Mastercard makes a move toward stablecoins, in an effort to boost mainstream use

By Steve GelsiCredit-card giant teaming up with Fiserv's FIUSD stablecoin programMastercard Inc. said it's working to weave Fiserv Inc.'s FIUSD stablecoin into a range of its payment products. It's another traditional financial firm jockeying for a seat at the table as cryptocurrencies become more mainstream.Fiserv (FI) and Mastercard (MA) plan to issue stablecoin-linked cards for shared customers to allow consumers and businesses to make FIUSD payments everywhere in the world where Mastercard is accepted.While cryptocurrencies were designed in part to bring down the cost of transactions for merchants and consumers, compared with the fees they pay to the Visa Inc. (V) and Mastercard Inc. (MA) credit-card networks, those established players are teaming up to offer products of their own.They're doing so partly by teaming up with the pioneers in creating and handling digital currencies.Mastercard's stock rose 2.7% after the open Tuesday morning. Fiserv's stock gained 2%.Jefferies analyst Trevor Williams said he's not worried about risks to Visa or Mastercard's business from stablecoin, but investors have thought otherwise."The volume/nature of questions we've gotten from investors globally signals the overhang from perceived risks is unlikely to lift near-term," he said in a Monday research note.Just as investors worried about competition from buy-now-pay-later companies and other financial technology players and kept Visa and Mastercard stocks range-bound in 2021, the same market dynamic may be in play now, Williams said. But those fears are unfounded, he said."We are highly skeptical stablecoins will ever be a relevant payment method in the U.S.," said Jefferies analyst Williams.However, stablecoins could be a part of the traditional consumer-payments ecosystem in several ways, he said.For example, Visa and Mastercard could allow their acceptance networks to be used with crypto wallets; or consumers in countries withvolatile currencies could hold the USDC stable coin and use the currency to make online credit-card purchases linked to their wallet, he said.U.S. consumers could also make USDC or other stablecoin payments through a crypto wallet at the point-of-sale or online, he said.As a traditional backbone provider for financial transactions, Fiserv got the ball rolling on Monday when it said it would launch its own stablecoin called FIUSD. It's intended to be a white-label cryptocurrency product that banks and other financial institutions could use for their own branded stablecoins.The company is teaming up with Circle Internet Group Inc. (CRCL) - an issuer of stablecoins that has seen its stock skyrocket since its June 5 initial public offering - as well as privately held Paxos Trust Co. LLC, a marketplace for virtual currencies. It's also working with PayPal Holdings Inc. (PYPL) to "build future interoperability" between FIUSD and the PayPal USD, or PYUSD, stablecoin for consumers and businesses to move money both in the U.S. and internationally.Circle Internet's stock dropped 1.5% after rallying 76.6% over the past three sessions, while PayPal's stock tacked on 1.9%.Stablecoins have come into greater focus by investors after the U.S. Senate last week passed its version of the Genius Act, which sets up a regulatory structure for stablecoins.Stablecoins are backed by traditional currencies and offer quicker transaction settlements and less expensive overseas payments compared with the existing financial system.Mastercard said it will offer FIUSD across its global payments network of more than 150 million merchants.Chiro Aikat, a co-president at Mastercard, said the company will work to build "a robust ecosystem that bridges traditional financial services with digital assets."Fiserv Operating Chief Takis Georgakopoulos said the company's work with Fiserve "is promoting greater reach and utility of stablecoins by helping our financial institutions and merchants enable greater payments choice to their customers."All the details are not yet worked out, but Mastercard and Fiserv said they'll explore ways to solve "real-world challenges and opportunities" for stablecoins, such as:More efficient on/off-ramping of funds. This would allow an easy transition for consumers and businesses to toggle between traditional currencies and FIUSD.Helping merchants settle in FIUSD in a move that "not only expands choice but also enhances operational efficiencies and delivers a seamless payment experience."Giving FIUSD the use of Mastercard's Multi-Token Network (MTN) in order to "bring off-the-shelf support for programmable, on-chain commerce for banks," the companies said.The Mastercard One Credential program will allow consumers to "flexibly choose the payment type of their choice from debit, credit to stablecoin balances."Mastercard's stock has gained 3% in 2025 through Monday, while shares of rival Visa have advanced 8.8% and the S&P 500 index SPX has edged up 2.4%.-Steve GelsiThis content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.