A shorter article this week, but Stripe is one of the most important companies to follow.
Stripe Connect with Crypto
Stripe announced a partnership (for now with Twitter) to enable USDC stablecoin payouts via their Stripe Connect marketplace product. This move is very reasonable and lines up with what I wrote about years prior in this article on Visa peaking.
In a world where I routinely find examples of crypto nonsense and excess, I find this very well thought through. Why is this reasonable?
Stripe cites a genuine user need that crypto enables – they cannot pay out creators in some parts of the world due to less-stable financial infrastructure.
Stablecoins should mimic the price of a dollar, unlike Bitcoin and other wildly volatile instruments.
The USDC stablecoin is particularly reputable, with recent investments by Blackrock and Fidelity.
My views on the impact of crypto on Visa and Mastercard have evolved since my prior article linked above. Interchange, consumer fraud protections, and rewards are still powerful motivators (along with user inertia). Paying with Bitcoin is a long ways away, but these types of stablecoin efforts are where Visa and Mastercard will likely see the first crypto challenges. Looking forward, it is easy to envision a situation where Stripe rolls out stable coin payments to a large swath of the internet. I don’t expect adoption in the developed world to be that high for now, but it will serve as a check on the rest of the system.
The operative word in “credit card” is of course credit. The one downside of USDC payments is of course that getting rid of the banks and credit card networks will mean the removal of credit. I’ve tried to get my head around crypto loans and find them to be varying degrees of problematic. Overcollateralized loans are common in crypto, yet rely on tying up vast sums of your wealth during the float. Crypto loans are a “market goes up” type of bet, and we’ve seemingly lost that price momentum.