Encryption payment PI: Visa and Mastercard enter Web3

Author: Prathik Desai, Source: Token Dispatch, Compiled by: Shaw Jinse Finance

From the earliest banknotes in China's Tang Dynasty to the effective check system of today, nearly a thousand years of development have occurred. Afterwards, the emergence of telegraphic transfers accelerated the development of cross-border trade in the 19th century. However, nothing has changed payment methods as thoroughly as a forgotten wallet.

In 1949, Frank McNamara forgot his wallet while dining with clients at Major's Cabin Grill in Manhattan, New York. This incident left him embarrassed but also prompted him to invent a new way to ensure that such situations would not happen again. A year later, he returned with the world's first credit card, the Diners Club Card. This card was originally just a piece of cardboard, but it later developed into a credit card network that processes billions of transactions every day.

Shortly thereafter, MasterCard and Visa emerged from the banking alliance and brand reshaping, their birth primarily driven by necessity.

In the 1960s, as BankAmericard (which later became Visa) gradually dominated the market, other regional banks were concerned about missing out on opportunities in the credit card business. To coordinate their response, several banks established Interbank in 1966 (which was later renamed Master Charge, and ultimately renamed Mastercard), allowing them to pool resources, share infrastructure, and build a scalable competitive network.

What started as a chaotic struggle for relevance ultimately became one of the most successful collaborations in banking history. Payments became simpler, and more importantly, they became invisible. Swiping or tapping not only brought convenience but also laid the foundation for modern commerce.

People can now put their purchasing power in their pockets. Merchants have a faster way to collect payments. Banks have a new source of income. And the credit card networks in the middle tier have become one of the most valuable businesses in the world.

In 2024 alone, Mastercard and Visa generated revenues of $17 billion and $16 billion respectively from payment services. Moreover, the volume of digital transactions continues to grow steadily year by year.

From 645 billion in 2018 to 1.65 trillion in 2024, the transaction volume has increased by 2.5 times. According to Accenture's "2025 Global Payments Report", it is predicted that by 2028, the transaction volume will grow by 70% from the 2024 level, reaching 2.84 trillion.

2023, approximately 57% of global non-cash transactions are completed using debit or credit cards, with settlement times typically taking 1 to 3 days. Each transaction usually goes through multiple institutions before it can finally be paid to the merchant. Even so, this method remains effective. You can travel around the world and use the same card in Tokyo, Toronto, or New York. Payments have become invisible.

Visa and MasterCard have actually never issued your card, nor have they ever held your funds. What they own is merely a payment channel based on trust between unacquainted financial institutions. When you click to pay, their network decides whether to allow the transaction, matches the correct accounts, clears the bill, and ensures that the funds ultimately arrive.

To obtain this service, merchants need to pay about 2% to 3% of the transaction amount to the relevant parties. This fee will be distributed among the issuing bank, acquiring bank, processing institution, and credit card network. In exchange, everyone can have a system that operates normally. You don't need to know who settled it, just make the payment.

As a consumer, you may not care about this process at all. But for businesses, those few percentage points of fees can add up to a significant amount, especially for small enterprises with thin profit margins.

Have you ever encountered a situation where a vendor or a street shop owner charges you a few extra bucks when you pay with a credit card compared to cash or other forms of electronic payment? Now you know the reason.

Imagine if they could avoid delays, receive payments instantly, and have extremely low fees. That would be a remarkable scene. This is the vision of blockchain. And this is the model that Visa and MasterCard are trying to emulate, or else they will be surpassed.

With the addition of stablecoins, the dynamics of payment settlement will change further. In the past 12 months, the monthly trading volume of stablecoins has already surpassed that of Visa.

Using stablecoins, transactions can be completed in seconds, transferring directly from one wallet to another. No banks, no processors, no delays. Just code. On networks like Solana or Base, fees are only a fraction of a cent. And final confirmation can be almost instant.

This is not just theoretical. Freelancers in Argentina have already adopted USDC. Remittance platforms are integrating stablecoins to bypass the correspondent banking system. Crypto-native wallets allow users to pay merchants directly without the need for a bank card.

Visa and Mastercard are facing a life-and-death threat. If global transactions begin to occur on the blockchain, their roles may disappear. Therefore, they are making adjustments.

MasterCard's actions over the past year are hard to ignore.

The company recently partnered with Chainlink to directly connect over 3.5 billion cardholders to on-chain assets, which accounts for over 40% of the global population. The system utilizes Chainlink's secure interoperability infrastructure, combined with the capabilities of Uniswap and payment processors like Shift4, to create a bridge between fiat and cryptocurrency.

