Introduction
The global payment landscape is on the brink of a monumental shift. Visa and Mastercard, the two giants dominating the payment network industry, are now fiercely competing to integrate blockchain technology and stablecoins into their core systems. With an estimated $20 trillion in global payment transactions projected for 2024, the potential for blockchain to streamline and enhance these processes is enormous.
While fintech innovations have improved the front-end user experience, the backend settlement and cross-border payment systems still rely on outdated technologies. Blockchain offers a promising solution, enabling faster, cheaper, and more efficient transactions. This article delves into the strategies Visa and Mastercard are employing to harness the power of stablecoins and blockchain, and what this means for the future of payments.
The Dominance of Visa and Mastercard
Visa and Mastercard collectively control a significant portion of the global payment market. As of 2024, Visa holds approximately 39% of the market share, while Mastercard accounts for 24%. Given that China UnionPay primarily processes domestic transactions, Visa and Mastercard effectively dominate the international payment landscape.
Both companies operate on a four-party model, involving card issuers, acquirers, merchants, and cardholders. They generate substantial revenue by charging small fees for processing transactions and facilitating settlements between parties. Their operating margins—67% for Visa and 57% for Mastercard in 2023—reflect the efficiency and scalability of their network-based businesses.
How Traditional Card Payments Work
Understanding the traditional payment process is essential to appreciate the innovations blockchain brings. Here’s a step-by-step breakdown:
- Payment Request (D+0): A cardholder initiates a purchase, and the payment information travels from the merchant to the acquirer, then to the card network (Visa or Mastercard), and finally to the card issuer.
- Authorization (D+0): The card issuer checks the cardholder’s credit limit, card validity, and potential fraud before approving or declining the transaction.
- Settlement (D+3): The issuer pays the acquirer after deducting fees, and the acquirer pays the merchant. Card networks charge fees to both issuers and acquirers.
- Billing and Repayment (D+30): The cardholder receives a bill and repays the issuer the following month.
This process, while functional, has inherent inefficiencies, particularly in settlement times and cross-border transactions.
The Limitations of Traditional Payments
Despite advancements in fintech, two major issues persist in traditional payment systems:
- Slow Settlement Times: Batch processing and weekday-only settlements can delay fund availability for merchants, especially during holidays.
- High Cross-Border Costs: International transactions incur additional fees, including cross-border transaction fees (∼1%) and foreign exchange fees (∼1%), making them more expensive than domestic payments.
Blockchain technology addresses these challenges by enabling 24/7 operations, borderless transactions, and reduced fees. Recognizing this potential, Visa and Mastercard are actively integrating stablecoins and blockchain into their networks.
Visa’s Four-Pronged Stablecoin Strategy
Visa operates VisaNet, one of the world’s largest payment networks, capable of processing 65,000 transactions per second. In April 2025, Visa outlined four key initiatives to incorporate stablecoins into its ecosystem.
1. Modernizing Settlement Infrastructure
Since 2021, Visa has piloted the use of USDC (a USD-backed stablecoin) for settlement through VisaNet. Over $225 million in settlements have been completed using USDC, reducing the need for card issuers to convert cryptocurrencies into fiat currencies. For example, Crypto.com now settles with USDC via Ethereum, cutting settlement time from eight days to four and reducing foreign exchange fees to 20–30 basis points.
Visa has also extended this capability to acquirers like Worldpay and Nuvei, allowing them to receive USDC through Ethereum and Solana. This end-to-end stablecoin settlement pipeline enhances efficiency and reduces costs for all parties involved.
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2. Enhancing Global Remittances
Visa Direct, the company’s peer-to-peer fund transfer service, is being upgraded to integrate stablecoins. This aims to improve the efficiency of cross-border remittances. Visa’s recent investment in BVNK, a stablecoin infrastructure startup, further underscores its commitment to expanding stablecoin capabilities for both retail and enterprise use.
3. Programmable Digital Currencies
Visa’s Tokenized Asset Platform (VTAP) enables financial institutions to issue and manage digital tokens, including stablecoins and tokenized deposits, using smart contracts. These tokens can automate complex processes like conditional payments or loans. Currently in sandbox testing with BBVA, VTAP is slated for a pilot on the Ethereum blockchain in 2025.
