CONSUMER STABLECOIN PAYMENTS IN THE U.S

U.S. CONSUMER CRYPTO

Let’s talk about something that’s rarely addressed when it comes to stablecoins: their use case for U.S.-based consumer payments.

This week, I came across an insightful article by Sam Broner and it got me thinking.

He highlights a compelling case for stablecoin adoption—not just for cross-border transactions, but for businesses operating right here in the United States. If you haven’t read that article, give it a read as well.

The biggest takeaway? Even a modest 1% reduction in payment processing fees can have an outsized impact. For large organizations like Walmart or Amazon, the increase in profitability could translate into higher wages, better benefits, improved employee well-being and cost of living improvements.

But what does this mean for merchants of all sizes and consumers?

Let’s dig in.

THE OVERLOOKED U.S. USE
CASE FOR STABLECOINS

Most conversations about stablecoins center around cross-border payments and remittances.

It’s a valid point and there are strong signs of product market fit for some of our guest on stableminded like withparallax.com, borderless.xyz, iron.xyz, dakota.xyz spherepay.co, routefusion.com, layer1.com all building to solve problems around cross-border payments and remittances.

All are either building infrastructure for stablecoins or using stablecoins as a core component of their business model.

Plain and simple; stablecoins are making cross-border payments faster, cheaper and delivering better FX exchange rates to local fiat currencies. (HINT: big topic of conversation in Season 2)

People worldwide across countries like Argentina, Brazil, Mexico, Nigeria, South Africa, India, Philippines, Ukraine… the list goes on. Their citizens want to have easy access to USD denominated bank accounts.

Here in the U.S. however, many argue there’s no need for stablecoins because the dollar is already readily available and convenient to use. Systems like ACH, real-time payments, and even the rise of bank-to-bank payment apps provide relatively quick and easy solutions.

With the rise of neo-banks plus the legacy banks in the U.S. (Chase, Bank of America, Wells Fargo) its not hard to open a bank account and get access to the digital US dollar.

A DIFFERENT PERSPECTIVE ON
STABLECOINS IN THE U.S.

I live in California. Yes, I have extremely easy access to the USD dollar. The vast majority of transactions I make yearly are digitally.

Direct deposits into our bank accounts, ACH transfers for paying bills and the mortgage, credit/debit cards and apple wallets at check out and of course using stablecoins where possible. 99% or more of the money I move yearly is digital. I avoid using cash like the plague because its inconvenient.

However, I have another problem. The cost of living in California has been steadily on the rise. Everyone in my family and friend group across the state feels it. Families make $150,000 a year and live paycheck to paycheck. The dollar does not go as far as it used to.

For our family, we feel it in day to day life. Going out to eat, groceries, christmas shopping at local businesses, buying coffee, getting gas; the normal stuff.

When I am thinking about payments, it’s not just about costs—it’s also about convenience. There’s still friction for consumers when it comes to payments using the US dollar. Using a debit/credit card at the point of sale may be costless and near instant (sometimes) for the consumer most of the time, but some payment systems still place holds on ACH holds on funds, locking up the consumers funds.

A wire transfer? That’s a $30 fee, minimum, plus 1-5 days to settle. Just look at these cost:

On top of that, WHAT consumers are buying with the US dollar using these traditional payment systems is getting more and more expensive (I.e the actual cost of goods we touched on earlier).

I want systems that make my money move faster, settle faster, and works for me (think high yield checking accounts + incentives like cashback programs). I love a good 2-4% cashback card with a sign up bonus, assuming I never pay a cent in interest.

My main point: there’s still friction for U.S base consumers when it comes to moving money.

For merchants on the other hand, business owners of all size feel this pain even more. Credit card processing fees have been eating into their margins for years. It’s no surprise there’s a $5.54 billion antitrust lawsuit against Visa and Mastercard for excessive fee’s

And here’s the thing: I’ve spoken to these business owners that are filing for this claim myself for some contract work I am doing. Many of them are fed up. They’re tired of handing over chunks of their revenue to payment processors.

Stablecoins offer a real alternative—giving businesses a new digital alternative for payment systems that put more money back in their pockets. Saving even 1% can can go a long way.

I think we are approaching a tipping point in the U.S. amongst business owners. They are more open and ready than ever to adopt new technology to realize these savings.

Stablecoin and web3 developer tooling on the other hand have reached a stage where apps can be built to combat the payment giants of the world, while being more user friendly than ever.

So what happens when these two worlds collide?

EVERY BIP MATTERS

Lately, I’ve noticed a trend: merchants offering cash-based discounts to customers. Just last night, I went to a Mexican restaurant that offered a 1-2% discount if I paid in cash. Another night, I saw a restaurant menu showing two separate prices—one for cash and one for card.

What does this tell ME? Business owners are actively searching for ways to cut costs. Every dollar, every cent matters.

As Max von Wallenberg put it on the Iron episode of the stableminded podcast: “Every BIP [basis point] matters.”

But here’s the problem: even though I could have saved money by paying in cash, I didn’t. Why?

First, I don’t carry cash. It’s inconvenient, and I only have cash on me if someone happens to pay me back in it. I get paid digitally. I want to keep my funds digital, whether thats in my bank accounts, credit card accounts or in my web3 wallets.

It’s just easier.

Now, imagine a different scenario. What if the restaurant had offered an app where I could pay digitally, save money and earn rewards? Instead of handing over cash, I’d download the app, the app is powered by stablecoins on the back end, and I get points towards rewards at the store whether its a restaurant, the grocery store, coffee shop etc, you get the point.

The decision would’ve been a no-brainer for me.

THE POWER OF 1%:
WHY EVER BIP MATTERS

Let’s talk numbers.

If every BIP matters, let’s look at what saving even 1% could mean for a small business.

