Walmart and Amazon Explore Creation of Stablecoins to Revolutionize Payment Systems

Walmart and Amazon are in discussions about launching stablecoins, a form of cryptocurrency that could potentially transform their transaction processes. According to informed sources, executives believe that generating significant cash and card transactions through their own digital coins could lead to substantial savings on fees. These stablecoins, which typically have a one-to-one exchange rate with government currencies and are backed by Treasuries, would facilitate rapid money transfers to retailers.

Before this innovative payment solution can be adopted, the Genius Act must be enacted into law, establishing a regulatory framework for stablecoins to govern their use. This legislation needs to garner approval from both the House of Representatives and the Senate. To support this initiative, a trade group called the Merchants Payments Coalition is actively lobbying Congress, arguing that such regulations would enable merchants to utilize alternative payment methods that could significantly reduce operational costs.

The prospect of Walmart and Amazon entering the stablecoin market has already impacted the financial sector, causing a roughly six percent decline in the stocks of Visa and Mastercard. On that day, Visa particularly struggled, earning the title of the poorest performer on indices like the Dow Jones Industrial Average and the S&P 500. However, experts remain uncertain about whether this competition between stablecoin issuers and traditional banks would yield positive outcomes for consumers and businesses alike. Walmart is also advocating for amendments that would increase competition within the credit card market.

In addition to Walmart and Amazon, other companies, including airlines and online travel agencies like Expedia Group, are exploring ways to incorporate stablecoin payment systems. The overall response from major banks regarding this potential shift in the payments landscape among the largest retail companies remains unknown. The growing popularity of cryptocurrencies is evident, with about six percent of the U.S. population reported to own some form of digital currency. One insider regarding Amazon's discussions indicated that while plans are still formative, there is consideration of collaborating with existing stablecoins. A recent note from TD Cowen analyst Jaret Seiberg has emphasized that the move towards instant payments is not only inevitable but also poses significant risk to established giants like Visa and Mastercard.