The Great Fintech Migration: Why Every Payment Company Will Run on Stablecoins

Forward-thinking payment companies are rebuilding their infrastructure for the next decade of financial services

In February 2025, Stripe paid $1.1 billion for Bridge. Three weeks later, Visa announced stablecoin card partnerships across six Latin American countries. Last month, Mastercard launched end-to-end stablecoin processing with major crypto platforms. Last week, Stripe doubled down with the acquisition of Privy.

Stablecoin networks have quietly grown to process $27.6 trillion in annual volume - outpacing Visa and Mastercard combined.

Stablecoin infrastructure is faster and cheaper, and companies are using it to fundamentally rebuild payment infrastructure for the next decade of financial services. The great fintech migration isn't coming. It's here.

Forward-thinking companies are making the transition now

The numbers tell a story of unprecedented acceleration. In the past six months alone:

• Stripe completed their largest acquisition frenzy ever, securing stablecoin infrastructure
• RedotPay raised $40 million to expand crypto card programs globally
• MoonPay acquired Iron for $100+ million to compete with Stripe
• PayPal announced PayPal USD (PYUSD) expansion to Stellar network, targeting remittances and "PayFi" solutions for their 400+ million users
• Nubank partnered with Lightspark to integrate Bitcoin Lightning Network for their 100+ million customers across Latin America

This is a land grab for infrastructure that will power payments for the next decade. Stablecoin supply grew 59% in 2024 alone, with companies like Starlink using stablecoins to repatriate funds from international operations.

The scale and speed of these moves signal that stablecoin infrastructure has reached a tipping point.

The hidden crisis of legacy payment infrastructure

Every payment company will eventually migrate to stablecoin infrastructure. While some debate the merits of moving onchain, others are already processing billions in stablecoin volume and unlocking cost advantages today.

The companies making this transition first understand something crucial: this isn't about replacing existing systems overnight. It's about building the foundational infrastructure that can support the next decade of financial services.

Legacy payment rails carry deep, structural inefficiencies - what we call the "Money Prison." Capital gets trapped in transit between financial institutions, creating friction that erodes profitability and user experience. The pain points are systemic:

1. Capital trapped in motion

Consider a typical cross-border payment. When a business in New York sends $50,000 to a supplier in Singapore, that money begins a multi-day journey through correspondent banks, clearing houses, and regulatory checkpoints. Each step introduces delays, fees, and failure points. These delays are not just inconvenient—they're expensive. Slow settlement processes cost institutions $100 billion annually, while global corporations lose $120 billion annually in cross-border fees. Companies like Wise have optimized the costs for some major corridors by netting the transfers they have to execute, although this is also very capital-intensive.

2. Capital locked in collateral

Money doesn't move 24/7 instantly in traditional banking systems. This creates counterparty risk during settlement windows. Companies need to maintain collateral and pre-funded accounts to cover these gaps. This capital sits idle instead of being deployed productively.

3. The reconciliation nightmare

Finance teams spend 30% of their time manually matching financial records across unsynchronized systems including banks, card networks, payment processors, and accounting platforms. These discrepancies are the result of outdated infrastructure that was never designed to operate in real-time.

The stablecoin infrastructure advantage

Forward-thinking payment companies are discovering a different approach:

→ 24/7/365 settlement capabilities

Unlike traditional banking systems that operate on business hours and batch processing schedules, stablecoin networks never sleep. A payment initiated at 11 PM on Christmas Day settles with the same speed and reliability as one sent during peak business hours.

→ Programmable money flows

Smart contracts can automate complex payment logic that currently requires manual intervention. Unlike traditional systems that require separate agreements and integrations for each payment rule, smart contracts can execute multi-party splits, conditional releases, and escrow arrangements automatically without intermediaries.

→ Global reach without correspondent banking

Traditional cross-border payments require relationships with correspondent banks in each jurisdiction - relationships that come with compliance costs and operational complexity. Stablecoin infrastructure provides direct settlement without intermediaries.

