Retail giants Walmart and Amazon are reportedly exploring the issuance of their own dollar-pegged stablecoins in the United States. According to a Wall Street Journal report, these stablecoins could be used to bypass traditional financial intermediaries, particularly banks and card networks like Visa and Mastercard, and potentially lower transaction fees significantly for both consumers and merchants.
This development is seen as part of a broader trend where major corporations are looking to harness the power of blockchain technology and digital currencies to streamline payments, reduce costs, and increase efficiencies. Walmart and Amazon, both of which have extensive consumer bases and dominate the e-commerce and retail sectors, could be poised to disrupt traditional payment systems with their own corporate-backed stablecoins.
For major corporations like Walmart and Amazon, stablecoins could provide an opportunity to bypass costly fees associated with traditional payment methods. Currently, when customers make purchases with credit or debit cards, merchants are required to pay transaction fees that can range from 1-3% of the total purchase amount. These fees are primarily pocketed by banks and card networks such as Visa and Mastercard, which control the payment infrastructure.
The ability to issue a corporate stablecoin could give Walmart and Amazon the ability to reduce these fees significantly. By using stablecoins, the companies could process payments more efficiently and faster, particularly for cross-border transactions, which often involve additional fees and delays.
Why Stablecoins for Walmart and Amazon?
Walmart, which has long been interested in expanding its financial services offerings, has already made inroads into the payments space with services like Walmart Pay. However, the company’s exploration of stablecoins represents a more ambitious step into the future of digital finance.
Walmart is not only looking to reduce transaction costs but also increase its influence in the global payments ecosystem. The retail giant has been lobbying for changes to the financial system, including increasing competition for credit cards, which has long been dominated by major players like Visa and Mastercard.
Similarly, Amazon, the world’s largest online retailer, has shown interest in blockchain technology and cryptocurrencies. While the company has yet to take a concrete step toward issuing its own stablecoin, its vast consumer base and global reach make it an ideal candidate for a move into digital currencies. If Amazon were to issue a stablecoin, it could create a new way for customers to pay for goods and services on its platform while reducing reliance on third-party payment processors.
Both companies stand to benefit from the reduction in transaction fees that stablecoins offer. Additionally, the use of a digital currency could enhance the customer experience by providing faster payments and more transparent transactions. For businesses, stablecoins offer the potential to cut out intermediaries and directly engage with their customers in a more efficient way.
The Genius Act and Its Impact
For Walmart and Amazon to issue stablecoins, they will need to navigate a complex regulatory environment. Stablecoins, which have gained attention from governments and regulators worldwide, are at the center of debates about financial stability, investor protection, and the future of digital currencies.
In the U.S., the path for corporate-issued stablecoins could be clearer if the Genius Act, a new regulatory framework for stablecoins, is passed. The bill, which recently passed a key procedural step in Congress, is designed to establish a clear regulatory framework for stablecoins and ensure they operate within the confines of U.S. financial laws. If passed, the act would provide the legal foundation for companies like Walmart and Amazon to issue their own stablecoins and incorporate them into their payment systems.
The Genius Act addresses several key issues, including the management and reserve requirements for stablecoins, ensuring they are fully backed by U.S. dollars or other government-backed assets. The bill also seeks to establish clear rules for stablecoin issuance and protect consumers from potential risks associated with digital currencies.
For Walmart and Amazon, the passage of the Genius Act could open the door for them to issue their own stablecoins, providing both companies with a new, potentially lucrative revenue stream while transforming how their customers pay for goods and services.
Effect on Payments Industry
The issuance of corporate stablecoins by major retailers like Walmart and Amazon could have far-reaching implications for the payments industry. By issuing their own stablecoins, these companies could significantly reduce their reliance on traditional payment processors like Visa and Mastercard, which have long enjoyed a monopoly over payment networks.
This shift could lead to greater competition in the payments space, lowering fees for merchants and consumers alike. Stablecoins, with their faster transaction speeds and lower costs, could make digital payments more efficient, particularly for global transactions. Cross-border payments, which currently face delays and high fees, could be streamlined using stablecoins, providing a more efficient alternative to traditional methods.
Furthermore, the move could spur greater adoption of blockchain technology and cryptocurrencies in the mainstream economy. As large corporations like Walmart and Amazon integrate digital currencies into their payment systems, it could pave the way for other companies to follow suit. This would accelerate the shift toward digital currencies in everyday transactions, further legitimizing the role of blockchain in the global financial ecosystem.
As more companies explore the use of stablecoins, the competitive pressure on traditional payment systems could increase. Companies like Visa and Mastercard have been investing in blockchain technology and exploring partnerships with cryptocurrency firms, but the emergence of corporate-backed stablecoins could force them to adapt or risk losing market share.
Walmart and Amazon’s stablecoin ventures could also be seen as a challenge to the traditional banking system. If consumers and businesses can transact directly with stablecoins, bypassing banks and credit card companies, it could disrupt the entire financial ecosystem. This shift could lead to lower fees, faster payments, and a more decentralized system that reduces the control traditional financial institutions have over payments.
However, the success of corporate stablecoins will depend on regulatory approval, market adoption, and the ability to address concerns around security, privacy, and volatility. As stablecoins continue to evolve, they could play a central role in reshaping the global payments landscape.