Written by: Prathik Desai
Compiled by: Block Unicorn
It took nearly a thousand years from the first paper money in ancient China's Tang Dynasty to a functional check system. Then came wire transfers, accelerating cross-border trade in the 19th century. But what truly changed the way we pay was 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 embarrassed him but led to a breakthrough that ensured similar incidents would not happen again. A year later, he returned with the world’s first credit card—the Diners Club Card—which ultimately evolved into the credit card network that processes billions of transactions daily.
Soon after, Mastercard and Visa emerged from the chaos of banking alliances and rebranding, primarily out of a need for survival.
As Bank of America’s BankAmericard (later renamed Visa) gradually captured the market in the 1960s, other regional banks worried about missing out on the credit card opportunity. To address this challenge, a group of banks formed Interbank in 1966, later renamed Master Charge, which eventually became Mastercard, allowing them to pool resources, share infrastructure, and build a scalable competitive network.
This competition to remain competitive has evolved into one of the most successful collaborations in banking history. Payments have become simpler, but more importantly, they have become 'intangible.' Swiping or tapping a card is not just convenient; it has laid the foundation for modern commerce.
People can now carry purchasing power with them. Merchants receive payments faster. Banks gain new revenue streams. And the middle layer—the credit card networks—become one of the most valuable businesses in the world.
In 2024, Mastercard and Visa generated $17 billion and $16 billion in revenue, respectively, solely from payment services. The volume of digital transactions continues to grow year after year.
Transaction volumes have grown from $645 billion in 2018 to $1.65 trillion in 2024, a 2.5 times increase. According to Capgemini's (2025 World Payments Report), transaction volumes are expected to grow by 70% from 2024 levels to reach $2.84 trillion by 2028.
In 2023, approximately 57% of global cashless transactions were completed using debit or credit cards, which typically require 1 to 3 days to settle. Each transaction often goes through multiple institutions before the merchant finally receives the funds. Despite this, the system continues to operate well. You can use the same card to make payments in Tokyo, Toronto, or Thiruvananthapuram. Payments have become intangible.
Visa and Mastercard have never actually issued cards or held your funds. What they have is a channel built on trust between unacquainted financial institutions. When you swipe to make a payment, their networks decide whether to allow the transaction, match the correct accounts, clear bills, and ensure that funds are ultimately transferred.
For this, merchants need to pay about 2-3% of the transaction value, with fees distributed among the issuing bank, acquiring bank, processing agency, and card network. In return, everyone gets a fundamentally reliable system. You don’t need to know who settled the payment, as long as it is done.
As a user, you might not hesitate about this process. Do you remember the last time you asked your favorite café how they received funds after you swiped your card? You paid, they smiled in response, and then life went on. But for merchants, those few percentage points add up, especially for small businesses with thin profit margins.
Have you ever felt frustrated by being charged a few extra dollars for paying with a card compared to cash or other digital payment methods? Now you know why.
Imagine if they could eliminate delays, receive payments instantly, and have very low fees. That’s the promise of blockchain. Visa and Mastercard are trying to emulate this model or be surpassed by it.
With the addition of stablecoins, the dynamics of payment settlements have further changed. In the past 12 months, the monthly transaction volume of stablecoins has surpassed that of Visa.
With stablecoins, transactions can settle directly from one wallet to another in seconds. No banks, no processing agencies, no delays—only code. On networks like Solana or Base, fees are just a few cents, and transactions are nearly instant.
This is not just theoretical. Freelancers in Argentina are already accepting USDC. Remittance platforms are integrating stablecoins to bypass traditional banking systems. Crypto-native wallets allow users to pay merchants directly without a card.
The threats facing Visa and Mastercard are a matter of life and death. If the world starts trading on-chain, their roles could disappear. Hence, they are adapting.
Mastercard's actions over the past year cannot be ignored.
Its recent partnership with Chainlink aims to connect over 3.5 billion cardholders directly to on-chain assets, which account for over 40% of the global population. The system leverages Chainlink's secure interoperability infrastructure, combined with payment processors like Uniswap and Shift4, to create a bridge for converting fiat to cryptocurrency.
