Stablecoins Won’t Kill Card Rails. They’ll Make Everyone Hedge.

Sep 20

Card networks and the world's largest banks aren't choosing sides in the stablecoin debate. They're hedging — and the one exception deserves an executive's full attention.

IDEA IN BRIEF

Better data is finally catching up to the promise. Network data mandates are pushing Level III card data toward the accuracy and completeness AP teams have wanted for years. Better line-item detail means payments can more reliably auto-match to invoices instead of landing in a reconciliation queue.

This has been a quiet blocker on virtual card ROI for a long time. As the data improves, one of the most persistent objections — great, but our team still has to chase the remittance information — becomes much less relevant.

Embedding is what makes usage durable. A virtual card issued as a one-off decision tends to remain a one-off decision. Embed virtual cards directly into ERP and AP workflows, and they become policy-driven, repeatable spend — part of how payables operates rather than another tool someone has to remember to use.

The next step is contextual issuing: an approved expense automatically generates a single-use card number that expires when the transaction clears. That's a materially different risk and reconciliation posture from a physical or shared card sitting in someone's wallet for a year.

And this shift takes time. BILL's René Lacerte noted in a McKinsey interview that virtual card and international payment products took years to mature on its platform. The challenge isn't simply the payment technology; it's understanding what a B2B transaction is actually for. Better data and deeper workflow integration are what begin to solve that problem.

Pricing is about to get more honest — or more contested. Flat-rate interchange pricing is easier to defend when neither side has enough data to question it. As transaction history becomes richer and more transparent, buyers, suppliers, and issuers can see more clearly where the economic value is landing.

Expect those pricing conversations to get sharper.

AI could start choosing the payment rail. Javelin calls this “agentic orchestration”: AI evaluating a transaction's economics, controls, timing, and data requirements and determining when a virtual card makes more sense than ACH or wire.

That's a more consequential use of AI than the fraud-detection capabilities dominating many vendor pitches today. When evaluating platforms, buyers should distinguish between AI that helps process a payment and AI that can intelligently determine how the payment should be made in the first place.

The Wrong Question

On earnings calls this year, one question keeps surfacing: will stablecoins kill the card networks? It is the kind of question headlines are built for, but it is the wrong place for executive teams to focus.

The more useful question is narrower and more strategic: where, specifically, is settlement moving to blockchain rails, and who is positioned to profit from that shift rather than be disintermediated by it? Framed that way, a different picture emerges — one in which almost every major player, from the card networks to the largest banks in the world, is running the same play. Not betting on stablecoins. Not betting against them. Hedging.

That distinction matters for how a payments or banking executive should actually spend 2027 planning cycles. The threat is real, but it is concentrated in a much narrower corridor than the headlines suggest — and the response the market has already chosen is instructive.

Where the Moat Is Real, and Where It Never Existed

Stablecoins are displacing card rails fastest in B2B and cross-border settlement, a segment now worth roughly $226 billion a year. That is not a surprising place for disruption to land: card networks never had strong pricing power or a real product advantage in wholesale settlement between businesses. Stablecoins simply do the job more cheaply.

Consumer checkout tells a different story. Roughly 90 percent of crypto-card spending volume still routes through Visa's network. Chargeback rights, fraud liability protections, acceptance at more than 175 million merchants, and rewards economics are not easily replicated by a token on a blockchain. In practice, stablecoins have become a funding source that sits behind a card rather than a replacement for the card itself.

The lesson for any executive mapping exposure: the risk is not evenly distributed across the payments stack. It is concentrated exactly where the incumbent's advantage was already weakest

Two Networks, Two Bets, One Insurance Policy

Neither Visa nor Mastercard is fighting stablecoins head-on. Both are repositioning to sit on top of the new rails — but they have chosen opposite strategies for doing it.

Mastercard went vertical: it acquired the stablecoin infrastructure firm BVNK for up to $1.8 billion, betting it can own the plumbing outright. Visa went horizontal: it is soliciting partners, staying deliberately token-agnostic, and positioning itself as neutral routing infrastructure. One analyst summarized Visa's bet as an attempt to become “the stablecoin of stablecoins.”

What both companies did next is the more revealing signal. Despite betting on opposite theories of how this plays out, both Visa and Mastercard joined Circle's Arc consortium anyway. Neither network is confident enough in its own strategy to skip the other one. Wall Street's read on all of this is telling: 2026 network earnings estimates were revised upward, not down. The market is pricing this as repositioning risk, not a revenue cliff.

Banks Are Running the Identical Play, One Level Down

Bank of America CEO Brian Moynihan has warned that roughly $6 trillion in U.S. bank deposits — 30 to 35 percent of the commercial deposit base — could migrate to stablecoins if regulators allow them to pay yield. JPMorgan CEO Jamie Dimon has taken the fight to Congress directly, arguing for regulatory parity rather than against stablecoins themselves.

