We are revisiting an important payments industry subject previously covered by The Wall Street Journal on June 13th, 2025: the possibility of large, qualified businesses, like major retailers such as Walmart (WMT) and Amazon (AMZN), issuing their own stablecoins to facilitate customer payments. If accurate, this may significantly disrupt the payments ecosystem by potentially reducing the billions of dollars these retailers annually pay to the payment card transaction networks.
Let us explain.
Should a retailer such as Walmart or Amazon introduce its own stablecoin or begin accepting existing stablecoins at checkout, it could establish a payment infrastructure that operates independently of traditional banks and payment card providers, thereby bypassing those networks. This strategy has the potential to significantly lower point-of-sale transaction costs, including interchange fees paid to card-issuing banks (such as Bank of America and Wells Fargo), separate card network fees to Visa and Mastercard and the traditional economics of the merchant acquiring model. What’s more, Expedia, Uber, Stripe, Shopify, and various airlines are exploring similar approaches. However, no concrete launch dates, or official confirmations have been made public, and their plans may depend on the interpretation of the recently passed GENIUS Act.
Nonetheless, down the rabbit hole we go.
Walmart (NYSE: WMT) is a staple of the American retail experience, with 4,600 stores located within a ten-minute drive for 90% of the population. Approximately 1 billion customers visit Walmart stores in the US each month or 250 million per week. These stores are mostly comprised of the large Supercenter discount retail facilities with 142,000 SKUs. All of that foot traffic and product variety across a wide range of categories, including groceries, household essentials, electronics, and apparel in a large-format hypermarket averaging about 180,000 square feet generates impressive statistics. For example, annual US sales of supercenter stores were $462.4 billion, up 5% year-over-year, for fiscal year 2025. For the sake of discussion around Supercenter oriented transaction fees, Sam’s Club and International are excluded.
How much does Walmart annually pay in payment card transaction fees?
Not all figures are publicly disclosed, but, using round numbers and our best guess, if the average purchase price at a domestic Walmart location is $43 implies there are about 10.7 billion annual transactions. Continuing on that thread, if half of all point-of-sale transactions are payment cards and of those half are credit and half debit, we estimate on a blended rate basis, Walmart could pay over $3-5 billion annually in payment card transaction fees (we may be conservative because we are assuming WMTs debit card MDR is half that of standard rate, all interchange plus fraud, no third party merchant acquiring or branded network assessment fee). To balance this discussion, on a counterpoint basis to our above scenario, even if we are too aggressive on our payment card transaction fee range starting at $3 billion, investors may be overlooking the cost to accept cash. The prevailing wisdom suggests that the fully loaded expenses of handling cash from register intake to bank deposit at a large retailer is around 1%. We have doubts about if that is still accurate in the inflationary environment of the last several years but let us assume it is; implies $2.3 billion annual handling expense when applied to 50% of F25 domestic sales of $462.4 billion. Taken cash and card payment together, minimum, there could be a $5 billion+ total payment processing expense reduction opportunity at Walmart. All estimates (speculation) we have seen to date on this subject are higher, some more than 2x. In our view, any cost savings on this line item may eventually trend towards 100% margin contribution because of big volume. As a result, it is reasonable to conclude that Walmart has a strong incentive to pursue payment options that reduce transactional friction. Additionally, company documentation indicates that Walmart has approximately eight billion shares outstanding. Applying a 25% tax rate to a theoretical $5 billion in cost savings could result in an incremental increase of $0.47 in earnings per share (EPS), relative to the projected adjusted EPS of $2.56 for fiscal year 2026. This scenario suggests a potential 18% improvement in adjusted EPS under these theoretical conditions.
Enter Stablecoins.
Stablecoins are a type of cryptocurrency directly pegged to another unit measure of value, often the U.S. dollar. This is meant to prevent the swings associated with crypto assets like Bitcoin. Stablecoins are easily exchangeable into major fiat currencies, transparent in value (always visible), and should be much cheaper to process as a medium of payment than branded payment cards and possibly cash. Think of a card issuer and processor model like AMEX, except for WMT branded stablecoins. Only used at WMT stores, processed in-house and available to everyone. WMT may or may not partner with third parties for their stablecoin offering. Regarding how stablecoins function, as discussed in our July 3rd article: Enter USDC Issuer and Stablecoin Infrastructure Leader Circle.