→ Transparent, auditable transaction history

Every transaction on a blockchain creates an immutable audit trail - one single source of truth that eliminates reconciliation nightmares. Instead of matching records across multiple systems, everyone looks at the same blockchain ledger. This dramatically reduces dispute resolution time and costs while providing real-time visibility into payment flows.

→ Direct crypto spending through cards

The missing piece has been enabling real-world spending. While stablecoins excel at B2B transfers and cross-border payments, consumers need a familiar way to spend without cumbersome off-ramping processes.

Crypto cards solve this by connecting stablecoin wallets directly to existing payment networks. Kulipa provides this functionality to wallets and PayFi apps, bridging on-chain balances with traditional card networks like Visa and Mastercard.

Crypto cards eliminate the multi-step conversion process that previously kept crypto in a separate financial universe from daily commerce - no more transferring to exchanges, converting to fiat, then withdrawing to bank accounts. Visa has settled over $225 million in stablecoin transactions using Solana and Ethereum networks, proving this direct spending approach works at scale. Users can now spend stablecoins anywhere traditional cards are accepted through familiar interfaces.

The complete infrastructure transformation

Why are industry leaders like Stripe and MoonPay investing billions in stablecoin infrastructure? The answer lies in the fundamental limitations of current payment architecture.

Traditional payment systems require separate integrations and capital requirements for different payment products (access to US bonds, PE funds, high-risk debt etc). Stablecoin infrastructure helps reduce operational complexity while making it easy to launch these new payment products.

The current acquisition frenzy reflects this strategic shift. Companies aren't just buying technology - they're positioning themselves to operate with fundamentally different payment architecture while maintaining familiar user experiences. The goal is to combine on-chain settlement efficiency with interfaces users already trust, so customers get faster, cheaper, more transparent payments without needing to understand blockchain technology.

Whether this approach delivers the anticipated benefits remains to be seen, but the scale of investment suggests industry leaders believe the transition is inevitable.

The cost of waiting

We're at an inflection point for fintechs. Customers increasingly expect seamless financial experiences. Companies building on traditional banking rails face settlement delays and operational inefficiencies that become more costly as stablecoin infrastructure demonstrates superior performance.

The most successful fintechs are responding by rebuilding their core infrastructure around stablecoin settlement while partnering with specialized providers to offer complete solutions. This approach addresses both backend efficiency gains and frontend user expectations without requiring companies to build everything in-house.

The window to make this transition is narrowing. As regulatory frameworks solidify and major payment networks accelerate their crypto integrations, fintechs who act now can offer their users complete financial sovereignty, combining the operational efficiency of stablecoin infrastructure with the spending capabilities users demand.

The great fintech migration has begun. The question is whether your platform will become a complete on-chain product built around stablecoins or remain constrained by legacy systems and limited user capabilities.

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Joel Monegro’s Fat Protocols thesis has had a long-lasting impact on crypto. While it’s been heavily debated, the overall vision stands true 10 years later - but for how long?

The thesis is fairly simple: blockchain protocols generate exponential value for end users as more applications (DApps) are built on top of them. Think how yield optimizers built on top of Dexes help users get more out of the same basis product. Everything is open source and interconnected, creating a virtuous growth cycle. This stands in stark contrast to Web2, where value is concentrated in monolithic applications.

This take stands true to this day, despite being 10-years old.

But as Web3 grows and welcomes newbies, it can feel like it’s dropping more and more of its initial identity. To provide smoother experiences, it becomes more centralised, sacrificing self-custody for the convenience of intermediaries.

In short, back to the old ways.

The growth of centralized applications raises a critical question: is crypto devolving into Web2, back to thin protocols and fat applications?

What’s thin, what’s fat?

Self-custody is at the root of what makes crypto the ecosystem it is today. Without it, there is no Ledger, no DeFi delta-neutral strategies spread across 57 DApps, no obscure Solana memecoins: crypto just becomes another inflexible speculative commodity.

