Stablecoins Are a Rail, Not a Brand

How stablecoins are being absorbed into payments, fintech, and global settlement, and why most issuers will fail.

Stablecoins are spreading through traditional finance in uneven but unmistakable ways. Klarna just launched KlarnaUSD on Stripe’s purpose-built L1 Tempo. Paypal’s PYUSD on Ethereum has seen its market cap triple in 3 months, eclipsing 1% stablecoin market share and nearing $4B supply. Stripe now pays out merchants in USDC. Cash App has expanded beyond Bitcoin, allowing its 58 million users to send and receive stablecoins in early 2026 interoperably with their fiat balance. Each company is taking a different angle, but they are all responding to the same trend: stablecoins let platforms move money easily.

Source: Artemis Analytics

The narrative often jumps straight to “everyone will issue a stablecoin.” That outcome doesn’t make a ton of sense. A world with dozens of widely used stablecoins is manageable, while one with thousands is chaos. Users don’t want their dollars (yes dollars, USD dominance is >99%) scattered across a long tail of branded tokens, each on their own chain with different liquidity, fees, and conversion paths. Market makers take spread and bridges take fees - this dynamic of intermediaries with their hand in the cookie jar is precisely what is trying to be resolved.

Fortune 500 companies should realize that stablecoins are exceedingly useful, but issuing one is not a guaranteed win. A select few firms would gain distribution, lower costs, and strengthen their ecosystem. Many others would take on operational burden without a clear payoff. The real competitive edge comes from how a company embeds stablecoin rails into its product or business, instead of just slapping its name on a token.

Why Stablecoins are Gaining Traction in TradFi

Stablecoins solve specific operational problems for traditional companies that legacy rails haven’t fixed. These benefits are pretty easy to understand: cheaper settlement, faster access to funds, better cross-border reach, and fewer intermediaries. When a platform moves millions of transactions per day for billions or even trillions of annual TPV, small improvements compound into meaningful economics.

1. Lower Settlement Costs

Most consumer platforms accept card payments and pay interchange on every transaction. In the U.S., these fees can range between ~1-3% of the transaction size plus a fixed transaction fee of ~$0.10-0.60 for the the Big Three (Amex, Visa, Mastercard). Stablecoin settlement reduces these fees to just a few cents, in cases where the payment stays on-chain. Companies with high-volume, low margin transactions see this as an attractive lever. Note they do not need stablecoins to replace cards, but to cover part of their volume to unlock savings.

Source: A16z Crypto

Some companies are opting to partner with a service provider like Stripe to accept stablecoin payments settled in USD. While this is not a necessary step, most businesses want zero volatility and instant fiat. The merchant often wants USD in their bank account, not crypto custody, private keys, or issues with reconciliation. Even the 1.5% variable fee that Stripe offers is materially lower than credit card alternatives.

It is plausible to imagine large firms initially partnering with stablecoin processing solutions at first, before making the tradeoff to deploy CapEx to build fixed infrastructure themselves. Eventually, this tradeoff will make sense for SMEs as well, who wish to retain nearly all of the economics associated with their output.

2. Global Accessibility

A stablecoin can move across borders without negotiating with banks in each country. This advantage is appealing for consumer apps, marketplaces, gig platforms, and remittance products. Stablecoins let them reach users in markets where they do not have established financial relationships.

Foreign exchange (FX) fees for end users of credit cards are typically an additional 1-3% of each transaction, unless transacting with a card that does not charge said fees. Stablecoins don’t charge cross-border fees because the payment layer doesn’t recognize borders at all; USDC sent from a wallet in New York arrives in Europe exactly the same way as if it were sent locally.

The only extra step for a European merchant is deciding what to do with a USD-denominated asset once it arrives. If they want EUR in their bank account, they must convert it. If they’re comfortable holding USD on their balance sheet, no conversion is needed, and they may even earn yield if the balance is idled on an exchange like Coinbase.

3. Instant Settlement

Stablecoins settle within minutes, often seconds, while traditional payment transfers may take days. Moreover, the former operate 24/7 and are not restricted by bank holidays, cutoff times, and other impediments native to the traditional banking system. Stablecoins remove these constraints, which can greatly reduce operational friction for companies that handle high-frequency payouts or manage tight working capital cycles.

