Visa and Mastercard are Threatening to Dominate Stablecoins and Undermine the Innovations That Technology Could Make
Congress passed the GENIUS Act to regulate stablecoins and open the door to the innovation that technology could provide. But that is already under threat – from Visa and Mastercard.
Visa and Mastercard control more than 80% of the credit card network market. These two dominant payment networks have slowed and blocked innovation in US payments for more than 40 years in order to stifle competitive threats and preserve their own dominance. In fact, the Department of Justice said in its current case against Visa, “Visa’s efforts have not only reduced innovation from other companies that would benefit consumers and businesses today, but also its own incentives to innovate” (see the complaint at page 53).
Now Visa and Mastercard are using their longstanding playbook to dominate stablecoin technology and make sure that stablecoins will not pose a competitive threat to them. They just want stablecoins to be a minor appendage of their credit card networks - meaning that stablecoin innovation won’t benefit consumers and businesses who are being crushed by the excessive swipe fees that Visa and Mastercard impose. Take a look at Visa’s own website, which says:
- “Stablecoin-linked cards enable consumers to spend their stablecoin balance at Visa-accepting merchant locations.”
- “Stablecoins are becoming increasingly integrated into mainstream payments — not just for crypto companies, but for banks, corporates and financial institutions globally.”
- They have an entire white paper saying the same thing: “Visa has been a leader in the development of stablecoin-linked cards, enabling consumers and corporates with stablecoin wallets to spend their stablecoins at the 150+ million merchant locations that accept Visa globally.”
- On April 30, Visa announced a partnership with stablecoin platform Bridge to offer stablecoin-linked Visa cards in multiple countries. A Visa official said that “We’re focused on integrating stablecoins into Visa’s existing network and products in a frictionless and secure way.”
- And on August 12, a Bloomberg article noted that over the past year Visa has "expanded the company's stablecoin settlement business, partnered with a major bank on issuing its own tokens and inked deals with fintech firms globally." The article quotes Visa's head of crypto saying that he sees crypto "massively expanding our addressable market."
Mastercard is looking to do the same. Read it here:
- “Mastercard has been preparing for this moment for years. We’ve worked across the crypto and traditional finance ecosystems to explore and understand how stablecoins and other digital assets can complement and enhance existing payment systems.”
- Mastercard also announced on April 28 that it has formed partnerships with at least eight crypto companies to allow consumers to “spend the stablecoins in their crypto wallets via traditional cards at the over 150 million merchants accepting Mastercard globally.”
- Mastercard claims it is “defining the future of digital money”
Payments insiders are seeing this and think stablecoins won’t change anything about these two dominant incumbents because of “the moves networks are making to build their own stablecoin infrastructures.”
Visa has made its intention clear: “Visa no longer adapts to the evolving landscape; it takes command.”
Mastercard has domination in mind too: “At Mastercard, we’re not waiting for the future — we’re building it.”
So, Visa and Mastercard want to co-opt stablecoins within their existing card network system, with its exorbitant price-fixed fees, and prevent any innovation that might threaten their dominance.
That would be bad news for the nearly 300 business groups, consumer and public interest groups, some of the nation’s largest unions, the Coalition of Large Tribes, the Stillaguamish Tribe of Indians and multiple members of tribes across the nation, the American Logistics Association, the Armed Forces Marketing Council and nearly 2,000 individual businesses that have all asked for passage of the Credit Card Competition Act to bring relief from skyrocketing swipe fees.
COMPETITION IS BETTER FOR EVERYONE
IT'S TIME TO PASS THE CREDIT CARD COMPETITION ACT