Payment stocks took a hit on Friday following a Wall Street Journal report that Amazon and Walmart are exploring the possibility of using or issuing their own stablecoins. Analysts and investors say that may have been a little hasty. Stablecoins provide a way to move the value of U.S. dollars using cryptocurrency rails instead of traditional banking rails. They're appealing to retailers for their potential to save companies billions of dollars in processing fees, thanks to the speed and cost efficiency of blockchain technology, although that would cut a high volume of transactions away from the major card networks. Uber , Apple and Airbnb are among other big companies reported to be exploring stablecoins in recent weeks. On Friday Visa lost about 5%, while Mastercard fell more than 4%. American Express , Capital One and PayPal also retreated. Meanwhile, Circle closed up 25%, still rallying on the heels of its wildly successful IPO the week before. Additionally, on Thursday, Shopify said it will enable payments in USDC, the popular stablecoin issued by Circle, to merchants on its ecommerce platform. Analysts are standing by the card networks, however, saying stablecoins' potential impact on consumer-to-business payments is likely far off due to regulatory and technological challenges. Different use cases "We're aggressive buyers of V/MA shares as we see many hurdles to this theoretical alternative to card payments," Wells Fargo analyst Donald Fandetti said in a note in response to the news report. "Use of stablecoin reminds us of pay-by-bank or account-to-account payments, which are available today in the U.S. yet have not scaled," he explained. "Debit is also cheaper post interchange [regulation]. And to replace a credit card, a value prop has to be provided ... It seems to us that stablecoins are more likely to be a use case for certain cross-border B2B payments, rather than an alternative to cards." As Bernstein emphasizes, the retail giants are in an exploratory phase. Walmart has a history of pushing the bounds of fintech and large retailers exploring alternative payment methods "is nothing new," analyst Harshita Rawat said in a note Friday. "Traction will likely take years and may be limited to certain cross-border use-cases or some emerging countries (e.g., ones which have volatile underlying currencies)," she said. "In retail consumer-to-business payments, stablecoins are a solution looking for a problem (for the foreseeable future) in most developed markets … There are, however, other use-cases with stronger product market fit e.g., in less liquid remittances corridors, cross-border business-to-business and treasury/cash management." For example, Rawat pointed out, PayPal launched its stablecoin in 2023, and despite the company's reach across roughly 400 million users and 30 million merchants, PayPal USD (PYUSD) has had limited traction due to the lack of a crypto flywheel, lack of demand, and limited push by the company until recently . Political pushback Traditionally used as bridge currencies for crypto traders, stablecoins this year are seeing a surge in interest by banks and payment firms as the Trump administration has rolled back restrictive Biden-era crypto policies and Congress is making progress on passing stablecoin legislation . Last week the Senate advanced the GENIUS Act, a bill to regulate stablecoins, setting it up for a final floor vote in the coming days. "We question if the government ultimately will permit commercial firms to issue stablecoins that can be broadly used to make payments," TD Cowen's Jaret Seiberg said in a note. "We appreciate that the GENIUS Act that the Senate will pass next week does not bar commercial issuance. Yet our view is that the issue is not resolved as we expect a political backlash to permitting commercial firms to possess payment data for consumers." In any case, the push to instant payments is inevitable, Seiberg said, and "represents a risk to Visa and Mastercard" even if in the long term. The very discussion of Amazon and Walmart exploring stablecoins is an example "of the clout the merchants have to press banks to move to less costly and much faster debit payments." Oppenheimer's Owen Lau told CNBC stablecoins are well positioned to eat into card networks' revenue, but that that doesn't necessarily mean they'll replace the current mediums of consumer payments. Still, the conversation shows the market where payments evolution is headed. "There's still long way to go for consumer adoption [of stablecoins], but this is the direction we are going in," he told CNBC. "We have been waiting for this moment for years and now, it appears that it's coming." —CNBC's Michael Bloom contributed reporting.