How Traditional Companies Should Approach Stablecoins

Stablecoins create both opportunity and pressure. Some companies can use them to expand their product reach or lower costs, while others risk losing part of their economics if users shift to cheaper or faster rails. The right strategy depends on a company’s revenue model, geographic footprint, and how much of its business depends on legacy payment infrastructure.

Some companies benefit from adding stablecoin rails because it strengthens their core product. Platforms that already serve cross-border users can settle funds faster and avoid the friction of local banking relationships. They can reduce settlement costs when payments remain on-chain if they are processing millions of transactions.

Many large platforms operate with extremely thin transaction margins. If stablecoins allow a platform to bypass even 1-3 basis points of cost on a portion of flows, the savings are material. At $1 trillion of TPV, 1 bp of cost reduction is worth $100 million. Offensive companies mainly encompass fintech native, capital-light payment rails like Paypal, Stripe, and Cash App.

Other firms adopt stablecoins because competitors may use them to bypass parts of their business model. For example, banks and custodial institutions are highly at risk from stablecoins, which may take share from traditional deposits, causing them to lose low-cost funding. Issuing tokenized deposits or providing custody services may give them an early defense against new entrants.

Stablecoins also reduce the cost of sending money across borders, meaning that remittances are at risk. Defensive adoption is less about growth and more about preventing erosion of existing revenue. Companies in the defensive grouping are diverse, ranging from Visa and Mastercard on the interchange and settlement side, Western Union and MoneyGram on the remittance front, and banks of all sizes that rely on low-cost deposits.

Given the existential threat of being too slow to adopt stablecoins on both sides of the aisle, the question for the Fortune 500 then pivots to this: does it make sense to issue my own stablecoin or integrate an existing token?

Source: Artemis Analytics

Every company issuing a stablecoin is not a sustainable equilibrium. Users want their stablecoin experience to be frictionless, and may switch back to preferring fiat if they have to juggle dozens of branded tokens in their wallet, even if they are all denominated in the same currency.

Supply Trajectory

Companies should assume only a small set of stablecoins will maintain deep liquidity and broad acceptance. At the same time however, this is not a “winner take all” industry. For context, Tether’s USDT was the first fiat-backed stablecoin, and premiered on Bitcoin’s Omni Layer in October 2014. Its dominance among stablecoins peaked at >71% in early 2024, despite the launch of competitors such as Circle’s USDC, which launched in 2018.

As of December 2025, USDT’s dominance of total stablecoin supply stands at 60%, with second place USDC clocking in at 26%. This means alternatives control approximately 14% of the $310B pie. While $43B this doesn’t sound like a lot compared to the multi-trillion equity or fixed income markets, overall stablecoin supply has grown 11.5x from $26.9B in January 2021, representing a 63% CAGR over the last five years.

At a more modest 40% annual growth rate, stablecoin supply would reach ~$1.6T by 2030, over five times its current value. 2025 was a critical year for the complex, which benefited from significant regulatory clarity under the GENIUS act and massive institutional adoption resulting from clear use cases.

Combined USDT + USDC dominance will likely decline by then as well. At the current 50bp/quarter decline in dominance, other stablecoins may encompass 25% of the universe by 2030, or $400B under our supply projections. This is a healthy sum, but clearly not enough for dozens of Tether- or USDC-sized tokens.

When there is a clear product market fit, adoption can be rapid, and benefit from the tailwind of broader stablecoin supply growth while potentially taking share from incumbents. Otherwise, a new mint risks being lost in the soup of stablecoins that have low supply and an unclear growth story. Note that of the 90 stablecoins Artemis tracks today, only 10 have >$1B of supply.

Corporate Case Studies

Companies experimenting with stablecoins are not following a single playbook. Each is responding to pressure points in its own business, and the differences matter more than the similarities.

Paypal: Defending the Core While Testing a New Rail

PYUSD is a defensive product first and a growth product second. Paypal’s core business still runs on cards and bank transfers, and that is where most of its revenue comes from. Take rates are materially higher for branded checkout and cross-border transactions.