Self-custodial wallets allow thin applications and fat protocols to thrive, so let’s see how they benefit end users. As opposed to their centralized counterparts (CEXs), they do not take wild fees whenever users interact with on-chain applications to trade, swipe or gamble money away.

Actually, wallets are so hands-off they can even struggle to generate revenues. Most of them take fees whenever users make a swap or bridge natively in their UX. This model pushes them to integrate as many chains as possible to capture hot liquidity, and thus generate as much in-wallet movement as possible (we discussed it here).

Users are the main beneficiaries of this monetization struggle - for them, this is a free playground (minus the gas). However, the UX complexity that comes with with self-custody creates significant entry barriers for newcomers.

This is where custodial wallets and centralized products come in. They offer a familiar, Web2-like experience that lowers the barrier to entry, making crypto more accessible. This is made possible by the fact that CEXs run for the most part off-chain - including all the trading activities, order matching, and ledgers.

CEXs are fat applications, and as such, they take fat cuts, sometimes as high as 2% per transaction. But they onboard new users. Therefore, a legit question arises:

Is web2 just… Better?

By Web2, understand fat applications and thin protocols. The Binance or Coinbase of this world when it relates to crypto. Is a great UX better than a higher value sum for end users?

Let’s start with the good news: traded volumes on the DEX/CEX ratio are looking up. This means that more and more volumes are traded on-chain than off-chain. But DEXs are still loosing the custody war: as of October 24, 85% of the volume is still traded on CEXs. This shows that the majority of users prefer simplicity over profit. Put otherwise, custody over self-custody.

Onboarding new users remains a very hard problem to solve because of the steep learning curve required to navigate in Web3. The process of setting up a wallet, securing seed phrases, and navigating various blockchain interactions is far removed from the intuitive experiences users have come to expect from Web2 applications.

In addition to that, it’s easy to get lost in the plethora of wallets out there. The market isn’t consolidated, which means there are solutions in every directions for all users type. This is all pretty confusing. And the switching cost from one wallet to another is pretty low: winning products will always be the ones with the better UX.

Currently, the better UX belongs to custodial solutions. CEXs for wallets/ trading/ yield generation aren’t the only applications that have a lot of success: Wirex for cards, BitStack for DCA, or Stake for gambling - all with impeccable and fun experiences.

But all is not gloom and doom. Self-custodial, decentralised products are catching back up: Aave for credit, Uniswap for swapping and staking, Legends or Infinex for wallets, Kulipa for cards.

All of this points towards one thing: fat applications might currently have the better UX, but DApps are catching up, and they have the advantage of added value through ecosystem synergies. Web2 might be better for non-tech savvy users now, but we’ll likely see a reversal in the coming years. And after all, what’s even the point of using Web3 if it’s not to leverage the value that fat protocols provide?

If not self-custody, why crypto?

It’s in these words that Ian Rodgers, Ledger’s Chief Experience Office, opened WalletConnects’ 2024 market statement:

In each bull run, new crypto or blockchain-focused companies compromise on self-custody, security, or both. Each time they have a very rational explanation for why this compromise is necessary, usually related to usability and “onboarding the masses.” Each cycle results in users getting rekt and broad distrust in the ecosystem. Little is as predictable.

This is what happens when fat applications win: everyone else gets the bitter end. FTX, Celsius, BlockFi… There are too many bankrupt centralized products to count already. That’s why crypto was created in the first place - to cut intermediaries playing with their client funds.

So how do we make self-custody more accessible? Probably by embedding self custody in familiar applications. Let’s take an example, like creating the CAC 40 of cryptos. Users can understand it very easily, making it more comfortable for them - and they benefit from the juicy APIs. They don’t need to know that it’s market neutral, hedged on Uniswap, etc. All of this is secondary. The important thing is that they already know and trust the high-level product.

Another example is the rise of social logins, with solutions like Argent or WalletConnect’s web wallets. Users can create a non custodial wallet just with their Google account: Web3 embedded in products retail already knows. From there, they can explore the wonders of dapps and digital collectibles.

