A new wave of payment innovation is upon us, and it is fueled, at least in part, by digital-first consumers' and merchants' concerns about the rising costs of traditional payment methods. Stablecoins, which are digital assets capable of being redeemed for a fixed amount of monetary value, stand out as one such innovative payment method that reduces friction by allowing lower costs and faster settlement for merchants, all without the need to rely on traditional payment card networks. There's a rumor that several large merchants are exploring issuing their own stablecoins as an alternative payment method to reduce acceptance costs. And the recently passed Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act provides a regulatory regime that could expand the adoption of stablecoins as alternative pay.
Merchant Acceptance Costs
A key driver to the adoption of stablecoins as an alternative payment is the elimination of the costs inherent in accepting traditional payment cards. Most merchants pay transaction and interchange fees — which may vary depending on the type of merchant, the type of transaction (e.g., card present or not present), and the card type — as a condition to acceptance of traditional payment cards (e.g., Amex, Mastercard, and Visa). Merchants' obligation to honor all cards, coupled with surcharging restrictions, have left merchants with little flexibility when it comes to acceptance costs, unless the merchant has a separate incentive arrangement with a card payment network to reduce acceptance costs. Because stablecoins operate on blockchain networks, direct transactions between a merchant and a customer can occur with minimal or no involvement from traditional financial institutions, which will eliminate the need for many acceptance fees and potentially introduce other inherent cost savings for merchants (e.g., reserve requirements and chargeback risks).
Faster Settlement
Because of their use of blockchain technology, stablecoins also significantly reduce settlement times associated with traditional payment rails by
- bypassing intermediaries in the clearing process, including many of the players in the current payment infrastructure (e.g., networks, issuing banks, acquiring banks, processors);
- offering 24-7 availability, reducing delays based on time zones, weekends, and holidays; and
- reducing reconciliation time due to the use of a public ledger.
Stablecoins, therefore, satisfy the increasing demand for instant settlement, particularly in an increasingly global marketplace.
Even with these benefits, however, the lack of a federal regulatory framework for stablecoins may impede wider adoption by merchants and consumers alike.
The Promise of the GENIUS Act
The GENIUS Act, which establishes the first federal regulatory framework specifically for the issuance and use of payment stablecoins, passed in the Senate and the House with bipartisan support and was signed into law by President Trump on July 18, 2025. Among other requirements, the GENIUS Act requires issuers to provide a full reserve for dollar-backed stablecoins and to provide monthly public disclosures and audited financial statements. Stablecoin issuers will also be subject to the Bank Secrecy Act for anti-money laundering and related purposes and would be subject to oversight by federal or state regulators.
The passage of the GENIUS Act represents a significant step forward with the broader adoption of stablecoins, and blockchain more generally, across the payments space. Payment providers like PayPal and Stripe already support stablecoin transactions, and other platforms are expected to soon follow. And while merchants may be initially hesitant to embrace this alternative payment method, any up-front investment required to integrate this technology will be substantially outweighed by the benefits of stablecoins, which present the opportunity to improve both the customer experience and the merchant's bottom line.
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