“The End of Credit Cards?”
How 0% Fee ‘Digital Dollars’ Are Attacking VISA’s Empire
Prologue: The Quiet Revolution in Payments
While you swipe your plastic card or tap your phone, a massive tectonic shift is happening beneath the surface of global finance. Giants like Shopify and Spotify have begun adopting a new payment method: stablecoins. This is not a mere tech curiosity. It is a direct challenge to the decades-long payment empire built by VISA and Mastercard—and the beginning of a quiet revolution that will change all our financial lives.
What Threatens Card Companies? Old vs. New Payments
The disruptive power of stablecoins comes from their ability to perfectly exploit the complexity and inefficiency of the traditional card payment system. A direct comparison makes it clear why global merchants have every reason to embrace this fee-free alternative.
💳 Traditional Card System
- Fees: Merchants pay 1.5% – 3.5% of every transaction.
- Settlement Speed: Takes 1-3 business days for merchants to receive money.
- Process: Customer → Card Co. → Acquirer Bank → Network → Merchant (4+ steps).
- Downsides: Complex, high costs, slow cash flow for businesses.
🌐 Stablecoin Payment System
- Fees: Zero (or a negligible blockchain network fee).
- Settlement Speed: Instantaneous, 24/7/365.
- Process: Customer’s Wallet → Merchant’s Wallet (Direct P2P).
- Upsides: Simple, virtually no cost, real-time cash flow.
As shown, stablecoins offer merchants two irresistible benefits: immediate access to their cash and dramatic cost savings. This is the very core of the payment revolution.
The Secret of 0% Fees: How Do They Make Money?
If there are no payment fees, how do stablecoin issuers generate revenue? The answer is a brilliantly simple banking concept: managing the reserves.
A Business Model Like a Bank
- Deposit: A user buys $1,000 worth of a stablecoin (like USDC) with $1,000 cash.
- Reserve Formation: The issuer (e.g., Circle, Tether) holds that $1,000 in a secure reserve.
- Interest Income: This reserve is invested in ultra-low-risk assets, primarily U.S. Treasury bonds, earning 4-5% annual interest.
The power of this model at scale is staggering. Tether (USDT), the largest stablecoin issuer, generated a net profit of $6.2 billion in 2023 using this method alone. This figure is more than 70% of the annual net income of the global investment banking giant Goldman Sachs. Stablecoin companies have proven they can build immensely profitable financial businesses without charging a single payment fee.
The Empire Strikes Back: How Card Companies Are Fighting for Survival
Facing the potential dethroning of their payment kingdom, Visa and Mastercard are not standing still. Their strategy can be summarized as: “Embrace, but control.”
“Play in Our Walled Garden”
Visa’s “Crypto Card” initiatives are a prime example. These cards allow users to pay with stablecoins, but the entire transaction is processed through Visa’s existing, centralized payment network. The user gets the convenience of paying with crypto, while Visa and the card issuers get to charge the merchant the same old transaction fees.
This is a clever defensive move to neutralize the core value propositions of stablecoins (decentralization and zero fees) while co-opting their convenience. It remains to be seen, however, if consumers and merchants will settle for this “half-measure revolution.”
Future Outlook & Final Conclusion
The passage of stablecoin regulation in the U.S., like the proposed GENIUDS Act, signals the integration of this innovation into mainstream finance. This trend is global, with similar legislative discussions happening worldwide.
The Bottom Line: While card companies and stablecoins will coexist and compete in the short term, the long-term victory will go to the faster, cheaper, and more efficient system. Consumers will gain more payment choices, and merchants will likely be freed from the burden of high fees. The “Payment War” has begun, and its ultimate winners will be the everyday users.