Business, product summary, and use cases:
- Circle’s flagship product, the United States Digital Coin (USDC) is the second most used stable coin globally. USDC is 100% backed (1:1) by cash and short-term government securities. The company’s recently launched Euro Digital Coin (EURDC) works on the same principle. Circle generates transaction revenues from redeeming USDC and interest income from customer deposited currency reserves backing each USDC stable coin.
- USDC is regulated and transparent, the face value of a USDC token is always known, as is its ability to convert into US dollars through the company or a crypto exchange, including into any fiat currency, 24/7/365.
- Circle answers the call for industrial strength, global, and legitimate next generation payments platform for businesses and consumers.
- There are many benefits to using USDC, including: fast (almost immediate) and low-cost transaction processing anywhere in the world. Cross-border remittance is a natural market which is traditionally expensive on a dollar value sent basis (consumers), and slow for international B2B transactions (may require several days). The combined service revenue opportunity is over $100 billion.
- USDC is natively compatible with 16 blockchain networks and has portability capability to other Ethereum Virtual Machine (EVM) and non-EVM chains. Circle also provides their own wallets and smart contract platform.
- Circle went public in an initial public offering on June 5, 2025, and now has a $40 billion market cap, and is riding a wave of positive momentum following the recent US Senate passing of the Genius Act. These guidelines provide legal structure to the legitimacy of stablecoin companies in the US, which was previously lacking.
- USDC use cases have potentially seismic implications for the pricing and speed of B2B and C2B transactions. From what we can tell, many of the use cases for USDC carry a transaction fee that is half of the “standard rate,” and this with a faster clearing time.
- The Merchant Discount Rate (MDR) on average for the small and medium sized retailers in the US is between 2-3% vs USDC potential 1%. If third party service providers are involved, and other services wrapped around the USDC transaction, that rate could go higher. None the less, the base rate will start at a much lower price point compared to the traditional four-party payment system of 1) Card Brand (Visa/Mastercard/Amex/Discover), 2) Card Issuer (Financial Institution like Bank of America), 3) Merchant (PoS location) and 4) Consumer.
In sum, for the first time in decades, the face of the C2B and B2B payments is changing.
Payments could be faster and cheaper than current alternatives, and more importantly, contain rich data packets for every transaction.
They thought of this before.
Investors may recall, on August 1, 2019, Walmart filed for digital currency patent that will be tied to other regular currencies. Otherwise known as a stable coin, one WMT coin will equal $1 (and convertible to other fiat currencies). According to the company there are four primary benefits to issuing their own cryptocurrency: First, Bank the Unbanked. Provide everyday financial services to consumers who are priced out of the traditional banking system by fee structure or balance minimums. One industry source suggests at a minimum 10% of the total US population or thirty-five million people fall into this category. To jump start this new program early potential adopters are Walmart’s 2.2 million employees which may also lead to Reduction of Payroll Administrative Costs. The third goal: Eliminate/Reduce Payment Card Transaction Fees. Furthermore, the world’s largest retailer has been engaged in a multi-decade feud with Visa over payment card interchange fees; the internally developed WMT cryptocurrency is a workaround to that nagging problem. Fourth, positively ID every consumer and track and analyze each purchase on a single database management system. Biometrics will identify each consumer and allow the company to provide rewards to those not currently reached and streamline services to those paying with different form factors (credit, debit, cash, check).
WMT has been pursuing injunctive relief from the card brands regarding interchange, which is typically a fixed component of the merchant discount rate (MDR) and may comprise up to 75% of the total MDR fee per transaction received by card issuers (banks). The issues related to transaction volume and benefits could potentially be addressed, as starting a new payment network often faces challenges such as initial low transaction volumes, retailer acceptance, third-party processors facilitating connections between retailers and issuers, and consumer adoption. For widespread adoption, the traditional payment ecosystem requires that all participants are economically incentivized. This partly explains why there are currently only four major payment networks in the US (Visa, MasterCard, American Express, and Discover). WMT’s operational scale and its ability to implement an alternative, cost-effective, programmable payment method could prompt significant changes within the payments landscape.
