The Stablecoin Opportunity: Lessons from the Credit Card

Stablecoins are the most transformative form of payment since the credit card. They're changing how money moves. With benefits like low cross-border transfer fees, near-instant settlement, and access to widely demanded currencies around the world, stablecoins have the potential to upgrade the existing financial system. For institutions holding USD deposits to back their digital assets, the stablecoin business represents an enormous profit opportunity.

Global stablecoin supply has already surpassed $150 billion. Five stablecoins currently have at least $1 billion in circulation: USDT, USDC, DAI, First Digital USD, and PYUSD. I believe we're heading toward a world with far more stablecoins — one where every financial institution issues its own.

I've been thinking about what opportunities this growth creates. My conclusion: looking at how other payment systems matured — especially the credit card networks — can provide some answers.

What do credit card networks and stablecoins have in common?

To consumers and merchants, all stablecoins look like USD. But each stablecoin issuer handles USD differently — stemming from varying issuance and redemption processes, the reserves backing stablecoin supply, different regulatory frameworks and audit frequencies, and so on. Resolving these complexities represents a massive opportunity.

We've seen analogous situations in credit cards before. Consumers use assets that are USD-equivalent but not perfectly interchangeable (they're dollar-denominated loans, but those loans aren't fungible because each person's credit profile is different). Networks like Visa and Mastercard handle the coordination of payment flows across the system. The stakeholders in both systems — or those who could become stakeholders — look remarkably similar: consumers, the consumer's bank, the merchant's bank, and the merchant.

An example can help clarify the structural parallel.

Imagine you walk into a restaurant and pay your bill with a credit card. How does your payment reach the restaurant's account?

Your bank (the credit card issuer) authorizes the transaction and transfers funds to the restaurant's bank (known as the acquiring bank).

A payment network — like Visa or Mastercard — facilitates the exchange of funds and takes a small fee.

The acquiring bank then deposits the funds into the restaurant's account, minus a processing fee.

Now imagine you want to pay with a stablecoin. Your bank, Bank A, has issued a stablecoin called AUSD. The restaurant's bank, Bank F, uses FUSD. Both stablecoins represent USD but are distinct. The restaurant's bank only accepts FUSD. How does an AUSD payment get converted to FUSD?

The process mirrors the credit card network flow:

The consumer's bank (which issued AUSD) authorizes the transaction.

A coordination service facilitates the conversion from AUSD to FUSD and may charge a small fee. There are several ways this conversion could work:

Path 1: Use a decentralized exchange (DEX) to swap stablecoins. Uniswap, for example, offers pools for exactly these kinds of swaps with fees as low as 0.01%.

Path 2: Redeem AUSD back into a USD deposit, then send that USD to the acquiring bank, which issues FUSD.

Path 3: The coordination service nets flows across the network — an approach that likely requires meaningful scale to execute.

FUSD is then deposited into the merchant's account, potentially net of a processing fee.

Where does the analogy break down?

The above highlights what I see as a clear structural parallel between credit card networks and stablecoins. It also provides a framework for thinking about when stablecoins will start to meaningfully upgrade — and in some ways surpass — credit card networks.

First, consider cross-border transactions. If the scenario above involved an American consumer paying at an Italian restaurant — the consumer wants to pay in USD, the merchant wants to receive euros — existing credit cards would charge up to 3%. Executing the same swap on a DEX might cost just 0.05% (60x cheaper). Apply that fee reduction across the full range of cross-border payments, and the productivity gains stablecoins could deliver to global GDP become obvious.

Second, consider business-to-individual payment flows. The time between a transaction being authorized and funds actually leaving the payer's account is fast: once authorized, funds can settle immediately. Instant payment is both valuable and highly sought after. On top of that, many businesses have global workforces. The frequency and volume of cross-border payments can be far higher than the average consumer's day-to-day transactions. As the workforce continues to globalize, this will be a powerful tailwind in the space.

Looking ahead: Where are the opportunities?

If the structural parallel between these network architectures holds any explanatory value, it can illuminate where business opportunities are likely to emerge. In the credit card ecosystem, major players built dominant positions around payment coordination, issuance innovation, and form factor support. We can expect similar developments with stablecoins.

The earlier example primarily describes the payment coordination layer, since money flow is itself a massive business. Visa, Mastercard, American Express, and Discover each carry market caps in the hundreds of billions, totaling over $1 trillion combined. The fact that these card networks have maintained a competitive equilibrium suggests healthy market dynamics and a market large enough to support multiple major players. It's reasonable to expect the stablecoin coordination space to see comparable competition as it matures. Stablecoins are roughly 1–2 years into building out their infrastructure layer — enough runway for new startups to stake a claim.

"Stablecoin issuance" is also ripe for innovation. Analogous to the rise of corporate credit cards, we're likely to see more businesses wanting their own stablecoins. Controlling the unit of payment could give enterprises far more control over end-to-end accounting workflows — from expense management to handling foreign tax obligations. These could become direct revenue lines for stablecoin coordination networks, but they could also represent a standalone opportunity for new startups (similar to companies like Lithic). The downstream needs of enterprise demand may spin out additional businesses entirely.

"Stablecoin issuance" could also become more tiered. Think about the hierarchy in credit cards: many cards let customers pay an upfront fee in exchange for a richer rewards structure — Chase Sapphire Reserve or AmEx Gold, for example. Some companies, typically airlines and retailers, even offer co-branded credit cards under their own name. I wouldn't be surprised to see similar experiments with tiered stablecoin reward structures emerge. This, too, could open a new path for startups.

All of these trends reinforce each other. As issuance diversifies, demand for payment coordination services grows. As coordination networks mature, they lower the barrier to entry for new issuers. These are enormous opportunities, and I'm excited to see more startups move into this space. Over time, this will be a multi-trillion-dollar market capable of supporting many large companies.

A few areas for improvement:

• Tighten the language: The piece could be made more concise and punchy by replacing vague phrases like "enormous opportunity" with specific examples.
• Add more concrete examples: Rather than stating the parallels, illustrate them with additional real-world examples.
• Lean into the future: While the credit card analogy is valuable, shift more of the weight toward stablecoins' forward-looking potential.
• Address the competitive landscape: Discussing existing players and their roles in the stablecoin ecosystem would paint a clearer picture of where the market stands today.
• Explain key technical terms: For a broader audience, consider briefly defining terms like "decentralized exchange" or "net settlement" to make the analysis more accessible.

By incorporating these suggestions, you can sharpen this piece into a compelling, well-informed take on the promising future of stablecoins.