Will the U.S. credit card industry, with its inflated swipe fees, survive stablecoins?
According to financial journalist Paul J. Davies, stablecoins pose a bigger threat to U.S. credit cards than to bank accounts or money market funds. What are the real dynamics between credit cards and stablecoins, and what are the possible outcomes of their collision?
- The U.S. credit card networks and banks collect inflated swipe fees costing American families over $1,000 annually.
- Regulators’ attempts to cap swipe fees have been failing.
- Paul J. Davies expressed his opinion that stablecoins are a threat to costly credit card networks.
Inflated swipe fees
On Sep. 2, 2025, Bloomberg released an op-ed by Paul J. Davies. In the article, he claims that stablecoins pose a threat to U.S. credit cards. Davies suggests that people don’t speak about this threat enough and focus more on other sectors disrupted by stablecoins. According to him, in traditional finance, stablecoins pose “the most coherent threat” to the credit card sector.
As stablecoins allow for fast and cheap transactions, Americans soon might tend to prefer them to using credit cards. Given that lately, swipe fees in the U.S. have been growing consistently, reaching 4% in 2023, merchants may opt for the use of stablecoins and encourage users to choose cryptocurrency instead of cards. Davies believes it is rather a specifically American problem, as in Europe, swipe fees are much lower than in the U.S.
The Federal Reserve stepped in, pushing for “swipe fee” regulation that would have put a cap on the fees applied by the U.S. banks to merchants. On Aug. 7, a U.S. judge vacated the initiative. The defense line of banks is coming down to the need to cover debit card issuance expenses.
The combined amount of fees paid in 2024 amounted to $187.2 billion, which is a 10% increase from 2023 and 70% increase from the pandemic era. Another source names a lower evaluation, claiming credit card companies in the U.S. made $148.5 billion from transaction fees, adding that swipe fees cost American families $1,200 annually. Depending on the operator, some transactions imply fees exceeding 3%.
Earlier this year, MPC Executive Committee member Christine Pollack was commenting on the swipe fees situation. She noted that American families and small businesses face economic uncertainty as Wall Street banks and credit card networks keep on inflating the fee burden. She claimed that price-fixed swipe fees keep on rising as there is “no competition to keep them in check.” According to Davies, the competition is here, and it is a stablecoin sector that is going to make the U.S. credit card industry, with its bloated swipe fees, obsolete.
However, we don’t see credit card companies fighting stablecoins or crypto per se. Rather, big TradFi entities like Visa and Mastercard are exploring avenues to embed themselves into the cryptocurrency market. Soon, they may become a handy gateway into the cryptocurrency realm.
Rivalry between the U.S. credit cards and stablecoins
While the integration of the credit card system and stablecoin sector in the U.S. seems inevitable, it doesn’t mean stablecoins are not a threat to credit cards.
While high swipe fees are arguably the main drawback of bank cards when compared to stablecoins, there are multiple other factors making stablecoins more attractive:
- Settlement speed: Stablecoin transactions are faster. More than that, cross-border transactions are as time-efficient as inland transactions, whereas bank transactions may take up to several days.
- Geographic coverage: Stablecoins are almost universal. All they require is an internet connection. Transactions involving banks are limited to jurisdictions where these banks can operate. This made the African unbanked population one of the drivers of the crypto revolution.
- Hidden and middleman costs: The use of credit or debit cards may incur additional fees charged for currency conversion and other services.
- Fraud and chargebacks: While crypto transactions are irreversible, TradFi has room for chargebacks and fraud that uses this tool.
Davies cites American Express CEO Stephen Squeri as saying that credit cards have enough benefits to compete with stablecoins. Squeri named reward programs, dispute resolution, protection against fraud, and ease of use. Who knows if all of these are enough to outweigh the high costs?
We asked Denelle Dixon about the dynamics in the relationships between stablecoins and credit card issuers. Dixon is the CEO and executive director of Stellar Development Foundation, connecting institutional finance and blockchain technology. According to Dixon, there’s more potential than threat in stablecoins. She said:
Dixon sees support for stablecoins from payment card giants as the way to maintain relevance during the new opportunity for payments. She suggests that when Visa or Mastercard integrates stablecoins, they unlock benefits associated with stablecoins, namely “faster settlement, borderless utility and new customer segments, while still leveraging their existing global reach.” She adds:
Both stablecoins and the credit card industry can benefit from working side by side. Stablecoins have a technological edge but lack the client loyalty and reputation of TradFi. At this stage, it doesn’t seem that they can seriously harm the credit card business; in fact, they complement each other.
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