In addition, Mastercard has partnered with Fiserv to launch a stablecoin called FIUSD. Mastercard's goal is to integrate it into over 150 million merchant touchpoints. What is their aim? To make the conversion between stablecoins and fiat currency as ubiquitous and seamless as email, providing convenience for their merchants.

MasterCard is also laying the groundwork for card-related stablecoin transactions, merchant settlements with digital assets, and tokenized loyalty programs through its multi-token network (MTN). Why give up loyalty rewards tied to cards just for choosing on-chain payment options?

What can Mastercard gain from this? In fact, there are many benefits. Enabling on-chain settlement can reduce intermediaries, thereby lowering internal processing costs.

Mastercard invested $300 million in Corpay's cross-border payment division in April 2025, indicating that they are betting on a high-volume, low-margin payment business where cost efficiency is crucial. Cross-border payments are one of the main distinctions between Mastercard and its competitor Visa. In 2024, Mastercard's cross-border transaction volume increased by 18% year-on-year.

They are also creating a new charging structure: while traditional card swipe fees may gradually decrease, they can now charge for API access, compliance modules, or integration with MTN.

At the same time, Visa has partnered with Yellow Card in Africa to attempt cross-border stablecoin payments, which are urgently needed on the African continent. Visa, in collaboration with Ledger, has launched a card that allows users to spend cryptocurrency and earn cashback in USDC or BTC. In addition, Visa continues to develop its Visa Tokenized Assets platform, aimed at enabling banks to issue digital fiat currency instruments on-chain.

With stablecoin settlement, Visa does not need to transact through multiple banks, nor bear so much foreign exchange slippage loss. The benefit of this approach is cost reduction and increased profit margins.

The philosophies of both companies are changing. They are programming themselves to become the infrastructure layer for programmable currency. They realize that the future may no longer be dominated by card swiping, but rather by smart contract calls.

Behind all of this, there are some very personal things.

I once waited three days to get a refund after canceling a booking. I have seen international freelancers struggle with wire transfer delays and fees. I also wonder why my cashback takes weeks to arrive. For users like us, these inefficiencies, while inconvenient, have quietly become the norm. Web3 now offers an alternative.

For payment giants, the biggest obstacle is the cost issue. For merchants, traditional card transactions can incur fees of 2% or more. With on-chain stablecoins, this fee can be reduced to below 0.1%. For users, this means faster cashback, real-time settlements, and lower prices. For developers and fintech companies, this means the ability to develop applications that connect directly to the global payment network without the need for traditional bank approvals.

Web3 will still face many pros and cons. Credit card networks offer features like fraud protection, refunds, and dispute resolution, whereas stablecoins do not. If you send funds to the wrong wallet, those funds are likely unrecoverable forever. Although the efficiency of on-chain fund flow is high, it still lacks the consumer protection measures that we value. The recently passed "GENIUS Act" by the U.S. Senate has likely addressed some concerns regarding consumer protection.

Visa and Mastercard will not sit idly by. Instead, they see this gap as an opportunity. By integrating traditional compliance, risk scoring, and security features into stablecoin transactions, their goal is to make Web3 safer for the average user. Their strategy is to let others build the protocols and then sell them the infrastructure that enables these protocols to be used at scale.

They are also betting on trading volume. Not speculative trading, but real-world applications: remittances, payroll, e-commerce. If these funds flow onto the blockchain, the companies responsible for managing these funds will benefit, even if they are no longer the past "toll collectors."

Visa and Mastercard are seeking to become the driving forces behind building such ecosystems from the ground up. Therefore, when the crypto wallet you choose requires a trusted KYC layer, or your bank needs cross-border compliance, a branded API is available for use.

What does this mean for users? In the future, your wallet may operate like a bank. You can pay with stablecoins, use it through Visa or Mastercard interfaces, earn tokenized reward points, and settle all payments instantly. You might not even know which chain it has gone through.

For someone like me who has used various payment methods ranging from banking apps to Unified Payments Interface (UPI) and even paying for coffee with cryptocurrency, the appeal is obvious: I want a truly effective payment method. I don't care whether it's a token or rupees. I only care that it's fast, cheap, and doesn't crash during the transaction process. If those established giants can guarantee this, maybe they do deserve to continue to exist.

Ultimately, this is a competition to maintain a core position. If Web3 wallets become the new payment standard, then the beneficiaries may also be those who build the underlying infrastructure for it. Meanwhile, credit card giants are betting that even if the currency changes, the infrastructure may still belong to them.

They want to hide behind the scenes again. Only this time, the passage will be made of code.