It’s easy to imagine other embedded experiences - like FaceIDs to help users log in their favorite websites where their digital collectibles are, or instant settlement at payments, with stablecoin transfers on the backend. That’s one of the things we’re working towards with Kulipa.

Conclusion

It’s fair to say this centralisation of crypto is temporary. The space isn’t mature enough yet to onboard billions of non-tech savvy users, and familiar experiences provided by fat applications offer a great alternative.

We’re achieving scale with the rise of layer 2s, anonymity with ZK/ FHE technology, security with solutions like Ledger, but we’ve yet to solve user experience. Web3 isn’t devolving into Web2, it’s only sharing the long tail of retail end users with custodial solutions, to give itself the time to create more delightful and fairer products for everyone around the globe.

About Kulipa

Kulipa helps non-custodial wallets issue crypto payment cards. With Kulipa cards, wallets can generate more fund movement, easily develop new use cases and maximize organic acquisition. Get in touch here!

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Bitcoin started in 2008 as a mean of payment, and with Stripe re-authorizing stablecoins, we’re circling back to it. As their total supply hovers around all-time-highs in August at $154bn+, stablecoins potential is undeniable.

Problem is, stablecoins in and out of themselves don’t solve any problem - for now, they are mostly regarded as the safest way to be exposed to crypto. But their true potential is far greater: instant settlement, easy access to the dollar, free-of-charge remittance - the use cases are legion. However, such potential can only be exploited when stablecoins get more accessible, or better embedded in the existing financial infrastructure.

We need a way to do just that, and wallets with a Web2 UX like Opera Minipay, Sling or Payy might be the solution. The self-custodial products are embedded in a great user experience, enabling both decentralised operations while removing friction for the user. Could embedded wallets be the gateway to mass stablecoin adoption?

We sat down with Mathilde David, Product Lead for Stablecoin Movement at Paxos, to explore the challenges and opportunities ahead.

1. What are the current issues slowing down stablecoins adoption?

Despite their growing popularity, stablecoins are still grappling with a couple of important challenges before they can achieve mainstream adoption.

Top of the list is the lack of regulatory clarity. Governments worldwide are struggling to classify and regulate this new asset class, creating a climate of uncertainty that deters businesses from entering the market and ultimately slows down innovation.

Second is accessibility. Having to on and off-ramp creates a significant barrier to entry for non-tech savvy users. Because of that, most of stablecoins current usage isn’t focused on making our payments more efficient, but rather on creating profits on-chain. According to Visa, more than 90% of stablecoin transaction volumes are made by bots, automating transactions such as arbitrage, MEV plays or liquidity providing on the blockchain.

Stablecoins need a UX lift, and Mathilde agrees:

"Much work is needed to simplify the Stablecoin payment experience. Today, as an example amongst many, users often have to choose which chain they want to make payments from: should they pick Ethereum, Solana, Polygon? That's typically the type of complexity that should be abstracted."

Such complexities not only deters new users but also limits the potential use cases of stablecoins. To make them more appealing to mainstream audiences, the user experience needs to be simplified and streamlined. This means abstracting away the technical complexities of blockchain technology and creating a more intuitive and user-friendly interface.

Until these challenges are addressed, stablecoins will likely remain confined to the crypto-native space, limiting their potential to revolutionize the broader financial landscape.

So let’s talk about just that: if it needs to be simple to pay with stables for people to start using them, what would the ideal payment experience in stablecoins look like? Embedded wallets might have the answer.

2. Embedded wallets, the gateway to mainstream stablecoin adoption?

Let’s think about the money sending process for a Venmo user. Enter a phone number and a PIN, and voilà, a payment has been made. No IBAN to register in the app, no beneficiaries to add to your bank, and god forbid, no QR code to scan.

Isn’t it the user experience stablecoins need to become mainstream? Stripped down to the bare minimum: pay with a phone number.

