Following up on yesterday’s discussion about the potential for US Banks to issue stablecoins, the fintech world is abuzz after Stripe’s Sessions announcements covering AI and stablecoin. Given Stripe’s massive influence,  any move they make warrants attention. The question on many payment strategy executives’ minds: Is Stripe about to unleash stablecoins to circumvent traditional card rails for consumer payments? While the crypto-evangelists might be shouting “yes!”, a more pragmatic and skeptical view suggests this is highly unlikely, at least for the core retail checkout experience.

Stripe’s dominance in online payments is undeniable. The company processed a staggering $1.4 trillion in total payment volume in 2024, a 38% increase from the prior year and equivalent to roughly 1.3% of global GDP, as highlighted in their 2024 annual letter (a MUST read). Their revenue is deeply intertwined with card transactions, the prevailing payment method in virtually every major market, barring a few exceptions with strong local schemes like iDeal in the Netherlands, Bizum in Spain, or Pix in Brazil. 

The recent Stripe Sessions user conference underscored their continued heavy investment in payment orchestration and their expanding footprint among the fastest-growing eCommerce giants. Indeed, Stripe’s reach is extensive: half of the Fortune 100, 80% of the Forbes Cloud 100, and 78% of the Forbes AI 50 are Stripe customers. Moreover, businesses building on Stripe are, in aggregate, growing their revenue seven times faster than companies in the S&P 500. This market share concentration effectively positions Stripe as a gatekeeper, influencing which merchant-facing services gain widespread traction. Just ask Google and Apple, who have reportedly grumbled about Stripe’s “pay to play” approach for prioritizing Apple Pay and Google Pay.

Given this backdrop, why would Stripe risk cannibalizing its core card revenue by promoting a potentially lower-cost alternative like stablecoins? One argument is that Stripe could offer stablecoins (as a lower cost alternative to card), that has a greater reliance on Stripe’s burgeoning suite of Value Added Services (VAS) (AI enabled Radar fraud prevention, ID&V, …etc).

In my view the notion of stablecoins displacing cards in mainstream consumer retail is a very big uphill battle (see previous analysis). First and foremost is consumer adoption and preference. For the average online shopper, the purported benefits of stablecoins like transaction speed or finality are largely irrelevant. Consumers are comfortable with cards; they value the robust consumer protections, chargeback rights, and, significantly, the rewards and points ecosystems that cards offer. These are deeply entrenched habits and value propositions that stablecoins, in their current iteration for retail, simply don’t match.

Second, merchant acceptance is not a given. Chief Marketing Officers are laser-focused on conversion rates. As detailed in this post on merchant payment priorities, they are highly unlikely to clutter their checkout pages with new payment options unless there’s a clear demonstration of improved sales, reduced cart abandonment, or access to a significant new customer segment. A niche payment method with questionable mainstream consumer demand doesn’t fit that bill.

Third, even if stablecoins gained some traction, they would primarily address the “debit” use case. Yet, in the US market, over 70% of non-recurring payments made online payment volume are credit cards. This further limits the disruptive potential of stablecoins at consumer checkout.

Where will Stripe Focus Stablecoin Innovations? The Edge

So, what are we to make of Stripe’s stablecoin announcements, such as their new Stablecoin Financial Accounts? It’s crucial to look beyond the retail checkout hype. Stripe will undoubtedly respond to merchant requests if there’s genuine demand for stablecoin acceptance. However, their recent moves are far more logically positioned to support cross-border B2B payments, treasury operations, global disbursements, and facilitating payments for businesses in regions with volatile fiat currencies or less developed traditional payment infrastructures. These are areas where stablecoins can offer tangible benefits in terms of speed, cost, and accessibility, and where Stripe can leverage its platform to provide valuable services.

For payment strategy executives at FinTechs and US financial institutions, the message is clear: Stripe’s foray into stablecoins is strategic and likely aimed at underserved segments and international business use cases. But the idea of stablecoins systematically circumventing card networks for everyday eCommerce purchases in the US remains a highly improbable scenario. The reign of the card, with its complex but deeply embedded multi-sided network of consumers, issuing banks, and accepting merchants, governed by well-understood economics and rules from Visa and Mastercard, is not ending anytime soon.