Take a deep dive into stablecoin cards: replacing Visa, or just a form of self-indulgence?
Author: Vaidik Mandloi Compiled and edited by: BitPushNews Crypto card spending surpassed $759 million in July, covering 9 million purchases — almost two and a half times that of the same period last year. However, more than 90% of the transaction volume still runs on the Visa network. And each of these cards will tell you the same story: we put payments on the stablecoin track, cut off the card network fees, and return the savings to the merchant. This is the same idea we discussed earlier when discussing how Stripe can build its own stablecoin cross-border payment chain. So if we actually try to get rid of the card network, what exactly will happen? Can avoiding Visa or Mastercard really save merchants money? Which layer do stablecoins replace in the payment stack? After thorough research, the answers were completely unexpected to me. To answer these questions about how the payment stack works, we must first figure out where the money actually goes when someone swipes a credit card. The first thing I realized was that most people, including those in the cryptocurrency industry, thought card networks like Visa had taken the biggest chunk. Wrong! When a merchant accepts a $100 purchase made with your rewards credit card, they pay the so-called Merchant Discount Rate (Merchant Discount Rate), which is approximately 2.2%, or $2.20. But the interesting thing is: this $2.20 didn't go into Visa's pocket; instead, it was distributed to three different participants, and the distribution ratio was very uneven. The largest chunk, about $1.75, went to the issuing bank (Credit Bank), which is the bank that issues credit cards to consumers. This fee is known as an interchange fee (Interchange), and it accounts for 70-80% of the entire merchant's processing fee. Next, the merchant's payment processor, also known as the acquirer (Acquirer), took about $0.30 to $0.70 as its markup. Finally, there is Visa or Mastercard, a real card network that everyone in the cryptocurrency industry wants to disrupt. It only takes an assessment fee (Assessment Fee) of about 0.13 to 0.18 dollars. This is only about 7-9% of the total cost paid by the merchant. So if you remove Visa from this equation, you're just removing the smallest item in the entire stack, and there's a reason why Visa's fees are so low. You see, Visa doesn't lend money to anyone, so it doesn't have to deal with all credit risk, chargebacks, or fraud disputes. In fact, Visa doesn't even transfer money. It's just a messaging network (Messaging Network) that only activates when you swipe in a store. Visa's job is to send authorization information from the merchant terminal to the card issuer and then back, and it establishes operating conditions that everyone in the system must abide by. However, it is the card issuer that actually takes on most of the heavy lifting. It is the card issuer that provides credit to the consumer and assumes the risk that the consumer may never repay. The card issuer is also responsible for floating funds (Float) between the purchase of the product and the date of payment of the bill, and uses exchange fees to fund reward programs that entice consumers to use the card. That's why Visa's business model is so fascinating. In 2025, Visa processed $14.2 trillion in payments, covering 257.5 billion transactions, generating net revenue of $40 billion and a net profit margin of nearly 50%. It earns an average of around 0.13 cents per transaction, which is its entire business model. Visa is one of the most valuable companies on the planet not because it charges a high fee per card, but because it processes a quarter of a trillion transactions a year, with almost zero marginal costs and zero credit risk. Now let's talk about the part where the situation is starting to make stablecoin cards really uncomfortable. The harsh reality of the stablecoin card economy Every stablecoin card is a debit card product. The money was already in the user's wallet in the form of USDC or USDT before the purchase occurred. Also, there is no floating deposit (Float) and no revolving balance (Revolving Balance) to generate interest income on the side. This puts these cards in a completely different economic category. Also, in 2010, the US Congress passed the “Durbin Amendment” (Durbin Amendment) to transfer debit card exchange fees to banks with assets over $10 billion...
