Spotify, which provides the world's largest music streaming service, recognizes the stablecoin USDC as a payment method in over 30 countries worldwide. Shopify, the leading e-commerce platform in the United States, also noted on Dec. 12 (local time) that it would support some merchants in accepting payments in USDC. Global platform companies like Amazon and Walmart are also considering the issuance of stablecoins. According to Deutsche Bank, the transaction volume of stablecoins exceeded $28 trillion (about 3,867.6 trillion won) last year, surpassing the combined performance of Mastercard and Visa. Stablecoins are coins whose value is fixed to the U.S. dollar, with 1 USDC recognized at 1 dollar, functioning as the dollar in the digital world.
The recent renewed attention on stablecoins is due to the U.S. stablecoin bill known as the GENIUDS Act. This bill passed the U.S. Senate by an overwhelming margin and is now pending in the House of Representatives. The bill contains provisions that restrict stablecoin issuance entities to banks and certified non-bank financial institutions. The virtual asset industry interprets this as the U.S. moving to secure leadership in the global payment market using stablecoins.
Until now, virtual assets have been strongly perceived as investment assets, referred to as 'digital gold', centered around Bitcoin. Although Bitcoin is not used for buying and selling like gold, it has been recognized as a means to generate investment returns through trading. However, now that stablecoins are gaining status as 'digital dollars', the possibility of their practical use in commercial transactions is increasingly growing.
As the scope of stablecoin usage expands, traditional card companies are bound to face inevitable impacts. The existing payment system follows a sequence of consumer → card company → value-added telecommunications network (VAN) → payment gateway (PG) → merchant. In practice, payments take 1 to 3 business days. In contrast, stablecoins allow for immediate 24-hour transfers and payments without fees. Payments are completed by transferring stablecoins from consumer coin wallets to merchant coin wallets without utilizing the infrastructure built by card companies. If merchants do not have to pay fees to card companies, there is no reason for them not to use stablecoins if they become widely adopted.
In the United States, stablecoins are already being utilized for payments. PayPal, which provides online payment and remittance services, has issued its own stablecoin (PYUSD) and supports stablecoin payments. When users pay with the PayPal app, the PYUSD they hold is transferred to the merchant’s PayPal account. Because the payment network of card companies is not used, there are no fees. PayPal also does not charge fees.
Instead of fees, PayPal generates revenue by managing stablecoin reserves. If a PayPal user purchases 100 PYUSD for $100, PayPal must hold the $100 received from the customer as reserves. These reserves are invested in ultra-low-risk assets like U.S. Treasuries and cash-like assets, from which PayPal earns interest revenue. Users must agree to let PayPal take the interest revenue to use PYUSD.
This revenue structure is identical to the stablecoin issuance system. Stablecoin issuers must directly hold physical assets to maintain '1 coin = 1 dollar'. If they have issued 10 billion stablecoins, they must hold $10 billion in U.S. Treasuries, cash, or deposits. The interest revenue generated from these U.S. Treasuries becomes the source of revenue for the issuer. Tether, which issues USDT, the market leader in stablecoin market share, earned $6.2 billion (8.56 trillion won) in revenue in 2023 from this reserve management. This is more than 70% of Goldman Sachs' net income ($7.9 billion) in the same year. Tether plans to launch a payment-exclusive stablecoin in the U.S. by early next year at the latest.
Global card companies feeling a sense of crisis are responding actively. They are supporting payments using stablecoins but ensuring that the payment process is only conducted within their networks. Since the payments are conducted within the card companies' networks, they can continue to charge payment fees as they do now.
Visa launched a 'Coin Card' in April that allows payments in stablecoins at 150 million merchants in Argentina, Colombia, Ecuador, Mexico, Peru, and Chile. Users can make payments using the coin card just like using a debit card. The payment amount is simply converted from cash to stablecoins.
In Korea, expectations are rising as Min Byeong-deok, a member of the Democratic Party of Korea, proposed the Digital Assets Basic Law, which serves as the basis for issuing a won stablecoin. Especially, as prospects emerge that Kakao Pay will issue a stablecoin service, stock prices soared.
Korean card companies are closely monitoring the situation as a concrete method for introducing stablecoins has not yet emerged. A card industry official noted, 'If stablecoin payments can occur without going through the card company payment network, the payments market excluding the credit sector could be encroached upon,' but he added, 'Because credit card profitability is significant, they will not be excluded from the market immediately.' This official remarked, 'Visa is partnering with coin companies to ensure that stablecoin payments occur within their network,' and said, 'Korean card companies will also immediately consider such methods.'