Shares of financial giants Visa and Mastercard saw declines on Friday, prompting a market valuation drop of over $60 billion. This follows reports that major merchants are considering the use of stablecoins to bypass traditional payment systems.
Stock Decline of Visa and Mastercard
Visa shares closed down 4.98% at $352.85, while Mastercard shares dropped 4.62% to end at $562.03. Both companies made the list of the worst performers on the Dow Jones that day.
Merchant Interest in Stablecoins
A recent report by The Wall Street Journal highlighted that merchants are exploring the potential of stablecoins—digital currencies pegged to fiat assets like the US dollar—that could help reduce costs tied to payment processing through traditional networks. "We believe in the potential of stablecoins to streamline payments and commerce," stated Mastercard's Chief Product Officer Jorn Lambert. However, there is skepticism regarding whether consumers will indeed abandon credit cards for stablecoins.
Analyst Opinions
Baird analyst David Koning suggested that the market may be overreacting to the threat posed by stablecoins. "Shoppers like credit," he remarked. He noted that consumer habits regarding credit and debit cards are unlikely to change soon. Bernstein's Harshita Rawat echoed Koning's sentiment, stating that traction for stablecoins may take years and be limited in scope. Nonetheless, some economists have encouraged clients to "buy the dip" following the stock price drop.
The decline in Visa and Mastercard's stock reflects a growing merchant interest in stablecoins as an alternative to traditional payment methods. Yet, analysts remain divided on the timeline for stablecoins to gain significant traction within the payment ecosystem.
