Visa and Mastercard Stocks Drop Amid Stablecoin Legislation
On June 18, 2023, Visa (NYSE: V) and Mastercard (NYSE: MA) stocks fell approximately 5% each, triggered by concerns over stablecoins potentially disrupting traditional payment networks following the U.S. Senate’s passage of stablecoin legislation. Stablecoins, which aim to maintain parity with fiat currencies like the U.S. dollar, could streamline payment processes and reduce costs for merchants by sidestepping conventional fee structures associated with credit card transactions.
The legislation mandates full reserve backing and compliance for stablecoin issuers, potentially allowing non-financial entities like Walmart and Amazon to issue their own stablecoins, further challenging Visa and Mastercard’s dominance, especially in high-fee cross-border payment markets. Despite the potential threat, industry experts suggest it may take time for stablecoins to gain widespread acceptance, as credit cards remain ingrained in consumer behavior and offer additional benefits such as credit access and rewards.