Stablecoins threaten that stack by offering cheaper settlement and faster movement across borders. PYUSD lets PayPal participate in that shift without losing control of the user relationship. As of 3Q25, the company reported 438 million active accounts – defined as users who transacted with the platform in the last 12 months.

PayPal already holds user balances, manages compliance, and operates a closed-loop ecosystem. Issuing a stablecoin fits naturally into that structure. The challenge is adoption, as PYUSD competes with USDC and USDT, which already have deeper liquidity and broader acceptance. PayPal’s advantage is distribution, not price. PYUSD only works if PayPal can keep it embedded inside PayPal and Venmo workflows.

Source: Artemis Analytics

PYUSD is similar to Venmo in that both are growth vectors for PayPal, but aren’t immediate revenue generators. Venmo in 2025 will generate about $1.7B of revenue, which is only about 5% of its parent’s top-line. However, the company is finding monetization success with the Venmo debit card and “Pay With Venmo” products.

PYUSD currently offers a 3.7% annual reward rate for users holding the stablecoin in their PayPal or Venmo wallets, meaning PayPal is breaking even at best from a net interest margin perspective (holding T-Bills as collateral against supply). The real opportunity comes from the flow, not the float. If PYUSD reduces Paypal’s reliance on external rails, lowers settlement costs of certain transactions, and keeps users within the ecosystem rather than off-platform, PayPal will be a net beneficiary.

Moreover, PYUSD supports defensive economics. Disintermediation by open stablecoins like USDC is a real risk, and by offering its own stablecoin, PayPal reduces the chance that its services become an external layer it has to pay for or integrate around.

Klarna: Reducing Payment Friction Inside Commerce

Klarna’s interest in stablecoins is about control and cost. As a BNPL provider, Klarna sits between merchants, consumers, and card networks. It pays interchange and processing fees on both ends of the transaction. Stablecoins offer a way to compress those costs and simplify settlement.

Klarna helps consumers finance purchases on a short-term and longer-term basis. For payment plans within a couple of months, Klarna typically receives a fee between 3-6% + ~$0.30 per transaction. This is the company’s biggest income source, and sees it receiving compensation for handling payments, taking on credit risk, and increasing a merchant’s sales. Klarna also offers longer installment plans (e.g. 6, 12, 24 months) where it charges consumers interest similar to a credit card.

In both of these cases, Klarna is less about becoming a payments network and more about managing internal flows. If Klarna can settle merchants faster and cheaper, it improves margins and strengthens merchant relationships.

The risk is fragmentation – Klarna does not benefit from users holding long-term balances in a Klarna-branded token unless it becomes widely accepted outside its platform. In short, for Klarna, stablecoins are a tool, not a product.

Stripe: Owning the Settlement Layer Without Issuing a Token

Stripe’s approach is arguably the most disciplined. It has chosen not to issue a stablecoin and instead focuses on enabling payouts and acceptance using existing ones. This distinction matters, as Stripe does not need to win liquidity, but rather flow.

Stripe’s TPV grew 38% YoY to $1.4T in 2024; at this rate, the platform may eclipse PayPal’s TPV of $1.8T, despite having been founded over a decade later. The company’s recent reported valuation of $106.7B is reflective of this growth.

The company’s support for stablecoin payouts reflects a clear customer demand. Merchants want faster settlement, fewer banking constraints, and global reach. Stablecoins solve these problems. By supporting assets like USDC, Stripe improves its product without asking merchants to manage another balance or take on issuer risk.

The acquisition of Bridge Network for $1.1 billion earlier this year reinforces this strategy. Bridge specializes in stablecoin-native payment infrastructure, including on- and off- ramps, compliance tooling, and global settlement rails. Stripe did not buy Bridge to launch a token – it bought Bridge to internalize the plumbing. This move gives Stripe more control over its stablecoin strategy and improves the integration for existing merchant workflows.

Source: PolyFlow

Stripe wins by becoming the interface for stablecoins. Its strategy is indicative of its market position, processing trillions of dollars of volume with mid-double digit annual growth. Regardless of which tokens dominate, Stripe stays neutral and collects fees on volume. Given the underlying stablecoin transaction costs a fraction of a fraction of a penny, any fixed fee Stripe can collect in this new market is accretive to its bottom line.

