Amazon and Walmart mull Stablecoin payments to avoid credit card fees

The landmark crypto bill that just passed in Congress paves the way for more businesses to issue their own stablecoins. This corner of the crypto market has received a lot of attention as the GENIUS Act moved toward becoming law, with crypto proponents cheering the huge show of legislative support.

These digital assets are a type of cryptocurrency pegged to fiat money like the US dollar and they’re ironically helping the US Dollar “re-dollarise” the world as countries like China try to usurp the Greenback as the world’s global reserve currency. Right now though they're mostly used by crypto traders to easily buy other tokens.

However, stablecoins used for payments would be a monumental shift in the foundations of commerce.

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In June, The Wall Street Journal reported that Walmart and Amazon were considering launching their own stablecoins. Now that the GENIUS Act has cleared the final legislative hurdle, crypto experts expect big changes to the payments ecosystem.

It isn't hard to see the incentive for big companies like Walmart or Amazon. Businesses could save significant amounts in credit card processing fees, cutting out an expensive intermediary by having people use their proprietary crypto as payment.

"Retailers currently lose an estimated 2% to 3% of every transaction to credit card processing fees," CoinRoutes co-founderDave Weisberger, said.

"For companies with billions in sales, eliminating even a portion of that margin drag could unlock 10s of millions in savings. Stablecoins offer a potential alternative that reduces frictional costs, accelerates settlement times, and gives merchants more control over payment rails."

Eliminating that type of cost would be a boon for Walmart and Amazon, but would be a blow to credit card issuers like Visa and Mastercard.

"If a fraction of their customer base starts using a store-issued stablecoin instead of a Visa-backed card, that's billions in interchange fees gone overnight," Will Reeves, said CEO of bitcoin rewards app Fold.

Visa recently issued a statement on the passing of the GENIUS Act, noting that it anticipated the market shift brought on by stablecoin adoption. It stated that it is "laying the groundwork by building and supporting blockchain-based solutions that help our partners and clients integrate stablecoins into the future of mainstream payments."

So, what will it mean for consumers? For people shopping with a retailer like Amazon or Walmart, a stablecoin payment system might not feel all that different from what they're doing now.

According to Kevin Lehtiniitty, CEO of stablecoin network Borderless.xyz, a stablecoin issued by a big retailer would feel similar to using a gift card.

Reeves shared a similar perspective.

"On the surface, not much changes - you tap your phone, check out, maybe earn extra rewards or save on fees. But underneath, everything shifts. Walmart and Amazon aren't just retailers anymore - they're now your bank and your payment network."

The benefit for shoppers could ultimately be lower prices if companies pass what they save in transaction fees to their customers.

"Competition at this scale drives down transaction costs, and that means consumers will likely see lower prices, better rewards, or both," Reeves added.

Dan Silverman, CEO of Balcony, noted that the rise of corporate stablecoins could also prove beneficial to unbanked people, as it would allow them to access digital currency through their phones.

"The big thing I could also imagine is for loyalty points or rewards to be baked into the token itself," he stated. "Think about when you get that long printed out receipt that has savings on it that you end up throwing out and never taking advantage of. The savings could be issued automatically on-chain."

In order for either company's stablecoin initiative to succeed, its customers would have to trust them.

A potential downside for consumers is that stablecoins could add another layer to a process that's become pretty simple over the years. Shoppers would have to buy the stablecoins first and then use them to transact. For many people, it could be simpler to just keep using credit or debit cards already on file.

Another risk for consumers is the management of stablecoin reserves. To hold their value, the tokens must be backed by an equivalent amount of liquid reserves, such as cash or short-term Treasurys. If these reserves are mismanaged or the issuing entity runs into financial trouble, the stablecoins could untether from their fiat peg and lose their value.