Walmart and Amazon Explore Stablecoins, Threatening Credit Card Giants’ Core Business

The Wall Street Journal reports that Walmart and Amazon are examining stablecoins for payment adoption throughout their vast retail network.

The companies are considering using blockchain transaction processing technology to process payments through a system that could eliminate the involvement of traditional financial institutions.

The technical shift could generate major operational difficulties for payment networks and simultaneously disrupt their current revenue generation patterns.

Stablecoin transactions could introduce new types of reward ecosystems and potentially replace traditional credit card points or cash back with crypto-based incentives, forcing credit card issuers to innovate or adapt.

Walmart has entered discussions with fintech firms to create a U.S. dollar-pegged digital currency, according to sources familiar with the effort. The company is investigating the development of digital currency solutions which would allow customers to use their platform for transactions.

The companies maintain secrecy about their digital currency initiatives, but they are already connected with established financial services platforms that could serve as stablecoin alternatives.

Walmart supports the fintech One as its neobank service through the retail giant, and Amazon operates both Amazon Pay and holds multiple credit card agreements.

The retail giants Walmart and Amazon could opt to use stablecoin issuance to establish operational dominance, which would enable them to fight Visa and Mastercard directly at their core businesses.

Business operations that accept Visa and Mastercard payments incur payment fees that decrease profitability by 1.5% to 3.5%. Blockchain transaction processing costs amount to just a few cents.

The large business transactions performed daily by these corporations could produce significant cost reductions that would usher in transformative changes for the credit card industry.

Stablecoin implementation would also allow retailers to monitor payment processes throughout their entire operations. Through blockchain-based ledgers, merchants could monitor transactions in real time, potentially eliminating payment delays that occur with traditional card systems.

Blockchain technology offers transparent transactions, which could help merchants reduce fraud exposure and enhance reconciliation processes while enabling instant sales data for enhanced inventory management and forecasting of market demands.

The operational upgrade would benefit Amazon because the company relies on analytics and logistics to succeed beyond checkout operations.

The Senate’s recent passage of the GENIUS Act provides a federal framework for dollar-pegged stablecoins, giving major retailers like Walmart and Amazon a clearer path to launch payment tokens.

PayPal’s PYUSD stablecoins have entered the payment market despite most consumers having a limited understanding of blockchain.

Stablecoins give merchants access to programmable features, instant settlement capabilities, and cost-efficient operations. The regulatory status of stablecoins remains unclear as they continue to grow in user popularity.

Walmart and Amazon could build personalized customer rewards programs through their token generation methods. The ability of native token rewards to create instant program changes without issuer agreements makes them a significant competitive tool for retailers.

The Senate’s passage of the GENIUS Act provides a federal framework for dollar-pegged stablecoins, giving major retailers a clearer path to launch payment tokens.

The establishment of token systems by retailers could transform how consumers use their conventional rewards credit and debit cards.

Retailer-operated tokens will compel banking institutions to establish new approaches for interacting with consumers. The reduction in traditional credit and debit card transactions would lower interchange fees as well as reduce the amount of behavioral data that banks collect.

Financial institutions face intensified market competition because they need to choose between forming retail partnerships or building banking systems that support tokens. Small banking institutions use digital asset services to stay competitive in the market.

Visa is experimenting with USDC on the Ethereum blockchain. At the same time, Mastercard launched its CBDC Partner Program to support central bank digital currency pilots. Corporate-backed stablecoins demonstrate greater market potential than public-chain projects because they use established retail brands for backing.

Through their network operation, payment system operators now manage their own payment operations. A single problem exists because payment rails, data management systems, and loyalty programs remain at risk.

Retailers could now manage more of their payment systems. They could avoid third parties while also taking on the complex tasks of handling transactions, data, and loyalty programs.

Dante Disparte, Chief Strategy Officer at Circle, the issuer of USDC, said that retail-driven models might pull the gravity center of payments away from banks and networks. The new development remains uncertain because experts cannot determine if it represents a permanent market shift or another technology testing phase.