From 24/7 Wall St. · Rich Duprey · · 2m
SoFi Solves Crypto Hurdle With Mastercard Stablecoin
SoFi becomes first U.S. bank to deploy stablecoin settlement across Mastercard network.
In brief
SoFi becomes first U.S. bank to deploy stablecoin settlement across Mastercard network. SoFi Technologies has migrated its $25 billion card program to settle in SoFiUSD on Mastercard's network, bypassing traditional retail crypto payment barriers. Originally reported by 24/7 Wall St..
SoFi Deploys Stablecoin Settlement
SoFi Technologies became the first nationally chartered U.S. bank to go live with stablecoin settlement across Mastercard's global payments network.
“SoFi Technologies ( NASDAQ:SOFI | SOFI Price Prediction ) said this morning it has become the first nationally chartered U.S. bank to go live with stablecoin settlement across the Mastercard ( NYSE:MA ) global payments network”
Card Program Migrated to Blockchain
SoFi moved its entire $25 billion card program to settle in SoFiUSD on a public blockchain that merchants never touch.
“The consumer experience does not change: a shopper swipes a standard SoFi card at any Mastercard merchant. Behind the scenes the authorization is tokenized into SoFiUSD, routed across the network, and the merchant receives settlement funds instantly in a SoFi Bank account with zero-cost withdrawal to cash around the clock”
Merchants Unaffected by Change
Merchants do not need to hold stablecoins, build new infrastructure, or change how they operate.
“per SoFi’s own release, merchants "do not need to hold stablecoins, build new infrastructure or change how they operate"”
Crypto Hurdle Removed
SoFi eliminated four historical barriers to retail crypto payments: staff training, POS terminal changes, accounting software updates, and crypto volatility absorption.
“Historically the "crypto hurdle" at retail failed on four costs: train staff, change POS terminals, alter accounting software, and absorb crypto volatility”
Regulatory Backing for SoFiUSD
SoFiUSD is issued by SoFi Bank, N.A., an OCC-regulated nationally chartered bank fully redeemable 1:1 for U.S. dollars.
“SoFiUSD is issued by SoFi Bank, N.A., an OCC-regulated nationally chartered bank, fully redeemable 1:1 for U.S. dollars, and supported by reserves consisting primarily of cash”
Scale of Deployment
SoFi’s $25 billion card program is the first large-scale deployment of stablecoin settlement across Mastercard’s network.
“The $25 billion card book is a real deployment at scale”
SoFi’s Financial Rationale
SoFi aims to generate fee-based revenue from SoFi Technology Solutions and net interest income from Fed funds earned on cash held at the Fed.
“Noto framed the payoff as running through two P&L lines: fee-based revenue from SoFi Technology Solutions, and "net interest income from leaving that cash at the Fed bank and earning Fed funds on it"”
Mastercard’s Stance
Mastercard CEO Michael Miebach views stablecoins as additive to the network and expects a world of multiplicity with many coins and chains.
“Mastercard CEO Michael Miebach has been consistent that stablecoins are "additive to our network" and that the company expects a "world of multiplicity, many coins, many chains" that requires a trusted interoperability layer”
Market Reaction
SoFi shares rose to $17.14, a 1% intraday gain, while Mastercard was little changed at $564.03.
“SoFi shares ticked up to $17.14, a 1% intraday gain against a stock that is still down 34.53% year to date. Mastercard was little changed at $564.03, off 0.64% on the session”
Crypto vs. Stablecoin Performance
Bitcoin, Ethereum, and Solana are up 14.37%, 15.83%, and 23.1% respectively in a week, but all remain down year-to-date.
“Over the identical seven-day window, Bitcoin is up 14.37%, Ethereum is up 15.83%, and Solana is up 23.1%, though all three remain deep in the red on a one-year basis (BTC -23.32%, ETH -33.96%, SOL -45.96%)”
Merchant Adoption Challenge
SoFi is in active discussions with large merchants but has not signed contracts for stablecoin-based settlement arrangements.
“SoFi says it is in "active discussions with large merchants across the US regarding stablecoin-based settlement arrangements" spanning multinational retailers and technology platforms”
Next Steps for Adoption
The first named non-SoFi merchant migrating to SoFiUSD with transaction volume will determine if the "crypto hurdle" is truly solved.
“The falsifiable trigger to watch: the first named non-SoFi merchant migrating card-acquiring settlement to SoFiUSD, with a disclosed transaction count or dollar volume”
Here's the gist
SoFi Technologies has migrated its $25 billion card program to settle in SoFiUSD on Mastercard's network, bypassing traditional retail crypto payment barriers.
