Key Points
- SoFi has begun settling debit and credit card transactions with Mastercard using its SoFiUSD stablecoin as it moves its entire card program to blockchain-based settlement.
- The program is expected to process more than $25 billion in annualized volume, while customers continue using their cards without directly interacting with the underlying stablecoin infrastructure.
- Payments experts say blockchain settlement could improve speed and liquidity management, but stablecoins do not eliminate banks, card networks or the need for local currency liquidity.
Stablecoins are increasingly moving into the infrastructure behind conventional payment networks, providing a potential alternative to traditional banking settlement rails without necessarily changing how consumers pay.
That shift is becoming more visible as financial institutions begin using blockchain networks to settle obligations between banks, card networks and other payment participants. SoFi is the latest example, beginning to settle debit and credit card transactions with Mastercard using its SoFiUSD stablecoin.
The bank plans to migrate its entire card program to the blockchain-based settlement system, which it expects will process more than $25 billion in annualized volume.
For SoFi customers, the change is largely invisible. Cardholders will continue using their debit and credit cards normally, while the underlying settlement process moves onchain.
Stablecoins Target the Settlement Layer
The SoFi-Mastercard arrangement does not eliminate the existing payment intermediaries. Visa and Mastercard continue to operate their card networks, while banks remain involved in the movement and settlement of funds.
Instead, the blockchain is being used as an alternative rail for settling obligations between participants.
Martins Benkitis, co-founder and CEO of emerging-markets liquidity provider Gravity Team, described the development as something other than traditional disintermediation.
The card network still calculates obligations and manages interactions between participants, while banks continue to provide important parts of the financial infrastructure. The change is primarily occurring in how those obligations are settled.
This distinction could become important as stablecoins expand within mainstream payments. Businesses and consumers may not need to interact directly with stablecoins for the technology to become a significant component of payment infrastructure.
As Benkitis noted, businesses are more likely to focus on whether settlement is available when needed and whether funds arrive reliably than on whether a stablecoin is being used somewhere in the underlying process.
Visa Is Also Moving Settlement Onchain
SoFi’s initiative follows similar moves by established payment companies.
Visa said in April that its stablecoin settlement pilot had reached a $7 billion annualized run rate as the company expanded support to nine blockchains. The company described blockchain settlement as a complement to traditional settlement infrastructure.
The developments indicate that stablecoins are increasingly being evaluated as infrastructure rather than solely as cryptocurrency trading instruments.
For payment networks, the technology offers a mechanism for moving settlement value outside conventional banking schedules, potentially allowing transactions to be processed continuously.
The Federal Reserve has also examined the implications of payment stablecoins, noting that they could alter the economics of payments without necessarily removing banks from the system.
Faster Settlement Does Not Automatically Mean Lower Costs
The potential benefits of moving settlement onchain extend beyond transaction speed.
Varun Datta, a venture capitalist and founder of Truth Ventures, said continuous settlement could reduce delays and potentially lower the amount of capital companies need to maintain across different locations to support payment obligations.
The effect could be particularly relevant to cross-border transactions, where funds may currently need to move through multiple intermediaries and banking systems.
However, faster settlement does not necessarily mean that the overall cost of a payment will fall.
Conversion costs, compliance requirements, technical integration and stablecoin management can all add expenses to the payment process. Datta said evidence of lower total costs and improved liquidity management at scale would be needed before the economic benefits could be considered established.
Local Currency Liquidity Remains Essential
Cross-border payments also expose a limitation that blockchain settlement does not eliminate: the need for local currency liquidity.
Benkitis said dollar-denominated stablecoins can move between balance sheets rapidly, but completing a payment in an emerging market may still require access to local banks and sufficient domestic currency liquidity.
This means that blockchain settlement can accelerate the movement of value between participants without necessarily solving the final conversion into local money.
“The stablecoin gets the value there quickly,” Benkitis said. “You still need the local liquidity to finish the payment.”
The distinction is particularly important for international payment systems, where the efficiency of the blockchain rail can ultimately be constrained by the availability of local banking relationships and foreign-exchange liquidity.
Stablecoins Could Become Invisible Payment Infrastructure
The SoFi example illustrates how stablecoins can be integrated into existing financial systems without requiring consumers to change their behavior.
Cardholders continue using familiar payment products, while banks and payment networks use blockchain infrastructure in the background to settle transactions.
That model could allow stablecoins to gain broader adoption without requiring businesses to directly manage digital assets themselves.
The technology would effectively function as another settlement layer alongside existing financial infrastructure rather than replacing the entire payments ecosystem.
Outlook
SoFi’s move to blockchain-based card settlement demonstrates how stablecoins can be deployed as an alternative settlement rail while leaving established card networks and banks in place. The potential advantages include continuous settlement, faster movement of funds and more flexible liquidity management, but the overall economics still depend on integration, compliance, conversion and access to local currencies.
As Visa, SoFi and other financial institutions expand blockchain-based settlement, the more significant development may be the gradual integration of stablecoins into existing payment infrastructure rather than their replacement of traditional financial intermediaries.
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