenization of real-world assets.

Therefore, for Chinese companies, it is not enough to see that Visa, Stripe, and PayPal are all working on stablecoins and simply conclude that "we can also use stablecoins for payments."

When it comes to the use of stablecoins, I usually advise companies to first ask themselves three questions.

The first question is, where is the business entity located?

If the entity is in mainland China, with business, customers, employees, suppliers, income, and expenses all within the territory, then there is no need for stablecoin payments, and they should not be touched. The so-called USDT receipts, stablecoin salary payments, and on-chain funding pools could pose significant risks under the current regulatory framework.

The second question is, where is the transaction scenario?

If the company already has overseas entities, overseas customers, overseas teams, and overseas suppliers, and the business occurs in jurisdictions where stablecoins can be used compliantly, then stablecoins can be studied as a funding tool. However, this does not mean that the company can freely receive or exchange coins. It still needs to complete the closed loop through local licensed institutions, bank accounts, tax processing, and accounting systems.

The third question is, what operational problems do stablecoins actually solve?

If traditional payment solutions are already cheap enough, fast enough, and stable enough, then there is no need to pursue stablecoins for the sake of stablecoins. But if the company is facing payments to global freelancers, small and high-frequency cross-border settlements, on-chain native businesses, users without bank accounts, or markets with difficulties in obtaining dollars, then stablecoins may truly create value.
Scenario assessment before companies use stablecoins

This is a judgment that is closer to reality.

Crypto Is Being Traditionalized

The future valuable stablecoin system is likely not a "de-banked finance" completely detached from the banking system.

On the contrary, it will increasingly resemble a hybrid structure: front-end users will still use familiar wallets, bank cards, and payment tools; backend merchants will still receive fiat currencies; and the intermediate layer of cross-border clearing networks will increasingly be completed by stablecoins, blockchains, banks, and payment networks.

This is also the most noteworthy aspect of Visa and Circle's collaboration.

It does not tell us that traditional finance will be eliminated by crypto finance. On the contrary, it tells us that traditional finance is absorbing crypto finance.

Stablecoins are transitioning from being a trading medium within the cryptocurrency world to becoming a new type of clearing module in the global payment network. This transformation will not happen overnight. It will not occur simultaneously in all countries and all scenarios. But the direction is becoming increasingly clear.

This may be the true significance of stablecoins.