It took nearly a thousand years to go from the first paper money of the Tang Dynasty in ancient China to a functional check system. Then came telegraphic transfers, which accelerated 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 embarrassing moment led to a groundbreaking initiative to ensure such incidents wouldn't happen again. A year later, he returned with the world's first credit card—the Diners Club Card—which eventually evolved into a credit card network processing billions of transactions daily.
Soon after, Mastercard and Visa emerged from the chaos of bank alliances and brand reshaping, primarily out of necessity for survival.
As BankAmericard (later renamed Visa) gradually captured the market in the 1960s, other regional banks feared missing out on credit card opportunities. To address this challenge, a group of banks formed Interbank in 1966, which was later renamed Master Charge and 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 'invisible.' Swiping or tapping is not just convenient; it underpins 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—becomes 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. Digital transaction volumes continue to grow each year.
Transaction volumes grew from $645 billion in 2018 to $1.65 trillion in 2024, a 2.5-fold increase. According to Capgemini's (2025 World Payments Report), it is expected that by 2028, transaction volumes will grow by 70% from 2024 levels, reaching $2.84 trillion.
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In 2023, approximately 57% of non-cash transactions worldwide were completed via debit or credit cards, which typically take 1 to 3 days to settle. Each transaction often has to go through multiple institutions before the merchant finally receives the funds. Nevertheless, this system still works well. You can use the same card to swipe for payment in Tokyo, Toronto, or Thiruvananthapuram.
Visa and Mastercard have never actually issued cards or held your funds. What they own is a channel built on trust between unacquainted financial institutions. When you swipe your card to make a payment, their network decides whether to allow the transaction, matches the correct accounts, clears the bills, and ensures funds are ultimately transferred.
To this end, merchants need to pay about 2-3% of the transaction value, with fees distributed among issuing banks, acquiring banks, processing entities, and card networks. In return, everyone gets a fundamentally reliable system. You don’t need to know who settled the payment, as long as it is completed.
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As a user, you may be completely indifferent to 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 back, and life went on. But for merchants, those few percentage points can add up to a significant amount, especially for small businesses with thin margins.
Have you ever felt frustrated about being charged a few dollars more for card payments 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.
After the introduction 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 entities, no delays, only code. On networks like Solana or Base, fees are just a few cents, and transactions are almost 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.
Visa and Mastercard face existential threats. If the world starts transacting on-chain, their roles could vanish. Therefore, they are adapting.
Mastercard's actions in the past year cannot be ignored.
It recently partnered with Chainlink to connect over 3.5 billion cardholders directly to on-chain assets, representing over 40% of the global population. The system harnesses Chainlink's secure interoperability infrastructure, combined with the power of payment processors like Uniswap and Shift4, to create a bridge for converting fiat to cryptocurrency.
Additionally, it 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 currencies anytime and anywhere, just like email.
Through its Multi-Token Network (MTN), Mastercard has also laid the foundation for stablecoin-linked cards, digital asset merchant settlements, and tokenized loyalty programs. Why give up loyalty rewards associated with cards just because you choose on-chain payment options?
What are the benefits for Mastercard? Actually, many. Enabling on-chain settlements can reduce internal processing costs by minimizing intermediaries.
Mastercard's $300 million investment in Corpay's cross-border payment sector in April 2025 indicates they are betting on high-volume, low-margin businesses where cost-effectiveness is crucial. Think about cross-border payments, which is one of the key differentiators that sets Mastercard apart from its competitor Visa. In 2024, Mastercard's cross-border transaction volume grew 18% year-on-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 partnering with Yellow Card in Africa to experiment with cross-border stablecoin payments—something that Africa desperately needs. They are launching a card that allows users to spend cryptocurrency and receive cash back in USDC or BTC. Additionally, Visa continues to develop its Visa Tokenized Asset Platform, aimed at enabling banks to issue digital fiat tools on-chain.
With stablecoin settlements, Visa no longer has to transact through multiple banks, nor bear as much forex slippage. The motivation for this is to reduce costs and increase profit margins.
The philosophies of both 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 swipes, but rather by smart contract calls.
Behind all this are some deeper personal factors.
I once waited three days for a refund due to a canceled booking. I have witnessed international freelancers distressed by delays and costs associated with telegraphic transfers. I have wondered why my cash back would only appear weeks after the transaction. For users like us, these inefficiencies, while inconvenient, have quietly become the norm. Web3 now offers an alternative.
For payment giants, the biggest hurdle will be costs. For merchants, traditional bank card transactions can cost 2% or more. With on-chain stablecoins, costs can drop below 0.1%. For users, this means faster cashback, instant settlements, and lower prices. For developers and fintech companies, this means the ability to build applications that can directly access global payment networks without the need for traditional banking fees.
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, those funds are likely gone forever. While on-chain fund flow is highly efficient, it still lacks the consumer protections we value. The recently passed Senate (GENIUS Act) likely addresses some of these consumer protection concerns.
Visa and Mastercard did not sit back and wait for the opportunity. 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 ordinary users. The strategy is to let others build protocols and then sell them the hardware that will enable these protocols to be used at scale.
They are also betting on transaction volumes. Not speculative trades, but real-world use cases: remittances, wages, e-commerce. If these flows shift on-chain, companies that help manage these flows will benefit, even if they are no longer the consumers of the past.
Visa and Mastercard want to be the driving force behind building such ecosystems from the ground up. Therefore, when the crypto wallet you choose needs a trusted KYC layer, or your bank needs cross-border compliance, a branded API will be ready.
What does this mean for users? Possibly a future where your wallet operates like a bank. You receive payments in stablecoins, spend through Visa or Mastercard interfaces, earn tokenized rewards, with everything settling instantly. You might not even notice which chain it went through.
For someone like me, who has experienced everything from banking apps to UPI to buying coffee with cryptocurrency, the appeal is obvious: I want payments to be simple and effective. I don't care if it's tokens or rupees. What I care about is that it's fast, cheap, and error-free in transactions. If these old giants can guarantee that, perhaps they deserve to exist.
Ultimately, this is a race to remain indispensable. If Web3 wallets become the new payment standard, beneficiaries might also be those building the underlying tracks.
They want to be behind the scenes again. Just this time, the pipes will be made of code.
This article is republished with permission from: (Deep Tide TechFlow)
Original title: (The Payments Party)
Original author: Prathik Desai, Token Dispatch
Translated by: Block unicorn
'Will VISA and Mastercard face a survival crisis? As stablecoins gain popularity for cross-border payments, how will the two giants not miss out?' This article was originally published in 'Crypto City.'
