What Stablecoins Are and Why Visa, Mastercard, Stripe, and PayPal Care About Them

Stablecoins started as a trader’s parking lot for moving between Bitcoin and Ethereum without touching a bank. That part still exists, but the more interesting move is happening inside the payment stack: Visa, Mastercard, Stripe, and PayPal now use stablecoins in settlement, and banks are testing tokenized deposits alongside them.

1. A stablecoin is a digital token designed to hold a fixed value, usually one US dollar. Most stablecoins try to maintain that peg by holding cash and short-term government debt in reserve, with one dollar of reserve for every token issued. USDT and USDC are the two largest examples. If a stablecoin is fully backed and redeemable, one token can be exchanged for one dollar at any time.
2. The fixed value is the point. Bitcoin can swing ten percent in a day; a stablecoin is built not to. That makes it useful for payments rather than speculation, which is why payment companies keep looking at it even when direct merchant acceptance remains limited.
3. The thing payment networks care about is settlement, not checkout. Mastercard has stablecoin settlement live for issuers and acquirers. Visa’s stablecoin settlement pilot now spans nine blockchains. Stripe acquired stablecoin infrastructure firm Bridge in 2024. In 2026, Visa, Mastercard, Stripe, and Coinbase were reported to be backing a joint stablecoin platform called Open USD, with more than 140 banks and fintechs involved.
4. On paper, card payments clear in seconds. In practice, settlement comes days later, after banks and card networks reconcile balances through multiple intermediaries and batch cycles. A stablecoin transaction settles on a blockchain: once confirmed, the transfer is final within minutes, at any hour, on any day. For issuers and acquirers, that shortens the period when money is tied up between transaction and settlement.
5. Cross-border payments are where stablecoins look the most straightforward. A traditional international transfer can pass through several correspondent banks, each adding fees and delay. A stablecoin transfer moves directly between wallets on a blockchain, regardless of time zone or banking hours. PayPal’s crypto payment tools already convert wallet balances into merchant payouts with that goal in mind, aimed at cutting cross-border fees.

For high-risk PSPs, the useful distinction is simple: stablecoins are no longer just a crypto asset class story. They are increasingly part of the settlement plumbing, which means they matter to acquirers, issuers, and banks deciding how much balance-sheet time they want to give up to card rails versus blockchain rails.