Brett Schafer, The Motley Fool

Sun, Jun 22, 2025, 3:05 PM5 min read

• Large retailers are trying to build stablecoins to circumvent Visa.

• The company has plenty of firepower to defend its position in the payments ecosystem.

• Investors should not panic and sell their Visa stock today.

• 10 stocks we like better than Visa ›

This week, stablecoin legislation was approved by the United States Senate. The bill -- called the GENIUS Act -- still needs to go through the other side of Congress and on to the President's desk, but it is one step closer to bringing stablecoins into the financial system. By regulating the new currencies pegged to the U.S. dollar, issuers of the coin will now need to keep ample reserves to pay back customers and also go through regular audits.

Investors are betting that legislation will spur customer adoption, which is a threat to Visa (NYSE: V). If stablecoins are adopted wholesale by consumers, it could mean less payment volume through Visa's network. Less volume means less profit.

Does that mean it is time to sell your Visa stock? Not really. Here's why stablecoins are not a large threat to Visa's business model today.

This legislation is inspiring companies to investigate making their own stablecoins. According to reports, both Walmart and Amazon -- the two largest retailers in the United States -- are exploring making stablecoins for shoppers. Retailers are incentivized to do this because of the high fees paid to the credit card networks every year, which range from 2% to 3% of every transaction. Visa only collects 0.1% or a little more of every dollar spent, while most goes to the banking partners that issue credit cards and give consumers cash-back rewards.

By adopting stablecoins, merchants see an avenue to avoiding the credit card fees that are a huge expense on their operations. Wal-Mart and Amazon alone could save billions of dollars a year that are now going to the financial system. It only needs to see mass adoption of stablecoins for this to happen. Easier said than done, but there are a lot of profits on the line for trying.

Defeating Visa and credit card fees is not going to be easy. If it were, the companies would simply stop accepting Visa altogether. But they cannot, because of Visa's immense scale in merchant acceptance and consumer usage that is difficult to replicate.

Visa has operations in 200 countries and territories, accepted by 150 million merchants and growing. It also has 4.8 billion total debit and credit cards in circulation. Over $15 trillion in total payments volume is processed by Visa every year. For stablecoins to succeed, they will need to replicate not one but both sides of this network. Shoppers will not use stablecoins for everyday use unless they are accepted everywhere. Merchants will not care about accepting stablecoins if nobody uses them.