Stripe’s announcedits acquisition of Privy yesterday, web3 wallet infrastructure platform that enables developers to easily build and integrate secure, self-custodial wallets into their applications with well defined APIs (consistent with everything Stripe does). 

IMHO this signals an acceleration of Stripe’s strategy to dominate the intersection of eCom, wallets, Finance and stablecoin, with a likely product focus on embedding user-friendly stablecoin wallets directly into merchant checkouts and developer platforms. This will greatly expand and “juice” stablecoin adoption in eCom, particularly when combined with LINK. While it COULD present a slight challenge to cards, I don’t see near term impact there (per blog last week). US and EU consumers prefer card, merchants do as well (due to governance and customer support), ROW, micro payments, cross-border, small merchant acquiring/payfacs (and other edge UCs are a different story). 

The acquisition enables simplification of cryptocurrency usage for a broader audience. Privy specializes in “embedded wallets,” which allows users to create and manage crypto wallets with familiar methods like an email address, removing the need for users to grapple with seed phrases and other technical hurdles that have hampered mainstream adoption. This focus on a seamless user experience is consistent w/ Stripe’s Link (and everything else they do).

Product Focus: Seamless Stablecoin Wallets

I see near term product focus on deep integration of its wallet infrastructure into Stripe’s Link and core platform. This will likely manifest in several key ways:

• “Invisible” Wallets for Mainstream Users: For the average consumer, this could mean the ability to hold and transact with stablecoins without ever knowingly interacting with a complex crypto interface. Imagine a scenario where a user can choose to pay with “USD Coin” (USDC) at a merchant checkout as easily as they select a credit card, with the underlying wallet creation and management handled seamlessly by Privy’s technology in the background.
• Developer-First Tools for Stablecoin Onboarding: For developers, Stripe will likely offer a powerful suite of APIs to easily embed stablecoin wallets into their own applications and platforms. This would significantly lower the barrier to entry for businesses looking to build products and services on top of crypto rails, from NFT marketplaces to global payroll systems. Apple in app purchases (internationally) would be an example. 
• Unified Fiat and Crypto Experiences: Stripe’s recent launch of “Stablecoin Financial Accounts” and its earlier acquisition of stablecoin platform Bridge already laid the groundwork for this vision. By integrating Privy, Stripe can now offer a complete, end-to-end solution for businesses to accept, store, and manage both fiat currencies and stablecoins within a single, unified Stripe account.
  

Programmability… Where?

Beyond simple payments, the integration of Privy’s (and Bridge) unlocks programmable transactions. Stablecoins, being blockchain-based, can have rules and logic embedded directly into their transactions. This opens up a host of possibilities that traditional payment methods cannot easily replicate:

• Automated and Conditional Payments: Imagine a freelance contract where payments are automatically released upon the completion of specific, digitally verifiable milestones. Or an e-commerce platform where a portion of a sale is instantly split and sent to multiple suppliers and a logistics partner.
  
  
• Micropayments and New Business Models: The low transaction fees associated with some stablecoin networks make micropayments economically viable. This could enable new business models, such as pay-per-view content, real-time streaming royalties for artists, or tipping economies for online creators.
  
  
• Enhanced Security and Fraud Prevention: Programmable transactions can include built-in security features, such as multi-signature requirements for large transactions or time-locks that prevent immediate withdrawal of funds, offering new tools to combat fraud.

Key UC? Agentic Commerce (see Programmable Money – Cards and Coins and Agentic Economic Opportunity – Edge UCs).

Competition with Cards: A Hybrid Approach

Will this impact V/MA GDV? I don’t think so. 

• Lowering Merchant Fees: For merchants, the allure of stablecoin payments lies in the potential for significantly lower transaction fees compared to the 2-3% typically charged by card networks. Stripe has already experimented with lower fees for crypto transactions, and a broader rollout could entice a segment of merchants to actively encourage stablecoin payments. HOWEVER, consumers in US and EU don’t hold coins, and merchants refuse to add another payment option that doesn’t increase conversion rates. Large merchants also view cards payments as a key competitive advantage. As a top 2 retailer said “Tom the net margin in retail is 1.5%, no one processes card payments more cost effectively than me. This 80-100 bps cost advantage is very meaningful given our 1.5% margin. I want V/MA to win (just don’t tell anyone I said that)”.
• A Bridge, Not a Complete Replacement: Stripe’s strategy seems to be one of bridging the old and new financial worlds, not burning the bridges. Cards are still the “last mile” as evidenced by its recent partnership with Visa to allow for the issuance of cards linked to stablecoin balances. This hybrid approach allows users to spend their stablecoin holdings at any merchant that accepts Visa, effectively leveraging the existing card infrastructure as a ubiquitous “off-ramp” for the crypto economy. This suggests a period of co-existence, where stablecoins offer a new rail for payments while still relying on card networks for widespread acceptance.
• The Long-Term Vision: In the long run, as user adoption of native stablecoin wallets grows and the infrastructure for direct wallet-to-wallet payments becomes more robust, the reliance on traditional card rails could diminish. Stripe, with its deep merchant relationships and now, with Privy, a powerful tool for user onboarding, is positioning itself to be the central nervous system for this new financial paradigm, regardless of which “rails” the transactions ultimately run on.
• Gaining Leverage and Setting New Rules: By expanding LINK to an alternative to other cards and wallets, Stripe creates optionality and leverage. With a captive, embedded wallet ecosystem, Stripe will be in a stronger position to negotiate fees with card networks and can more forcefully influence the go-to-market strategies of competing wallet technologies (and authentication/identity). It effectively allows Stripe to assume a gate keeper role for how payments technology is integrated and monetized at the checkout.