Stablecoins Are Coming for Your Rewards Points
The crypto tokens pose more of a threat to US credit cards than to bank accounts or money market funds.
Stablecoins pose more of a threat to the US credit-card industry than to deposit accounts or money market funds.
Photographer: Daniel Acker/Bloomberg
Credit cards versus stablecoins is one of the less-discussed competitive battles ahead, but it’s one where traditional finance faces the most coherent threat. The constant-dollar-value crypto tokens offer a route to cheap, fast payments — and in the US, that could make a real difference to consumers and retailers who still pay unusually high fees for card transactions compared with Europe.
The growth prospects for stablecoins are overblown in my view, but they may offer an opportunity for merchants and airlines to recover costs from big banks and networks like Visa Inc. and Mastercard Inc. If customers can be persuaded to use coins sponsored by Amazon.com Inc. or American Airlines Group Inc., the companies could boost profit margins and still run points-based loyalty schemes. There are some big “ifs” here, but this makes more sense to me than people giving up insured deposits in favor of stablecoins, or companies deciding they’re a better way to store cash than money market funds.