4. Stablecoin-Linked Cards
Visa partners with infrastructure providers like Bridge, Baanx, and Rain to offer stablecoin-linked cards. These cards allow users to spend stablecoins directly, with conversions to fiat currency handled in the background. Services are already live in Latin American countries and plan to expand to Europe, Africa, and Asia.
Mastercard’s End-to-End Stablecoin Solution
Mastercard processes payments through Banknet, a distributed network supported by over 1,000 data centers. In April 2025, Mastercard announced a comprehensive infrastructure for stablecoin payments, covering everything from wallets to checkout.
1. Card Issuance and Payment Support
Mastercard collaborates with crypto wallets (e.g., MetaMask), exchanges (e.g., Kraken, Gemini), and fintech startups (e.g., Monavate) to enable stablecoin payments. The MetaMask card, for instance, allows users to spend crypto assets stored in their wallets, with settlements handled through Monavate’s integration with Banknet.
2. Merchant USDC Settlement
While most merchants prefer fiat settlements, Mastercard supports USDC settlements through partnerships with Nuvei and Circle. Paxos-issued stablecoins are also supported, offering flexibility for merchants adopting digital currencies.
3. On-Chain Remittances with Crypto Credential
Mastercard’s Crypto Credential service simplifies blockchain payments by allowing users to create aliases instead of using complex wallet addresses. It also includes pre-transfer checks to ensure compatibility and compliance with international regulations like the Travel Rule. The service is available in Latin America and Europe through exchanges like Wirex and Bit2Me.
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4. Enterprise Tokenization Platform
Mastercard’s Multi-Token Network (MTN) is a private blockchain service for issuing, managing, and transacting tokens. Use cases include:
- Ondo Finance tokenizing its US Treasury-backed fund (OUSG) for real-time trading.
- JPMorgan Chase integrating its Kintex payments system with MTN.
- Standard Chartered piloting tokenized carbon credit trading.
The Race for Web3 Payment Dominance
With increasing U.S. government support for cryptocurrencies, Visa and Mastercard are vying to lead the Web3 payment revolution. Both companies released detailed stablecoin strategies in April 2025, focusing on:
- Stablecoin-linked card services
- Enterprise tokenization platforms
- Stablecoin settlement systems
- Peer-to-peer remittances
While blockchain adoption will enhance payment efficiency, it is unlikely to drastically alter market shares. The payment industry’s competitive dynamics are deeply rooted in long-standing relationships with merchants, acquirers, and issuers. Blockchain will optimize revenue models and improve competitiveness, but the core business structures will remain intact.
Frequently Asked Questions
What are stablecoins?
Stablecoins are cryptocurrencies pegged to stable assets like the U.S. dollar. They combine the benefits of digital currency—such as fast transactions and low fees—with the stability of traditional fiat currency.
How do Visa and Mastercard use stablecoins?
Both companies are integrating stablecoins into their payment networks for settlements, remittances, and card services. This reduces transaction times and costs, especially for cross-border payments.
Will blockchain payments replace traditional systems?
Blockchain will enhance existing systems rather than replace them. It addresses inefficiencies in settlements and international transactions but won’t overhaul the fundamental business relationships that define the payment industry.
Are stablecoin payments secure?
Yes, stablecoin transactions leverage blockchain technology, which offers transparency, immutability, and security. Visa and Mastercard additionally incorporate compliance checks and safeguards to meet regulatory standards.
Which countries support stablecoin payments?
Stablecoin-linked cards and services are currently available in select Latin American and European countries, with plans for expansion into Asia and Africa.
What is the future of stablecoins in payments?
Stablecoins are poised to become a core component of digital payment systems. As regulatory clarity improves and technology advances, their adoption for everyday transactions and enterprise solutions will grow.
Conclusion
The competition between Visa and Mastercard to integrate stablecoins and blockchain technology marks a pivotal moment in the evolution of global payments. By addressing longstanding inefficiencies and reducing costs, these innovations promise to benefit consumers, merchants, and financial institutions alike. While the battle for Web3 payment dominance is just beginning, one thing is clear: the future of payments is digital, decentralized, and driven by stablecoins.