Take a small business that’s been operating for 20 years, generating $1 million a year in revenue. At 3% in merchant processing and interchange fees, that business is handing over $30,000 annually just to process payments. Over two decades, that’s $600,000 gone to all the players in the payment processing stack.

Now, imagine we lower those fees to 1%. That’s a $10,000 savings each year—$200,000 over 20 years.

In an era where inflation is the highest it’s been in decades, you’re telling me saving $10,000 a year wouldn’t matter? Amplify the revenue to $5, $10, $100 million a year and it gets even crazier.

And that’s just the financial benefit.

Pair it with a stablecoin-powered system that streamlines loyalty programs, incentivizes consumers to use it at point of sales, reduces operational complexity for using stablecoins, and engages customers directly through push notifications.

BRIDGING THE GAP BETWEEN
CONSUMERS AND MERCHANTS

The opportunity is huge, but here’s the challenge: stablecoin adoption is fragmented. Merchants and consumers are tackling entirely separate friction points, and we haven’t built an ecosystem to unite the two.

Here’s what I think that could look like:

• A Unified App: Imagine a single app combining stablecoin payments and loyalty rewards. Think Starbucks’ app but built on stablecoin rails.

• Seamless Integration: Merchants settle stablecoin payments directly into their bank accounts, while customers use familiar tools like Apple Pay or credit cards to load funds.

• Network Effect: The app works across multiple businesses, creating a seamless and consistent experience for consumers while allowing merchants to share in the benefits without having to download 10 different apps

The result? Lower costs for merchants, better incentives for consumers, and a payment system that works for everyone.

Let’s break it down with an example.

Say you’re a coffee shop owner. The average cost to produce a coffee might be 50 cents, and you sell it for $4. Now, let’s say you’re already offering a free coffee for every 10 purchases through your loyalty program.

With traditional payment processors, you’re losing 2-3% per transaction in fees. On a $4 coffee, that’s 8 to 12 cents gone to the card companies—not to mention additional fees for the loyalty program system itself. In other words, for every $1000 dollars in revenue processed with their merchant processing system, $30 dollars is paid in fees. $100k is $3k in fees, $1m is $30k in fees and so on.

For some businesses, $30k a year could mean hiring someone part-time to help the business grow or even be the difference for their businesses staying open. To be honest, my numbers are probably conservative and in reality are much higher.

But what if you replaced the entire backend with a system built on stablecoins? One that:

1. Lowers Fees: Instead of losing 8-12 cents per transaction, you pay 1% or less—saving roughly 5 to 7 cents on each coffee sold.

2. Easy Tracking: Each stablecoin payment is automatically tracked, eliminating the need for separate loyalty cards or programs outside of the POS system

3. Direct Engagement: With a unified app, you could send iOS notifications to promote discounts, new menu items, or special offers, increasing customer retention.

4. Feels like a Normal App: It feels no different to use than the starbucks loyalty app, mcdonalds loyalty app or door dash. Stablecoins are the show under the hood, but consumers don’t need to know that.

If stablecoins could save businesses 1%, it opens up a whole new world of possibilities. Maybe businesses could lower their prices while maintaining similar profit margins, or offer better rewards, like a free coffee after 8 purchases instead of 10, to help their customers feel like their money is going a little bit further for once.

For customers, the math is just as compelling. They get to stretch their money further, earn rewards faster, and avoid the hassle of cash or traditional card systems.

It’s all dependent on user experience. Here’s something to consider:

Stabucks said 31% of total transactions at U.S. company-operated stores were made via the app, as of Dec. 31 2023, and it they had 34 million active members on the app making them one of the leading mobile payment providers in the country.

What if this type of app was built on stablecoins/web3 tech AND the system to do so was made available to merchants and consumers worldwide?

As a sales guy, I can already hear the pitch “Hey Mr/Mrs small business owner, would you like to easily launch an app like starbucks to make mobile ordering easier than ever and its going to save you 1% on processing fees AND give you a super easy to use loyalty program to reward the people that help keep your business going?”

When I put all of these together, it feels to me like the best of both worlds for merchants and consumers.

You tell me, are you sold or am I off my rocker here?

THE PATH FORWARD

Here’s the reality: consumer-based crypto payments will only work if the process feels invisible. No one cares about the rails—stablecoins, blockchain, or otherwise. What people care about is saving money, earning rewards, and making their lives easier.

The current payment system is full of inefficiencies that stablecoins can solve, and we all know compliance and regulatory clarity needs to improve in the U.S. but are getting better

The real innovation lies in connecting the dots: merchants cutting costs, consumers enjoying better rewards, and everyone benefiting from a more efficient payment ecosystem.

The question isn’t if we’ll see this transformation—it’s when.

As always, stay stable.

Zach & Drew

STABLEMINDED RECAP

• All 6 Episodes of Season 1 of the stableminded show are out now on Youtube and Spotify, supported by Layer1!

• Season 2 started filming last week and is supported by Mural Pay

• Building our stablecoin [redacted]

• You are still able to use the code “ STAYSTABLE20 “ to save 20% on our stable society hoodies. Limited Supply of 100

  

  LIMITED SUPPLY — *Tap-to-Engage functionality on left wrist. Pay with USDC or Card. 9.4 oz luxury fleece. Pullover style, drop shoulder, and ribbed sleeve cuffs. Embedded digital POA.

DISCLAIMER: *The content of this newsletter is for information purposes only and does constitute financial, investment or legal advice. Always consult with a qualified financial advisor before making any decisions based on the information discussed in this newsletter This content reflects the authors personal views and has not undergone detailed verification by a research team. While I aim for accuracy, these are thoughtful opinions open to reevaluation. Some citations may be incomplete or absent; I’ll make every effort to provide updates and corrections to the live version as needed.