The Merchant Pressure Point

Merchants are paying attention to stablecoins for a simple reason: payment acceptance is expensive, and the costs are visible. In the U.S., merchants paid $187.2B in processing fees in 2024 to accept $11.9T in payments from customers. For many small and mid-sized businesses, these fees sit just behind labor and rent as one of their largest operating expenses. Stablecoins offer a credible path to reduce that burden in specific use cases.

In addition to lower fees, stablecoins offer predictable settlement and faster access to funds. On-chain transactions offer finality rather than a credit card or traditional payment processing solution that can be charged back or disputed. Merchants are also not looking to hold crypto or manage wallets, which is why early pilots look like “stablecoins in, USD out.”

As of Artemis’ latest survey in August 2025, merchants are already processing $6.4B in B2B stablecoin payments, 10x what they were processing in December 2023.

Source: Artemis Analytics

This dynamic also explains why adoption among merchants will concentrate quickly. Merchants do not want to support dozens of tokens, each with different liquidity profiles, conversion costs, and operational quirks. Every additional stablecoin introduces complexity and reconciliation challenges from market makers or bridges, which undermine the original value proposition.

As a result, merchant adoption favors stablecoins with clear product market fit. Stablecoins lacking characteristics that make transacting easier than fiat will simply fade away. From a merchant’s perspective, accepting a long-tail stablecoin is not meaningfully better than accepting none at all.

The Artemis Stablecoins Map shows just how chaotic the current landscape is. Merchants simply aren’t going to deal with dozens of on-off ramps, wallets, and infrastructure providers to convert their earnings into fiat.

Source: Artemis (stablecoinsmap.com)

Merchants reinforce this outcome by standardizing on what works. Processors reinforce it by supporting only assets that customers actually use. Over time, the ecosystem converges around a limited number of tokens that justify the integration cost.

Why This Actually Matters

The implication of all of this is uncomfortable for a large part of the stablecoin ecosystem: issuance by itself is not a durable business.

A company whose primary product is “we mint a stablecoin” is betting that liquidity, distribution, and usage will materialize on their behalf. In practice, those things only emerge when a token is embedded inside real payment flows. The “if you build it they will come” ethos does not apply here, because consumers are inundated with choice from hundreds of issuers.

This is why issuance-only players like Agora or M0 struggle to explain their long-term edge unless they expand well beyond minting. Without control over wallets, merchants, platforms, or settlement rails, they sit downstream of the value they are trying to capture. If users can just as easily hold USDC or USDT, there is no reason for liquidity to fragment into yet another branded dollar.

By contrast, companies that control distribution, flows, or integration points get stronger. Stripe does not need to issue a stablecoin to benefit; it sits directly in the path of merchant settlement and gets paid regardless of which token dominates. PayPal can justify PYUSD because it owns the wallet, the user relationship, and the checkout experience. Cash App can integrate stablecoins because it already aggregates balances and controls UX. These firms earn leverage from usage.

The real takeaway is that stablecoins reward position in the stack rather than novelty. If you can control the interface, the flow, or the settlement layer and stablecoins enhance your economics. Sit upstream with nothing but a token and you compete in a market that naturally consolidates.

Conclusion

Stablecoins change how money moves, not what money is. Their value comes from reducing friction in settlement, not from creating new financial instruments. That distinction explains why adoption is happening inside existing platforms rather than alongside them. Companies are using stablecoins to improve operations they already run, not to reinvent their business.

This also explains why issuing a stablecoin is the wrong default. Liquidity, acceptance, and integration matter more than branding. Without consistent usage and clear demand, a new token creates overhead instead of advantage. Integration scales better than issuance for most firms, and the market naturally favors a small number of assets that work everywhere rather than many that work only in narrow contexts. A clear offensive or defensive use case must be defined before minting a stablecoin that will go nowhere.

Merchant behavior reinforces this outcome. Merchants optimize for simplicity and reliability. They adopt payment methods that reduce costs without adding complexity. Stablecoins that fit cleanly into existing workflows gain traction. Those that require extra reconciliation, conversion steps, or wallet management do not. Over time, this filters the ecosystem toward a limited set of stablecoins with clear product market fit.

In payments, adoption follows simplicity. Stablecoins that make money easier to move will survive; the rest will be ignored.