COMMENTARY: Stablecoins and Cards: Why the Either/Or Debate Misses the Point

The stablecoin hype is real. The pitch sounds irresistible: instant settlement, lower costs, fewer intermediaries. So, will the world move on from cards to stablecoins?

Nope. Why not? Because it’s more nuanced than that. Stablecoins and cards aren’t competing for the same job. Rather, they solve different problems in the money lifecycle. One moves and stores value efficiently; the other enables spending and trust at scale. Instead, one of the most compelling opportunities for fintechs today lies in building atop infrastructure that connects both.

For storage and transfer—especially cross-border transactions—stablecoins excel. Instant settlement, low costs, and digital-dollar access all matter when you’re sending remittances, paying overseas workers, or protecting savings from currency devaluation.

On the other hand, for commerce, where you need merchant acceptance, trust, and incentive mechanisms for spending, cards simply dominate. Universal acceptance for cards exists today across millions of merchants without any need to reinvent payment-acceptance hardware, software, or processes.

Trust and governance mechanisms are robust and work exceedingly well at scale. As a consumer, you can always rely on the well-trodden chargeback process through your card issuer. And, of course, cashback and rewards for spending on cards are so ingrained at this point with relatively sticky, market-clearing interchange rates.

The companies getting this right are integrating these rails: hold value in stables, spend with cards.

The three dynamics we alluded to above create an insurmountable advantage for cards when it comes to solving for spending. Start with incentives. In the largest markets, cards offer 2% to 3% cashback to shoppers. No consumer or business cardholder will voluntarily give up those rewards to pay with a more “efficient” rail.

Merchants must accept cards to serve these customers. Better technology doesn’t overcome behavioral economics. Meanwhile, if merchants have to incentivize shoppers to pay with stables by offering 2% to 3% in rewards, they’re back to square one any way and might as well just stick it out with cards. The pay-by-bank industry learned this lesson a dozen times over in the last fintech cycle.  

Then consider trust mechanisms. What some crypto enthusiasts call inefficiency—reversibility, refunds, chargebacks, netting, and settlement delays—are actually features that enable commerce at scale. These so-called “bugs” are features of a fairly evolved system that took decades to perfect in commerce across highly fragmented sets of buyers and sellers.

Crypto’s settlement finality sounds great to techno-libertarian idealists—until they need to reverse a fraudulent transaction and design a system that protects vulnerable consumers from deceptive or abusive merchants.

Finally, sunk costs matter. Card issuing, acquiring, and network infrastructure come with sophisticated risk-management and compliance ecosystem involving fraud detection, KYC/AML, and dispute resolution. Companies operating at scale on all sides of the card-network ecosystem won’t abandon decades of tooling and investment until something is very broken. But it isn’t.

Expect that the acceptance and network effect of cards will not be replicated for a long, long time until something with a 2x better value proposition for all sides of the ecosystem turns up.

On the other hand, in countries with unstable currencies or limited dollar access, stablecoins address genuine needs. They hold money that won’t lose value, move it across borders without prohibitive fees, and access digital dollars when traditional banking fails. For remittances, payroll, and savings, these efficiency gains are real.

But solving the storage problem creates a spending problem. You can’t buy groceries with a stablecoin wallet, or you don’t want to because you forfeit the rewards and chargeback rights linked to buying with a debit or credit card.

This is where the integration thesis becomes obvious. Stablecoins excel at holding value in unstable markets. Cards are the best rail for spending, bar none, and already exist at scale globally. The payments ecosystem needs both.

Companies are building this bridge. Customers hold funds in stablecoins for stability and cross-border transfers, then spend via cards as usual without any added friction. The opportunity isn’t in choosing one rail over the other, it’s connecting them seamlessly.

This pattern mirrors that of mobile wallets. When Apple Pay launched, many predicted the death of cards. What happened is that some physical cards moved into phones as tokenized cards that routed to the underlying bank account or line of credit. But the underlying card rails never went away. It’s the same payment rails with the same messaging layer, just with a new interface.

Apple Pay didn’t replace Visa or Mastercard. It became another way to use Visa and Mastercard. Stablecoins follow the same trajectory. It’s a new storage mechanism, but the same spending and acceptance infrastructure at the point of sale, and the same trust, governance, and incentive framework.

To build successful banking and payments experiences, fintechs must now plan to integrate multiple payment rails and solve for their customers’ needs holistically. It’s about how to store value and save and spend without compromising.

—Nikil Konduru is chief commercial officer at Lithic.