For Mathilde, it’s pretty clear - consumers habits are already there, they’re just waiting on the UX:

“There's definitely habits and a lot of trust from consumers to use digital wallets. It makes it natural to adopt crypto wallets with an intuitive experience, such as Metamask or Phantom. The next step is ensuring users can easily make payments with these wallets."

Reading this, one might think that delightful payment means like CEX cards (Binance, Coinbase etc) already exist, and such payment experiences are already available. Then, why hasn’t it been widely adopted yet?

Well, there are 2 reasons for that:

1. Most cards aren’t self-custodial (since they are issued by CEXs). As such, they often have hefty fees (as high as 1.5% on every payments) and are subject to all the issues CEXs have faced in the past (FTX, Genesis etc).
2. The few self-custodial cards that exist, like Ledger’s CL card, are pre-paid for the most part, adding significant friction in the user experience prior to paying, and limiting adoption.

At the end of the day, actually getting self-custodied stablecoins is very hard for the average user, and the options for paying with them are currently not optimal (although we’re working on it at Kulipa with pure debit cards).

So let’s say embedded wallets grow their user base, and that stablecoin-based means of payments are improved. Well, it’s just the beginning of the story. Wallets might be the best enabler for stablecoins payments, they won’t help with global acceptance just by themselves. They are merely the distribution tool, and we need the rest of the party to join. And who might that be?

3. Payment infrastructure providers are the next adopters

Wallets and their end users are only one part of the equation. Merchants and payment infrastructure providers are the two others.

For merchants, stablecoins are just a net positive, because it solves two of their biggest problems: long settlement times and intermediaries costs. Mathilde explains:

“I spent a lot of time with US merchants during my time at Square. From their perspective, any dollar counts. They are focused on minimizing the costs to operate payments, and stablecoins on low cost chains are a great solution for this”

Another interest merchants have in accepting stablecoins is the access to a global pool of consumers. It’s very expensive and a lot of work for merchants to be able to accept payments from any place in the world; a painful country by country integration is usually the way to go. On the other hand, 560 million people worldwide hold crypto. This is as many international consumers within reach without much work to do.

So it’s pretty clear that merchants are pretty incentivized to accept stablecoins. That’s 2 out of 3 parts of the equation validated. What about payment infrastructure providers? You know, those who build the apps, the payment rails, the protocols.

After some tough love in the last couple years, providers are coming back to stablecoins. In 2024, there has been a large number of good news for stablecoin’s acceptance.

Just to name a few:

• Revolut launched their own crypto payment cards two weeks ago,
• As mentioned, Stripe’s validation is pretty big for the industry,
• PayPal Xoom now offers free cross-border payments in 160 countries using PYUSD,
• Block has partnered with Yellow Card to facilitate affordable transactions in Africa,
• Grab, Southeast Asia's ride-hailing giant, has begun accepting stablecoin payments
• Mastercard announced exploring blockchain payments with 5 web3 startups, including Kulipa.

Things are moving. Startups are launching in the space, and incumbents are progressively integrating this new mean of payment. But for Mathilde, stablecoins shouldn’t limit themselves to getting adapted to traditional finance (TradFi). It’s only the beginning of true innovation:

“Stablecoins offer a chance to innovate beyond traditional finance.  There’s a real opportunity to create a better financial system for everyone. Paxos did this with the Lift Dollar, a dollar-backed stablecoin that automatically distributes daily yield when held in your wallet, turning it into a savings account.”

We’re getting there

Embedded wallets are the best gateway for stablecoins, as their user experience gets clearer and easier to handle. Payments rails are progressively integrating stablecoins after some much needed ecosystem consolidation - and merchants are all for it.

At the end of the day, stablecoins true potential might be just within reach, much closer to reality than what we expect. Will the rest of Web3 follow in their steps?

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About Kulipa

Kulipa helps non-custodial wallets issue crypto payment cards. With Kulipa cards, wallets can generate more fund movement, easily develop new use cases and maximize organic acquisition. Get in touch here!

The views expressed in this article are solely those of the author and do not necessarily reflect the official position or opinions of Paxos.”

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