Visa, Mastercard to capture $253-bn crypto threat

Turf War on the Cards

- AGENCIES

A turf war is breaking out in the vast world of digital payments—and the incumbents are suddenly on defense.

Tech firms and crypto startups are moving in on territory long dominated by Visa and Mastercard, powered by a new type of currency—the stablecoin—and a pitch merchants can't ignore: lower fees, faster settlement, and a way to bypass the big two altogether.

It's a tech threat and a financial threat. Digital tokens, which are typically pegged to the dollar, allow consumers to pay merchants directly from their crypto wallets—without routing payments through a bank or card network. Last year alone, US businesses paid an estimated $187 billion in swipe fees, most of it via Visa and Mastercard's systems. Stablecoins promise to make that toll much lower, or even obsolete.

"It's clear that eventually this entire space could be a threat to TradFi providers," said Christian Catalini, founder of MIT Cryptoeconomics Lab. "But credit card networks aren't sitting on the sidelines. The card networks will push to work with many stablecoins, so they retain their central role."