SoFi tie-up shows stablecoins can provide alternative blockchain settlement rail

What happened

That shift was in focus this week when SoFi began settling debit and credit card transactions with Mastercard using its SoFiUSD stablecoin (a digital token meant to hold a fixed value, usually one dollar). SoFi dives deeper into payments as it moves its entire card program to blockchain-based settlement using its SoFiUSD stablecoin, with more than $25 billion in expected annualized volume.

Stablecoins are increasingly being used to settle payments behind existing card networks, allowing money to move around the clock without changing how consumers pay. But rather than cutting Visa, Mastercard or banks out of the process, the technology is beginning to replace a narrower piece of the payments stack: the traditional banking rails used to settle obligations between participants.

The bank said it is migrating its entire card program, which it expects to process more than $25 billion in annualized volume, to the system. The shift does not remove intermediaries from the card settlement process, a SoFi spokesperson told Cointelegraph, but provides an alternative blockchain-based settlement rail.

For customers, the change largely happens behind the scenes. But those benefits do not necessarily translate into cheaper payments, he said.