Stablecoins — blockchain tokens pegged to fiat currencies such as the US dollar — are increasingly being used to settle payments behind the scenes of existing card networks, allowing money to move around the clock without changing how consumers pay. Rather than cutting Visa, Mastercard or banks out of the process, the technology is replacing a narrower slice of the payments stack: the traditional banking rails used to settle obligations between participants. Settlement is the step in which the banks behind cardholders' and merchants' transactions actually pay each other for accumulated activity, a process that has historically followed banking hours rather than running continuously.

That shift came into focus this week when SoFi, the US-based digital bank, began settling debit and credit card transactions with Mastercard using its SoFiUSD stablecoin. The bank said it is migrating its entire card program, which it expects to process more than $25 billion in annualized volume, to the new system.

According to a SoFi spokesperson who spoke to Cointelegraph, the move does not remove intermediaries from the card settlement process. Instead, it provides an alternative blockchain-based settlement rail. For customers, the change largely happens behind the scenes: SoFi cardholders will continue using their debit and credit cards as normal, while moving settlement onchain allows the bank to settle transactions faster, the spokesperson said.

Visa is pursuing a similar path. In April, the company said its stablecoin settlement pilot had reached a $7 billion annualized run rate as it expanded support to nine blockchains, describing blockchain settlement as a "viable complement to traditional settlement rails." The parallel moves put the two largest card networks at the center of the shift toward blockchain settlement.

Stablecoins don't eliminate payment intermediaries

Federal Reserve researchers wrote in a March note examining stablecoins and cross-border payments that stablecoins could change the economics of payments without necessarily eliminating banks.

Cointelegraph spoke with payments and investment experts to better understand what moving card settlement onchain actually changes, and what remains largely the same.

"I wouldn't call it disintermediation at this stage," Martins Benkitis, co-founder and CEO of emerging-markets liquidity provider Gravity Team, told Celegraph. "Visa and Mastercard are still there. The banks are still there. The network is still calculating the obligations, managing the transaction and deciding how participants interact with it."

As a result, stablecoins could become a larger part of payments without businesses or consumers necessarily interacting with them directly.

"If stablecoins become a major part of payments, most businesses probably won't care that there is a stablecoin somewhere in the process," Benkitis said. "They'll care that settlement is available when they need it and that the money arrives."

The economics of faster settlement

Varun Datta, venture capitalist and founder of Truth Ventures, agreed that continuous settlement could reduce delays and the amount of capital firms need to keep in different locations for payments, particularly across borders. But those benefits do not necessarily translate into cheaper payments, he said, as conversion, compliance, integration and stablecoin-management costs still need to be considered.

"I don't think speed on a blockchain automatically means a cheaper end-to-end payment," Datta said. He added that he would want to see evidence of lower total costs and better liquidity management at scale before calling the economic case proven — evidence that a completed migration of SoFi's more-than-$25 billion program would be positioned to provide.

Stablecoins still need local liquidity

The economics can become more complicated when stablecoins ultimately need to be converted into local currencies. Benkitis said that while dollar-denominated stablecoins can move between balance sheets within minutes, completing payments in emerging markets can be more complicated: local currency liquidity can be thinner, fewer banks may handle the flows, and access to the domestic banking system is still required.

"The stablecoin gets the value there quickly," Benkitis said. "You still need the local liquidity to finish the payment."