Additionally, it has partnered with Fiserv and launched a stablecoin called FIUSD, which Mastercard plans to integrate into over 150 million merchant touchpoints. What is their goal? To enable merchants to seamlessly convert between stablecoins and fiat currency anytime and anywhere, just like email.
Through its Multi-Token Network (MTN), Mastercard has laid the groundwork for stablecoin-linked cards, digital asset merchant settlements, and tokenized loyalty programs. Why give up loyalty rewards just because you choose on-chain payment options?
What are the benefits for Mastercard? Quite a lot. Enabling on-chain settlements can reduce internal processing costs by minimizing intermediaries.
Mastercard's $300 million investment in Corpay's cross-border payment department in April 2025 indicates that they are betting on high-volume, low-margin business where cost-effectiveness is crucial. Think about cross-border payments; this is one of the key differentiators that sets Mastercard apart from its competitor Visa. In 2024, Mastercard's cross-border transaction volume grew by 18% year-over-year.
They are also creating new fee structures: while traditional per-transaction fees may gradually decrease, they can now charge for API access, compliance modules, or integration with MTN.
Meanwhile, Visa is collaborating with Africa's Yellow Card to experiment with cross-border stablecoin payments—something Africa desperately needs. It has partnered with Ledger to launch a card that allows users to spend cryptocurrencies and earn USDC or BTC cashback. Additionally, Visa continues to develop its Visa Tokenized Assets platform, aimed at enabling banks to issue digital fiat tools on-chain.
With stablecoin settlement, Visa no longer needs to transact through multiple banks, nor bear so much forex slippage. The motivation is to lower costs and increase profit margins.
The philosophies of the two companies are shifting. They are programming themselves as the infrastructure layer for programmable currency. They realize that the future may no longer be dominated by card swiping, but by smart contract invocation.
There are also some deeper personal factors behind all this.
I once waited three days for a refund after canceling a reservation. I’ve witnessed international freelancers distressed by wire transfer delays and costs. I’ve wondered why my cashback only arrived weeks after the transaction. For users like us, these inefficiencies, while inconvenient, have quietly become the norm. Web3 now offers an alternative.
For the payment giants, the biggest obstacle will be cost. For merchants, traditional card transactions can cost 2% or more. With on-chain stablecoins, fees can drop below 0.1%. For users, this means faster cashback, real-time settlements, and lower prices. For developers and fintech companies, it means the ability to build applications that connect directly to the global payment network without traditional banking procedures.
Web3 will still have its own trade-offs. Credit card networks offer fraud protection, refunds, and dispute resolution services. Stablecoins do not. If you send funds to the wrong wallet, that money is likely gone forever. While the efficiency of on-chain capital flow is high, it still lacks the consumer protection measures we value. The recently passed Senate (GENIUS Act) may have addressed some consumer protection concerns.
Visa and Mastercard are not waiting for the right moment. Instead, they see this gap as an opportunity. By overlaying traditional compliance, risk scoring, and security features on stablecoin transactions, they aim to make Web3 safe for the average user. The strategy is to let others build the protocols, then sell the hardware that will enable these protocols to be used at scale.
They are also betting on transaction volume. Not speculative trading, but real-world uses: remittances, payroll, e-commerce. If this traffic shifts on-chain, companies managing these transactions will benefit, even if they are no longer the past fee-takers.
Visa and Mastercard want to be the drivers of building such ecosystems from the ground up. So, when your chosen crypto wallet requires a trusted KYC layer or your bank needs cross-border compliance, a branded API will be ready.
What does this mean for users? Perhaps a future where your wallet operates like a bank. You receive payments in stablecoins, spend through Visa or Mastercard interfaces, earn tokenized loyalty rewards, and everything settles instantly. You might not even notice which chain it went through.
For someone like me, who has experienced the transition from banking apps to UPI to buying coffee with cryptocurrency, the appeal is obvious: I want payments to be simple and efficient. I don’t care whether it’s tokens or rupees. What matters to me is that it’s fast, cheap, and error-free in transactions. If these old giants can guarantee that, perhaps they are worth continuing to exist.
Ultimately, this is a race to remain indispensable. If Web3 wallets become the new payment norm, the beneficiaries may also be those building the rails underneath.
They want to disappear behind the scenes again. But this time, the pipeline will be made of code.
