Payments giants Visa and Mastercard are exploring the use of stablecoin to make payments quicker, more efficient and more cost effective.

“It is still early, but we do see real potential, which is why we’ve been investing in the [cryptocurrency] space broadly [and] in the stablecoin space specifically for many years now,” Visa Chief Executive Ryan McInerney said during the company’s fiscal second quarter earnings call on April 29. 

San Francisco-based Visa will run a pilot program with $869 billion BBVA this year to launch stablecoin on ethereum blockchain [payments network built on ethereum network] to facilitate cross-border payments, McInerney said, adding that the offering will be targeted toward travelers who make cross-border payments often. 

Similarly, Mastercard is expanding its offerings for the deployment of stablecoin.  

“We’re collaborating with cryptocurrency platforms to allow consumers to spend their cryptocurrencies, including stablecoin, at more than 150 million Mastercard acceptance locations worldwide,” CEO Michael Miebach said during the company’s Q1 earnings call today.  

Mastercard allows payments with stablecoin on its network, Miebach said.  

“We’re working with fintech acquirer NuWay to enable the option to settle payments in stablecoin for their merchants,” he said. 

Mastercard, based in Purchase, N.Y., teamed up with crypto trading platform OKX and payments company Nuvei to allow consumers to use cryptocurrency and stablecoin for everyday transactions by issuing OKX debit cards, according to a Mastercard April 28 release. 

Mastercard plans to continue its investments in stablecoin and the crypto segment after investing in those sectors for years, Miebach said. 

“Stablecoin is relatively nascent,” Miebach said. “Why is that? Because there isn’t yet sufficient regulatory clarity.” 

Regulation and use case 

Stablecoin use has been under evaluation within the financial services industry for quite some time but has gained steam since President Donald Trump, who is an advocate of cryptocurrency, took office in January, Sean Viergutz, partner in the financial services division at consultancy PwC, told Bank Automation News. 

“I think his rhetoric, regulations and comments have been friendly to the crypto industry,” Viergutz said. “That doesn’t necessarily change a consumer’s sentiment around it and the adoption.” 

Trump’s actions to allow banks to use and develop crypto and stablecoins by streamlining the process of getting approved will help industrywide adoption, Viergutz said. 

On Jan. 17, two days before taking office, Trump launched $Trump coin, according to Bloomberg‘s Jan. 17 reports. The crypto has amassed a market cap of $2.8 billion as of May 1, according to crypto data analytics company CoinMarketCap.

For example, Morgan Stanely will allow users of its E*Trade system to exchange and trade cryptocurrencies, according to a Bloomberg report published today. 

SoFi similarly said that it will bring back crypto trading on its app and online platforms after dropping them in 2023 due to increasing regulatory scrutiny, CEO Anthony Noto said during the digital bank’s Q1 earnings call April 29. 

“We are optimistic about the U.S. government passing more clear and pragmatic regulations,” Visa’s McInerney said. “There’s a lot of activity and discussion about the stablecoin space right now, and I think the tipping point will be more clear and pragmatic regulations.” 

For widespread adoption of crypto and stablecoin, the industry must come up with viable uses, Dean Leavitt, founder and CEO at Boost Payments, told BAN. 

“Cross-border payments where you can make payments quickly at low costs seem to be the most prime use case of the technology,” Leavitt said, adding that stablecoin and crypto are a bit far off from being used in B2B payments for the time being. 

“There has been big conversations around how do you use distributed ledger technology [DLT] to un-trap trapped liquidity in various global corridors and for cross-border payments,” Viergutz said. Banks are also exploring DLT and stablecoin for internal liquidity management as a viable use , Viergutz said. 

BY THE NUMBERS: In the first quarter:   

Visa reported: 

• Net revenue of $9.6 billion, up 9% year over year; 

• Total transactions of 60.7 billion, up 8% YoY; and 

• Gross dollar volume of $3.9 trillion, up 5% YoY. 

Mastercard reported: 

• Net revenue of $7.3 billion, up 14% YoY; 

• Net income of $3.3 billion, up 9% YoY; and 

• Gross dollar volume of $2.4 trillion, up 9% YoY. 

MARKET OUTLOOK: Shares of Mastercard [NASDAQ: MA] were up 0.23% from market open today to close at $549. The company has a market cap of $500 billion.