Retail behemoths Walmart and Amazon are exploring the issuance of their own stablecoins, says a Wall Street Journal report.
These companies are aiming for a strategic maneuver that could save these companies billions in transaction fees and accelerate payment processing.
Why are corporations looking at stablecoin?
Along with Walmart, Amazon, Expedia Group, and some large airlines are also looking to issue their stablecoins, the WSJ report said, citing sources.
The move will affect financial companies negatively, including banks and credit card companies.
The motivation behind such a bold step is clear: current payment systems, reliant on traditional currency and card networks, come with substantial costs and delays.
Interchange fees, charged by card networks and issuing banks, eat into retailers’ margins.
Furthermore, payment settlements can take days, creating cash flow inefficiencies for businesses operating on razor-thin profits.
Stablecoins, digital tokens pegged one-to-one to fiat currencies like the U.S. dollar, offer a compelling alternative.
They promise near-instantaneous transactions with significantly lower fees, directly addressing these pain points for high-volume merchants.
US’s tilt towards stablecoin
The companies’ plans would depend upon the GENIUS Act of the US, which aims to establish a regulatory framework for stablecoins.
The GENIUS Act, which recently cleared a key Senate procedural vote, aims to bring clarity and oversight to the stablecoin market.
Its provisions include requirements for stablecoins to be fully reserved and subject to federal or state regulatory oversight, designed to protect consumers and ensure financial stability.
For companies like Walmart and Amazon, regulatory clarity is paramount.
The absence of a clear legal framework has been a major impediment to broader corporate adoption of stablecoins.
If the GENIUS Act passes, it would provide the necessary legal certainty for these retail giants to move forward with their plans, potentially unleashing a wave of innovation in merchant-led payment solutions.
Walmart, in particular, has been a vocal proponent of payment reform and has actively lobbied for changes to credit card regulations, reflecting its longstanding frustration with card network fees.
This push for stablecoins aligns perfectly with Walmart’s broader strategy to expand its footprint in financial services.
The company already offers a suite of financial services through its “Money Center,” including bill pay, check cashing, money orders, and money transfers.
Walmart has also ventured into lending with “One Loans” and offers its own branded credit cards and debit cards.
Issuing a stablecoin would be a natural extension of these existing offerings, potentially allowing Walmart to create a closed-loop payment ecosystem that further reduces costs and enhances customer loyalty.
For both Walmart and Amazon, a proprietary stablecoin could facilitate seamless domestic and international payments, streamline supply chain financing, and even enable innovative loyalty programs.
It could also provide a competitive edge, allowing them to offer more attractive pricing to consumers by passing on some of the savings from reduced payment processing costs.
WSJ had previously reported that the mega banks JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and other large commercial banks are discussing teaming up and issuing a joint stablecoin.
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