Stablecoins have become one of the most talked about developments in payments. Much of the conversation has focused on their potential as a new form of digital payment. However, merchants don’t need their customers to pay with stablecoins to benefit from them. Increasingly, the opportunity is in settlement.
What are stablecoins?
Stablecoins are a type of digital currency designed to maintain a stable value by being pegged to another asset. For example, USDC is designed to track the US dollar and is redeemable 1:1 for USD. Unlike cryptocurrencies such as Bitcoin, where the value can fluctuate dramatically, the purpose of stablecoins is to provide the advantages of blockchain-based money while maintaining a predictable (stable) value.
Payment borders begin with customer expectations
Traditional settlement is closely connected to the banking system. Moving funds is dependent on banking infrastructure, intermediaries, processing timelines and, depending on the payment and banking setup, operating hours. Even within the EU’s established payments landscape, moving money across borders can still involve different banks, infrastructure and, most importantly, time.
Stablecoin settlement provides an alternative route. Because it operates on blockchain infrastructure, funds can be transferred directly to a merchant’s wallet without relying on traditional banking rails. Blockchain infrastructure operates around the clock, without being limited by traditional banking hours, weekends or holidays. Funds can move between wallets in seconds or minutes, rather than being held up by traditional settlement cycles, giving merchants faster access to their money and greater control over cash flow.
This combination of stability and blockchain infrastructure makes stablecoins particularly attractive for settlement. Crucially, it does not require customers to pay with crypto. A customer can still use the payment methods they already know and pay in their local currency.
Beyond traditional banking infrastructure
A major advantage of stablecoin settlement is that receiving funds does not require the merchant to use a traditional bank account as the final destination. This gives merchants another route for receiving and managing funds, reducing their dependence on traditional banking infrastructure. Businesses operating across multiple markets can simplify settlement by reducing the need for multiple banking relationships. Stablecoins provide a consistent way to receive funds across borders.
Of course, the introduction of stablecoins does not remove banks or conventional financial infrastructure from the wider financial system. Instead, they simply provide merchants with greater choice over how and where they receive their settlement funds.
The benefits of blockchain, without the volatility of crypto
Let’s take USDC as an example, it is designed to maintain parity with the US dollar and is backed by reserves of highly liquid cash and cash-equivalent assets. This provides merchants with a blockchain-based asset without exposing them to the same degree of price fluctuation associated with cryptocurrencies such as Bitcoin.
That distinction matters when stablecoins are used for settlement. A merchant receiving Bitcoin would need to consider what might happen to its value between receiving it and converting or using it. A dollar-pegged stablecoin has a different purpose: maintaining a stable value while making it possible to move and hold that value using blockchain infrastructure.
For merchants, stablecoin settlement should not be viewed in the same way as investing in cryptocurrency. It is simply another way of receiving and managing funds.
Moving into the payments mainstream
Stablecoin settlement has been embraced by some of the biggest players in global payments. Visa and Mastercard are both expanding their stablecoin capabilities, including infrastructure that enables issuers and acquirers to settle using stablecoins. Their involvement is an important signal of where the market is heading. Rather than sitting outside established payments infrastructure, stablecoins are increasingly being integrated into it.
Stablecoins in Europe
The EU’s Markets in Crypto-Assets Regulation, better known as MiCA, has introduced an EU wide regulatory framework for crypto-assets and related services. It establishes requirements around areas including authorization, governance and prudential safeguards.
For merchants, this provides a clear European regulatory framework and greater oversight. It’s an important step in stablecoins moving from something associated primarily with cryptocurrency trading towards a practical piece of payments and financial infrastructure.
DIMOCO facilitates stablecoin settlement through Fipto, a MiCA-authorized partner, allowing merchants to access stablecoin settlement within a regulated European framework.
More choice in how merchants receive their funds
Stablecoin settlement is not about asking consumers to change how they pay. Nor does it mean every merchant should replace its existing bank settlement with a digital wallet.
It is about giving merchants options. By reducing dependence on traditional banking infrastructure, stablecoin settlement can give businesses greater freedom in how and where they operate. For merchants that face barriers accessing banking services, operate across multiple markets or want greater flexibility over where they receive their funds, it opens up an additional route to settlement.
Ultimately, that is where the potential of stablecoins becomes interesting. Greater access to settlement infrastructure makes it easier for more businesses to participate in the digital economy, giving merchants greater freedom to trade across borders without their banking setup being the defining factor.
With stablecoin settlement, DIMOCO gives merchants the option to receive funds directly into a digital wallet, combining the speed and flexibility of blockchain infrastructure with the stability of an asset pegged to fiat currency.