“If you want to be a bank, become a bank. Then you can do whatever you want under bank law.”

Jamie Dimon, CEO, JPMorgan Chase

The same banks lobbying against stablecoin competition are simultaneously building their own. Twenty-one major banks — including Citi, Goldman Sachs, Bank of America, Wells Fargo, UBS, and Deutsche Bank — are jointly developing a bank-issued dollar stablecoin, targeting a 2027 debut. JPMorgan's own tokenized-deposit platform, Kinexys, already moves an estimated $1 trillion a year.

It is worth separating the announcements from what has actually shipped. JPMorgan's deposit token, JPM Coin, went live for institutional clients in November 2025. SoFi Bank beat every larger competitor to market with sofiUSD, launched that December — the first stablecoin issued by a U.S. nationally chartered, FDIC-insured bank on a public blockchain. Citi's tokenized-deposit network and Société Générale's euro and dollar tokens are live as well. Bank of America and the 21-bank consortium, by contrast, remain pre-launch. The gap between a bank announcing a stablecoin strategy and a bank shipping one is still wide — and it is not always the largest balance sheet that closes it first.

A Reality Check on the Headline Numbers

Before any executive recalibrates strategy around stablecoin volume, the numbers deserve scrutiny. Analysis by McKinsey and Artemis Analytics found that stablecoins moved more than $35 trillion in transactions last year — but only about 1 percent of that represented genuine payments. The rest is crypto trading, exchange settlement, and internal protocol transfers that never touch an end user. Real payment volume — business-to-business transfers, payroll, remittances, capital-markets settlement — lands closer to $300 to $400 billion, in the same range as the B2B figure cited earlier.

As the researchers put it, headlines claiming stablecoin volumes are overtaking Visa's or Mastercard's multi-trillion-dollar flows “miss a key point.” That does not diminish the long-term case for stablecoins as a payment rail. It does mean the disruption is currently sized like a meaningful new payment corridor, not an existential threat to the existing one.

“Stablecoins are just the beginning; they are not the whole story.”

McKinsey & Company

McKinsey's separate research frames the bigger structural shift as a three-layer stack: stablecoins as money in motion, tokenized bank deposits as money at rest, and central bank digital currencies as final settlement money. Tokenized deposits alone already move more than $4 trillion a year — an order of magnitude larger than stablecoin payment volume.

The One Corridor Where the Threat Is Structural

Everything above describes a hedge, not a collapse. There is one corridor where the threat to card economics is genuinely structural rather than cosmetic: machine-to-machine payments, where AI agents transact with other agents or merchants without a human in the loop.

Interchange fees of 2 to 3 percent were built to compensate for consumer fraud protection, dispute resolution, and rewards — costs that make far less sense when the payer is a software agent and settlement is near-instant. Stablecoin settlement in that context is close to free. Visa is not ignoring this: it has shipped an agent-payment CLI and joined Stripe's Machine Payments Protocol. Joining the standard-setting effort, rather than building a competing one, signals how confident Visa is in defending interchange economics in this specific corridor.

The company best positioned to set that standard is not a crypto-native firm. It is Stripe, which has assembled a three-part stack—Bridge for fiat on- and off-ramp and issuance, Privy for seed-phrase-free embedded wallets for more than 75 million users, and Tempo, a purpose-built settlement blockchain—and has already processed roughly $400 billion in stablecoin payments in 2025. Tempo's design partners include Visa, Mastercard, Deutsche Bank, Shopify, OpenAI, and Anthropic: a list that reads less like companies threatened by Stripe's chain and more like companies who have concluded nobody wants to be left outside whatever standard wins.

What This Means for Your Strategy

Four things follow for executives sitting on either side of this shift.

Separate headline volume from real payment volume before acting on either. A $35 trillion transaction figure and a $390 billion payment figure describe the same market and imply opposite strategies. Know which one is driving your board's sense of urgency.

Treat a stablecoin strategy as a hedge, not a bet. Every sophisticated player in this market — Visa, Mastercard, JPMorgan, Citi, the 21-bank consortium — is pursuing parallel, sometimes contradictory strategies simultaneously. That is not indecision. It is the correct response to genuine uncertainty about which standard wins.

Audit machine-to-machine exposure now, not after volumes are material. This is the one corridor in this analysis where the economic logic behind existing fee structures may not survive intact. Any revenue model built on consumer-style interchange assumptions in an agent-to-agent context deserves a fresh look this year, not next.

Watch who is setting the standard, not who is making the most noise. Stripe's Tempo, backed by a design-partner list that includes the very networks it might disrupt, is a stronger signal of where machine payments infrastructure is headed than any single bank's press release.

TIM URAL is President of Point Monarch, a boutique payments and fintech advisory firm based in Mill Valley, California. He previously held senior roles at Visa, where he managed global key accounts, and at Oracle. His work focuses on payments strategy, portfolio optimization, co-branding partnerships, go-to-market execution, and agentic commerce.