Stablecoins Get a Boost As Walmart And Amazon Look to Adopt Them

Stablecoins are starting to move beyond niche status. Both Walmart Inc. and Amazon.com Inc. are investigating whether to issue the digital currency in the U.S. market, The Wall Street Journal reported early Friday.

Details are sketchy. Neither megamerchant responded to queries about the matter from Digital Transactions News. It also remains unclear whether the purpose of the stablecoins, should they become a reality, would be for supplier payments or for use by consumers. But both companies operate stores and e-commerce sites in the U.S. and internationally, creating a strong incentive to adopt a currency for payments that transcends geographic boundaries, observers say.

Stablecoin technology could also offer a tempting alternative to credit cards at a time when merchants are increasingly sensitive to transaction costs. Experts point to the potential for savings on merchant acceptance if stablecoins can ultimately displace a significant share of credit card volume. “Retailers of all sizes are looking for a go-around to branded interchange,” notes Cliff Gray, principal at Gray Consulting, in commenting on the news regarding Walmart and Amazon.

Stablecoins are generated by a blockchain and carry a value typically tied to a national currency, such as the dollar. As such, they can avoid the up-and-down price swings other cryptocurrencies, such as Bitcoin, are subject to. That makes them more appealing to users, though the coins’ ability to offer a stable value also represents a potential alternative to standard bank accounts, experts say, underscoring an advantage for supplier payments.

Another factor merchants are weighing is a bill in Congress that would set out and clarify rules for stablecoin acceptance and use. Called the Genius Act, the potential law could ignite more moves by merchants and blockchains to cooperate on stablecoins, observers say. For now, the bill has yet to pass either chamber of Congress.

In the case of the interest allegedly coming from Walmart and Amazon, the benefits of stablecoins could extend well beyond savings on transaction costs if offered or accepted by merchants. “Whether for suppliers or consumer purchases, stablecoins make lots of sense for retailers. No more funds volatility, and interchange costs are virtually eliminated, leaving the retailer only to negotiate fiat-to-stablecoin exchange rates,” notes Gray.

The advantages for merchants could grow as they issue more stablecoins, according to Gray. “At scale, they empower themselves as a financial network,” he says.

But while stablecoins may offer major advantages for wholesale payments, there could be drawbacks for merchants if they move to stablecoins at the point of sale, particularly in the incentives needed to move consumers en masse to a new form of payment, some observers say.

“If they issued their own stablecoins, with sufficient incentives, they could probably persuade some consumers to use them. But the incentives (yield on stablecoin deposits which might be in the form of credits to spend at Amazon and Walmart), likely would be greater than any reduction in interchange and network fees,” cautions Eric Grover, proprietor of the consultancy Intrepid Ventures, in an email message.