Amid Surging Stablecoin Use Cases, Payouts Stand Out

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The passage of the GENIUS Act in the U.S. has brought stablecoin interest to a fever pitch in recent months. However, even as more of the world’s leading organizations consider launching stablecoin, the use cases for these fiat-backed assets are still being unlocked.

In a recent PaymentsJournal podcast, Nabil Manji, SVP, Head of Fintech Growth and Financial Partnerships at Worldpay, and James Wester, Director of Cryptocurrency and Co-Head of Payments at Javelin Strategy & Research, highlighted payouts as one of the most intriguing applications for stablecoins—a model that could offer dramatic benefits for merchants.

At the Heart of Dovetailing Trends

In addition to regulatory clarity in the U.S., there has been global momentum toward more transparent digital asset regulations. For example, the European Union recently passed its Markets in Crypto-Assets (MiCA) legislation.

This improved regulated environment has made the space more attractive for both traditional financial institutions and corporates to explore digital assets. These organizations are considering stablecoins for several reasons, including payments, corporate treasury management, and yield generation.

The combination of regulatory clarity and institutional interest has dovetailed with broader payments trends to bring stablecoins into the spotlight.

“What I think makes the timing almost a perfect storm in a positive way is in many markets around the world, we’ve had domestic real-time payments,” Manji said. “The big outlier has been the U.S., where up until recently with RTP and FedNow, there hasn’t been relatively ubiquitous real-time payments.”

“Very quickly, the world’s largest economy and the participants in it, are going to grow accustomed to having real-time payments for domestic use cases through those payment rails,” he said.

In addition to the surge in real-time payments, cross-border e-commerce has continued to grow significantly, driven by factors like marketplace shopping, the gig economy, and social media commerce.

Consumers increasingly expect these trends—real-time payments and cross-border transactions—to converge, and they don’t understand why an adequate solution isn’t yet available.

Stablecoins are among the leading contenders to fill this gap because transactions are instant, efficient, and borderless. While their surface-level utility as a digital representation of the U.S. dollar is a game-changer, it’s only the beginning of what the technology can do.

“It’s becoming clearer, even to savvy payment folks, that it is different from what we have had in the past,” Wester said. “That was one of the misconceptions for a while, it was ‘Don’t we already do something like that?’ Well, not really. Once you begin to understand what stablecoins can do in terms of being a programmable digital bearer instrument, that idea becomes very powerful, and people begin to explore what they can do with it.”

The Two Lenses

While payment acceptance has traditionally taken precedence, payouts are at the heart of many merchants’ business models. These companies are searching for ways to make real-time, inexpensive payouts to beneficiaries, which could include employees, vendors, customers or other third parties.

These payouts are often high-frequency and low-value—such as those a marketplace might make to its sellers or a gig company to its workers. They could also include an airline reimbursing a passenger for disrupted travel plans, or an online gaming company paying out winnings to a user.

Often, these merchants need to make payout in a relatively high number of currencies and geographies. Additionally, many of the best candidates for stablecoin payouts serve unique customer bases.

“You layer on top of that the type of customers of theirs that would want to receive a stablecoin instead of fiat currency,” Manji said. “Then you layer on top the recipients that are in places like countries that have volatile currencies, or countries that the population is underbanked or unbanked.”

“Also, populations where they’ve got a relatively young age skew and people that want something like a stablecoin, because they’re comfortable with investing and generating yield on a stablecoin or operating something like a crypto wallet,” he said. “Those are the two lenses where this makes sense to offer to customers.”

Cutting Through the Complexity

Though stablecoin payouts may seem like a no-brainer given the regulatory environment and consumer familiarity, many merchants are still concerned about the implications of adopting cryptocurrency for payouts.

“One of the problems with payments people is we’re fascinated with payments, thinking everybody else is fascinated with payments too, and they’re not,” Wester said. “They just want to make sure that their money moves. We started talking about blockchain, digital assets, cryptos, stablecoins and how cool it is from a technology standpoint. All they did was look at it and say, ‘Wait, how are payments done? This sounds complex.’”

However, advancements in technology have made global payouts using stablecoins virtually indistinguishable from payouts in fiat currencies.

For example, on Worldpay’s platform, a merchant can fund their account in various fiat currencies. They can then initiate a payout request via an API call or by uploading a batch file containing hundreds or thousands of payments requests. Alternatively, they can log into the online portal to submit a one-off manual payment.

Regardless of the method, the payment instruction determines which currency should be deducted from the merchant’s account and which currency should be paid out to the recipient.

“For example, they may say, ‘Use some of my USD balance that I funded you to payout one of my marketplace sellers in Turkish lira,” Manji said. “We have connections in our platform to payout in over 130 currencies in over 180 markets, of which approximately 80 are on real-time payment rails. We can, in most cases, execute a relatively instantaneous payout to a beneficiary in countries covering most of the world’s GDP.”

The addition of stablecoin payouts to the platform means that Circle’s USDC has essentially become the 131st payout currency—making the adoption of stablecoin payouts as simple as the click of a button.

“There’s no new integration; there’s no new platform; there’s no new logic,” Manji said. “All we’ve done is in the field in the API where you put the destination currency, instead of putting something like Turkish lira or Argentinian peso, you just put USDC. Instead of sending us an international bank account number or a routing number and account number, you send us a wallet address and we take care of it from there.”

“So, the merchant doesn’t need any crypto wallet,” he said. “They don’t need to hold USDC. They don’t need to touch USDC. They don’t need to know what chain the customer’s wallet is on. They don’t need to screen the wallet. We take care of all of that for them.”

Across the Spectrum

This functionality can be a game-changer for merchants, but it is just the beginning of the road for stablecoins. Once organizations become accustomed to stablecoin payouts, they will begin to recognize other benefits, such as the ability to automatically execute transactions.

“The people who seem to light up the most when you talk about programmability are corporate treasurers,” Wester said. “They’re like, ‘I can do a lot of stuff that right now is either a manual process or an inefficient process.’ I think that is going to be an area where we’re going to see a lot of development.”

The recent surge of stablecoin-related news has led some to wonder when the hype might fade. However, the efficiencies and capabilities of stablecoins are likely to keep them at the forefront of the financial services industry for many years to come.

“There is this increasing interest from traditional financial institutions, from the payment ecosystem, from our clients, and from consumers to start using stablecoins in a meaningful way,” Manji said. “I think there’s this real interest now—across the spectrum—that’s giving us a lot of excitement in terms of how we’re thinking about the space and how we want to invest.”

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