In the credit card ecosystem, major enterprises have risen through coordination, innovative issuance, and empowerment of form factors, and stablecoins are similarly applicable.
Author: Alana
Translation: DeepTechFlow
Stablecoins represent the most revolutionary evolution in payment forms since credit cards, changing the way funds flow. With low cross-border fees, near-instant settlement, and global access to widely demanded currencies, stablecoins have the ability to improve the financial system. For those holding USD deposits supporting digital assets, they can also be a very profitable business.
Currently, the total supply of stablecoins globally exceeds 150 billion USD. Five stablecoins have a circulation of over 1 billion USD: USDT (Tether), USDC (Circle), DAI (Maker), First Digital USD (Binance), and PYUSD (PayPal). I believe we are moving towards a world with more stablecoins—a world where every financial institution will offer its own stablecoin.
I have been considering the opportunities arising from this growth. I believe that observing the maturity of other payment systems, especially credit card networks, may provide some insights.
How similar are credit card networks and stablecoin networks?
For consumers and merchants, all stablecoins should feel like dollars. However, in reality, each stablecoin issuer handles the dollar differently, stemming from different issuance and redemption processes, reserves supporting each stablecoin's supply, different regulatory regimes, and the frequency of financial audits. Addressing these complexities will present a huge business opportunity.
We have seen this situation in credit cards before. Consumers use assets that are almost interchangeable but not entirely interchangeable for spending, as these assets are loans in dollars (but not all loans are equal due to varying credit scores). Some networks—such as Visa and Mastercard—are responsible for coordinating payments in the entire system. And the stakeholders in both systems (ultimately) appear similar: consumers, consumers' banks, merchants' banks, and merchants.
An example may help illustrate the similarity in network structures.
Suppose you dine out and pay the bill with a credit card. How does your payment reach the restaurant's account?
Your bank (credit card issuer) authorizes the transaction and sends the funds to the restaurant's bank (acquiring bank).
An interchange network—such as Visa or Mastercard—facilitates fund exchange and charges a small fee.
The acquiring bank then deposits the funds into the restaurant's account but deducts a fee.
Now, if you want to pay with stablecoins. Your bank, Bank A, issues AUSD stablecoin. The restaurant's bank, Bank F, uses FUSD. These are two different stablecoins, although both represent dollars. The restaurant's bank only accepts FUSD. So, how does the payment in AUSD convert to FUSD?
Ultimately, this process will be very similar to the process in the credit card network:
The consumer's bank (issuing AUSD) authorizes the transaction.
A coordinating service facilitates the exchange from AUSD to FUSD and may charge a small fee. This exchange can occur in several ways:
Path 1: Utilizing decentralized exchanges for stablecoin-to-stablecoin exchanges. For example, Uniswap offers multiple liquidity pools with fees as low as 0.01%.
Path 2: Converting AUSD into USD deposits and then depositing the USD deposit into the acquiring bank to issue FUSD.
Path 3: Coordinating services can offset fund flows within the network; this may only be realized at scale.
FUSD is deposited into the merchant's account, possibly deducting a fee.
Where the analogies start to diverge
The above content describes the clear similarities I see between credit card networks and stablecoin networks. It also provides a useful framework for considering where stablecoins may effectively upgrade and surpass certain elements of credit card networks.
The first difference is in cross-border transactions. If the above scenario were a U.S. consumer dining at a restaurant in Italy—where the consumer wants to pay in dollars and the merchant wants to receive euros—existing credit cards would charge over 3% in fees. On decentralized exchanges (DEX), the fee for stablecoin conversions could be as low as 0.05% (a difference of 60 times). Widely applying this reduced fee to cross-border payments would clearly demonstrate how much productivity stablecoins could add to the global GDP.
The second difference is in the payment process from enterprise to individual. The time between payment authorization and funds actually leaving the payer's account is very rapid: once funds are authorized, they can leave the account. Instant settlement is both valuable and in demand. Additionally, many enterprises have a globalized workforce. The frequency and amount of cross-border payments may be much higher than for ordinary consumers. The trend of globalized labor should provide strong impetus for this opportunity.
Thinking about the future: Where might opportunities exist?
If the comparison between network structures holds in direction, it helps reveal potential entrepreneurial opportunities. In the credit card ecosystem, major enterprises have risen through coordination, innovative issuance, and empowerment of form factors. Stablecoins are equally applicable.
The previous examples mainly described the role of coordination. This is because moving funds is big business. The market capitalizations of Visa, Mastercard, American Express, and Discover are all at least in the hundreds of billions of dollars, with a total value exceeding 1 trillion dollars. The presence of multiple credit card networks indicates that competition is healthy, and the market is large enough to support major enterprises. It is reasonable to speculate that in mature markets, there will also be similar competition in stablecoin coordination. We have only 1-2 years to build enough infrastructure for stablecoins to succeed on a large scale. There is still enough time for new startups to pursue this opportunity.
Stablecoin issuance is another area of innovation. Similar to the growth of corporate credit cards, we may see a similar trend of enterprises wanting their own white-label stablecoins (note: white-label stablecoins are stablecoins issued by enterprises or organizations, with their own custom branding and identity, rather than being identified by the stablecoin's technical provider). Having spending units can better control the entire accounting process, from expense management to handling foreign taxes. This could become a direct business line for stablecoin coordination networks and may also be an opportunity for emerging startups (e.g., similar to Lithic). Derivatives of this enterprise demand may lead to the emergence of more new companies.
Issuance can also become increasingly specialized in many ways. Consider the emergence of tiered offerings. In many credit cards, customers can pay upfront fees to access better reward structures, such as Chase Sapphire Reserve or AmEx Gold. Some companies (usually airlines and retailers) even offer exclusive credit cards. If stablecoin reward tiers also experiment with similar offerings, I would not be surprised. This may also provide an opportunity for startups.
In many ways, all these trends mutually promote growth. With the diversification of issuance, the demand for coordination services also increases. As coordination networks mature, this will lower the barriers to entry for new issuers. All of this represents huge opportunities, and I look forward to seeing more startups in this field. In the long run, these markets will reach trillions of dollars and should be able to support many large enterprises.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
