Stablecoins have come a long way since their 2014 debut. They aimed at bringing stability to the volatile crypto market, but have since become a central pillar of the entire industry. Several new stablecoins have entered the market over the last decade, and the number is expected to continue growing. While US dollar-pegged stablecoins dominate the market, new coins pegged to other fiat currencies are expected to enter the market as well. Let’s discuss how stablecoins could eat up Visa and Mastercard’s credit card market.

Will Stablecoins Dethrone Visa and Mastercard?

Stablecoins have certain benefits that traditional credit cards cannot provide. Firstly, stablecoins have near-zero transaction fees. Credit cards, on the other hand, can charge up to 3.5% in fees. According to reports, merchants in the US pay over $100 billion in card fees every year. This chunk of capital could disappear if stablecoins take the spotlight.

Apart from transaction fees, credit cards are also subject to annual costs, interest rates, etc. These costs do not apply to stablecoins.

Not only are they cheaper, but stablecoins also save a lot more time. Transaction speeds can range from a few seconds to just a few minutes on the blockchain. Credit card transactions, on the other hand, can take from one to three business days.

Also Read: Brazil’s Nubank Adds Stablecoin Payments to Credit Cards

Given the attractive benefits of stablecoins, it won’t be surprising if the asset class slowly eats up Visa and Mastercard’s credit card market. The growing demand for blockchain-based assets could be a reason for Mastercard and Visa to open their doors to cryptocurrencies.

Risks To Users

Despite its advantages, stablecoins do have some risks. There are fewer consumer protection laws for stablecoins compared to traditional credit cards. Regulatory oversight is still in its nascent stages. However, the US passed a historic stablecoin regulation act, called GENIUS.

If the risks are better mitigated, the stablecoin industry could see a massive adoption curve. The crypto industry is expected to continue its upward momentum, and stablecoins will likely play a key role in its growth.