a16z: Fintech companies fully embrace stablecoin

Source: Sam Broner, a16z crypto partner; Translated by: AIMan@Golden Finance

We previously pointed out that stablecoins would consume the payment market, and this month many large payment companies around the world have noticed this.

In just the past six weeks: USDC issuer Circle has applied to list on the New York Stock Exchange; Coinbase has entered the agency payment sector and established a stablecoin API payment standard; Visa and Mastercard have enhanced their support for stablecoins; Stripe has announced the launch of stablecoin financial account balances, programmable stablecoins, stablecoin-supported debit cards, and more.

The main theme of all these announcements is to meet the needs of users, which we can regard as the "Skype moment" in the payment sector. What I mean is: in 2003, Skype launched their first killer feature, which was the ability to make low-cost calls from a computer to landlines. But as more and more people joined the digital calling network, it eventually became possible to abandon phone calls in favor of internet-based WhatsApp calls, signaling a seamless transition of the underlying technology from landlines to mobile operators, and then to internet-based voice and data connections.

Similarly, connecting stablecoins with traditional systems will help more people interact directly with stablecoins, even if they need to rely on traditional payment companies to build backward compatibility into existing products. As more individuals and businesses adopt stablecoins through existing products, stablecoins will have more opportunities to be applied to new or better blockchain-based products—such as self-custody, shopping, remittances, using DeFi, and so on.

Here is the announcement schedule from the past six weeks, how they fit into the big picture, and why they are important...

May 7 and 8: Stripe announced the launch of stablecoin financial accounts, allowing business users to hold stablecoin account balances in 101 countries/regions. They also announced the launch of USDB—a programmable stablecoin that allows developers to embed digital dollars into their applications (and rewards them for developing on USDB).

Stripe is integrating incentives directly into the stablecoin layer to increase adoption and have more stack. By launching stablecoin financial accounts, Stripe can bypass the slow and costly maze of correspondent banks, cut down on payment networks, and compete directly with banks and card networks. Stablecoin financial accounts allow Stripe to support users in 101 countries, up from just 46 previously. USDB may become the default stablecoin for Stripe products, providing them with more monetization options for payments. These releases will enable Stripe to offer cheaper, more customizable, more widely available, and more profitable products using a neutral blockchain track instead of card networks.

May 7: The world's leading offline payment network MoneyGram ( announced the launch of MoneyGram Ramps, a programmable stablecoin deposit and withdrawal channel that enables cash access in over 170 countries/regions.

Importance: Stablecoins have found a product-market fit in emerging markets, with remittance services being a key driver of early adoption in these markets. However, the conversion between stablecoins and physical cash is surprisingly difficult, and in most markets, physical cash remains a widely accepted alternative. MoneyGram has a global cash network, which provides stablecoins with another way to interact with everyday purchases and expenditures.

May 6: Coinbase announced the launch of x402, a new standard for internet-native stablecoin payments, aimed at enabling atomic transactions between APIs, applications, and AI agents.

Did you know that Visa cannot process payments below one cent? Agency commerce (i.e., autonomous software agents performing transactions on behalf of users) requires programmable money to enable agents to make purchases and consume for us.

Stripe, Visa, and other companies are exploring their respective proxy commerce layer solutions. Stablecoins are an appealing choice as they are built on a trusted, neutral, and decentralized platform. Moreover, since decentralized protocols do not charge withdrawal fees, the long-term costs of stablecoins are likely to be the lowest. The "x402" standard integrates stablecoin settlement, intent-based payments, and compliance into a specification—laying down a track that Visa and SWIFT cannot match in terms of speed, composability, or programmability.

May 6: Visa and BVNK announced a strategic partnership. The collaboration between Visa and BVNK can be interpreted as a bet on the "pipeline" of stablecoins—allowing the card network to directly connect to payment channels that might bypass it. By partnering with stablecoin payment infrastructure company BVNK, Visa can hedge against the risks posed by Stripe's growing suite of stablecoin payment products.

Visa is smart in this regard: it expects other existing payment companies to follow suit, or risk losing the future to dominant stablecoin payment platforms and startups.

April 28 and 30: Mastercard and Visa announced the launch of products that allow consumers to use stablecoin balances for everyday shopping by swiping their cards.

On April 28, Mastercard announced partnerships with Circle, OKX, Paxos, and several exchanges and wallets to enable broader stablecoin integration. These updates allow consumers to use their Mastercard to spend associated stablecoin balances. Additionally, merchants can settle fiat card payments in USDC.

Two days later, the Bridge supported by Visa and Stripe announced that fintech developers based on Bridge will be able to issue Visa cards linked to stablecoins, allowing users to pay with their linked stablecoin balances at fiat points of sale through the Visa network.

Both of these products can enhance the adoption of stablecoins by integrating with systems that people use in their daily lives. Cardholders can use stablecoins directly for savings and spending without worrying about whether merchants accept stablecoins; when merchants do not support stablecoins, they can use the accompanying Visa or Mastercard directly.

Stablecoin-linked cards can be downward compatible with existing infrastructure, but ultimately, the "strong form" of the technology will prevail. In the end, merchants prefer to avoid the 2.5% card processing fee. However, in the future, stablecoin payments may be used directly at the point of sale, helping businesses achieve higher profits. Meanwhile, entrepreneurs will continue to develop new products to make stablecoins a more ideal choice.

At the same time, Stripe announced a partnership with the financial operations platform Ramp to launch stablecoin-supported cards starting in Latin America, creating more spending options for users.

April 23: PayPal announced that starting in 2025, U.S. users holding PYUSD in their PayPal or Venmo accounts will earn a 3.7% yield.

PayPal wants users to deposit funds—even if they are using MetaMask. By offering a 3.7% yield on PYUSD in Venmo or PayPal accounts, PayPal is incentivizing users to buy and hold the stablecoin within the app. However, holding PYUSD outside the platform yields even higher returns—expected yields will be the first step to boosting PYUSD trading volume and integration.

April 21: Circle announced a collaboration with Deutsche Bank, Société Générale, Santander Bank, Standard Chartered Bank, and several stablecoin startups to launch the Circle Payment Network to improve international payments.

Circle is competing with SWIFT (the dominant network for international bank transfers) and the network of correspondent banks, directly targeting the frequently criticized messaging services and slow payment speeds of the latter. To succeed, they need to create a business model and products for the Circle payment network that are superior to correspondent banking.

April 1: Circle applies to list on the New York Stock Exchange, legalizing stablecoin payments.

Circle's S-1 listing preparations began in January, with documents submitted on April 1, aimed at further legitimizing stablecoin payments, laying the groundwork for broader user adoption, and kicking off a month of announcements from some of the world's most important fintech companies.

So what does all this mean? Traditional payment companies not only recognize the value of stablecoins but are also building the critical infrastructure to achieve backward compatibility for stablecoins, thereby accelerating their adoption. Although these products may initially seem very similar to the payment methods we have used for decades, payment companies are actually guiding a new on-chain economy by embracing and building stablecoins.

How do we expect this to develop? We are now seeing people reliably using stablecoins through traditional payment methods. The infrastructure improvements launched this year will guide more people to use stablecoins directly. By making the integration of stablecoins easier and more intuitive, we will also begin to see greater network effects: more entrepreneurs are building the next generation of products that can only be realized through nearly instant, nearly free, programmable money.