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Visa's Future in the Stablecoin Era: Friend, Foe, or Frenemy?
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Key Takeaways
Visa now supports USDC, PYUSD, USDG and EURC across Ethereum, Solana, Stellar and Avalanche.
Decades of fraud prevention, compliance and global reach give Visa an edge over stablecoin-native rivals.
V shares are up 11.3% YTD, with fiscal 2025 earnings expected to grow 13.7% year over year.
For Visa Inc. (V - Free Report) , whose “cash cow” interchange revenues hinge on card-based transactions, the surge of stablecoins represents both a looming threat and a potential growth lever. The payments landscape is evolving rapidly, and stablecoins now sit at the heart of that disruption. With regulators clarifying rules and merchants increasingly open to blockchain-based payments, these tokens have moved well beyond the experimental stage. Their promise of instant settlement and lower transaction costs poses a challenge to traditional payment rails.
Yet, Visa is hardly on the defensive. It has rolled out multiple initiatives with fintech partners to support payouts, cross-border transfers and crypto-to-fiat on-ramps using stablecoins. Building on its early USDC settlement, Visa has expanded its capabilities to cover three more major stablecoins, including PayPal Holdings, Inc.’s (PYPL - Free Report) PayPal USD (PYUSD), USDG and EURC, across four blockchains: Ethereum, Solana, Stellar and Avalanche. This multi-chain, multi-currency infrastructure is designed to ensure Visa remains integral to money movement, no matter the form it takes.
While stablecoin-native networks market themselves as faster and cheaper, Visa’s entrenched advantages are hard to match. Decades of experience in fraud prevention, compliance and global interoperability give Visa an edge that crypto networks are yet to replicate. Stablecoins may threaten pricing models, but duplicating Visa’s trust, regulatory standing, and merchant reach is far more challenging than offering lower fees, at least in the near-term.
Competitors are also moving quickly. Mastercard Incorporated (MA - Free Report) has tested stablecoin transactions and joined Paxos’ Global Dollar Network, adding support for USDG, USDC, PYUSD and FIUSD. It is also working with wallets such as MetaMask, OKX and Crypto.com while enabling card-based spending through its Multi Token Network and Mastercard Move settlement rails, reaching more than 150 million merchants. PayPal, meanwhile, has gone further by launching PYUSD, its proprietary stablecoin designed for payments and remittances.
As such, stablecoins are less an existential rival and more a new layer of the payments stack. For Visa, the challenge lies in capturing the upside of stablecoins without eroding its highly profitable card-based business. Ultimately, stablecoins may not be strictly a friend or foe but a complex “frenemy” as Visa navigates the digital payments’ next phase.
Visa’s Price Performance, Valuation and Estimates
Shares of Visa have gained 11.3% year to date, outperforming the broader industry and the S&P 500 Index.
Visa YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Visa trades at a forward price-to-earnings ratio of 27.64X, up from the industry average of 22.28. Visa carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Visa’s fiscal 2025 earnings implies a 13.7% rise year over year, followed by 12.4% growth next year.
Image: Bigstock
Visa's Future in the Stablecoin Era: Friend, Foe, or Frenemy?
Key Takeaways
For Visa Inc. (V - Free Report) , whose “cash cow” interchange revenues hinge on card-based transactions, the surge of stablecoins represents both a looming threat and a potential growth lever. The payments landscape is evolving rapidly, and stablecoins now sit at the heart of that disruption. With regulators clarifying rules and merchants increasingly open to blockchain-based payments, these tokens have moved well beyond the experimental stage. Their promise of instant settlement and lower transaction costs poses a challenge to traditional payment rails.
Yet, Visa is hardly on the defensive. It has rolled out multiple initiatives with fintech partners to support payouts, cross-border transfers and crypto-to-fiat on-ramps using stablecoins. Building on its early USDC settlement, Visa has expanded its capabilities to cover three more major stablecoins, including PayPal Holdings, Inc.’s (PYPL - Free Report) PayPal USD (PYUSD), USDG and EURC, across four blockchains: Ethereum, Solana, Stellar and Avalanche. This multi-chain, multi-currency infrastructure is designed to ensure Visa remains integral to money movement, no matter the form it takes.
While stablecoin-native networks market themselves as faster and cheaper, Visa’s entrenched advantages are hard to match. Decades of experience in fraud prevention, compliance and global interoperability give Visa an edge that crypto networks are yet to replicate. Stablecoins may threaten pricing models, but duplicating Visa’s trust, regulatory standing, and merchant reach is far more challenging than offering lower fees, at least in the near-term.
Competitors are also moving quickly. Mastercard Incorporated (MA - Free Report) has tested stablecoin transactions and joined Paxos’ Global Dollar Network, adding support for USDG, USDC, PYUSD and FIUSD. It is also working with wallets such as MetaMask, OKX and Crypto.com while enabling card-based spending through its Multi Token Network and Mastercard Move settlement rails, reaching more than 150 million merchants. PayPal, meanwhile, has gone further by launching PYUSD, its proprietary stablecoin designed for payments and remittances.
As such, stablecoins are less an existential rival and more a new layer of the payments stack. For Visa, the challenge lies in capturing the upside of stablecoins without eroding its highly profitable card-based business. Ultimately, stablecoins may not be strictly a friend or foe but a complex “frenemy” as Visa navigates the digital payments’ next phase.
Visa’s Price Performance, Valuation and Estimates
Shares of Visa have gained 11.3% year to date, outperforming the broader industry and the S&P 500 Index.
Visa YTD Price Performance
From a valuation standpoint, Visa trades at a forward price-to-earnings ratio of 27.64X, up from the industry average of 22.28. Visa carries a Value Score of D.
The Zacks Consensus Estimate for Visa’s fiscal 2025 earnings implies a 13.7% rise year over year, followed by 12.4% growth next year.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.