Walmart and Amazon Explore Stablecoins. Visa Stock Falls Sharply but Analysts Not Too Concerned. — Barrons.com

By Nate WolfShares of Visa and Mastercard were sliding Friday after The Wall Street Journal reported that Walmart and Amazon.com, among other merchants, have been considering issuing their own stablecoins to customers, a move that could siphon revenue from traditional payments providers.Merchants' decisions on whether to unveil stablecoins — cryptocurrencies pegged to stable currencies like the U.S. dollar — rest on the passage of the Genius Act, a bill moving through Congress that would regulate the coins and require issuers to maintain reserves of dollars or other liquid assets, the Journal said.Barron's has reached out to Amazon about the report. Walmart declined to comment.Visa stock was down 5.2% to $352.19 on Friday, making it the worst performer in both the Dow Jones Industrial Average. Mastercard shares fell 4.7% to $561.87. Barron's has contacted both companies for comment.The selloff is understandable: Widespread stablecoin adoption would, in theory, spell trouble for card companies like Visa and Mastercard, which earn fees from traditional card-based purchases. But retailers face an uphill battle in getting consumers to adopt cryptocurrency at checkout, and card giants are unlikely to take a near-term hit, said industry experts on Wall Street."The key question is will consumers actually adopt [a stablecoin] and will they be willing to use it for payments," Mizuho Securities analyst Dan Dolev told Barron's.Walmart pays 2% in interchange fees for card-based payments, adding up to billions in annual costs, Mizuho estimated. But that setup also means each swipe is free for customers, so convincing them to switch to stablecoins will require some sort of incentive. If those incentives grow costly enough, they may exceed any interchange savings for the retailer, Dolev said.Merchants have attempted to introduce their own payment systems like mobile wallets in the past, but these initiatives have struggled to make inroads, analysts at Keefe, Bruyette & Woods wrote in a research note Friday. CurrentC, a payments app unveiled by a retail consortium called the Merchant Customer Exchange, was supposed to threaten Visa and Mastercard's payment dominance last decade, for instance, but the project flamed out in 2016.All analysts who Barron's spoke to were confident the news will have little impact on Visa and Mastercard, or indeed on consumer behavior, in the near term. In the longer run, the rise of stablecoins as a form of payment is at least worth monitoring, especially since stablecoin transactions likely will prove cheaper and quicker for merchants to process than cards, the Keefe analysts wrote.For now, Wall Street remains in wait-and-see mode."Certainly watching but not overly concerned at this point," Raymond James told Barron's. "That said, feels like we are only in the 3(rd) inning of the headlines."Write to Nate Wolf at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.