Yesterday, I attended a panel focused on stablecoins and their role in transforming payments in the US. The panelists were optimistic, highlighting the cost-saving potential of stablecoins as a key driver for adoption. They see stablecoins streamlining payments not just domestically but also internationally, where the cost benefits are even more pronounced. This perspective is grounded in the belief that the lower transaction costs associated with stablecoins would naturally lead to widespread consumer adoption.
For the most part, they are right.
However, my take diverges when it comes to the US market. Despite the apparent benefits, I believe the transition faces a significant hurdle: the American consumer’s deep-rooted affinity for credit card rewards. In a country where credit card points and rewards are a staple of financial activity, convincing consumers (especially middle-to-upper-class consumers) to shift away from their cards to a new form of payment is a considerable challenge.
This isn’t just about transaction costs. It’s about consumer habits and preferences. In the US, credit cards offer more than just a payment mechanism; they’re a way to earn benefits, travel points, and insure your purchase. For stablecoins to gain ground, there needs to be a compelling value proposition that matches or exceeds the perceived value of credit card rewards.
Merchants alone can’t drive this change. Just as they haven’t been able to shift consumers away from credit cards to cash, despite the lower costs, they’re unlikely to push consumers towards stablecoins without a strong consumer incentive. The adoption of stablecoins in the US will require a strategy that looks beyond just lower transaction fees. It needs to offer a reward system that can compete with, or outperform, that of traditional credit cards.
To be clear — Stables will eventually win, but only when they can offer consumers more. Until that time, they’ll remain a curiosity.