It took almost a thousand years to get from the first paper money in China during the Tang dynasty to a functional cheque system. Then came wire transfers, which accelerated cross-border commerce in the 19th century. But nothing changed payments quite like a forgotten wallet.

In 1949, Frank McNamara forgot to carry his wallet while dining with clients at Major’s Cabin Grill in Manhattan, New York. The incident brought him embarrassment, but also led to the creation of something that would ensure this never happened again. A year later, he returned with the world’s first charge card — the Diners Club Card — a piece of cardboard that would become the credit card network that processes billions of transactions every day.

Soon after, Mastercard and Visa emerged from a blur of bank alliances and rebrands, mainly born out of necessity.

As Bank of America’s BankAmericard (which later became Visa) began gaining ground in the 1960s, other regional banks feared missing out on the credit card opportunity. To mount a coordinated response, a coalition of banks formed Interbank in 1966, later known as Master Charge and eventually Mastercard, allowing them to pool resources, share infrastructure, and build a scalable rival network.

What began as a scramble for relevance turned into one of the most successful collaborations in banking history. Paying became simpler, but more importantly, it became invisible. That swipe or tap was more than mere convenience. It set the foundation of modern commerce.

People could now carry spending power in their pockets. Merchants got faster payments. Banks gained new revenue. And the middle layer – the card network – became one of the most valuable businesses in the world.

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Both Mastercard and Visa generated $17 billion and $16 billion in revenue from just payment services in 2024 alone. And digital transactions are consistently increasing with each passing year.

The volume has gone up 2.5x to 1.65 trillion in 2024 from 645 billion in 2018. As per Capgemini’s World Payments Report 2025, it is predicted to grow 70% from the volume in 2024 to 2.84 trillion by 2028.

About 57% of all global non-cash transactions in 2023 took place via debit or credit cards, which take 1-3 days to settle. Each of these transactions would often wind its way through multiple institutions before the merchant actually got paid. Still, it worked. You could travel across the world and tap the same card in Tokyo, Toronto, or Thiruvananthapuram. Payment had become invisible.

Visa and Mastercard never actually issued your card or held your money. What they owned was the pipeline built on trust between financial institutions that didn’t know each other. When you tapped to pay, their networks decided whether to allow the transaction, matched the right account, cleared the bill, and ensured the money eventually moved.

For that service, merchants would hand over around 2 to 3% of the transaction value, split between the issuing bank, the receiving bank, the processor, and the card network itself. In exchange, everyone got a system that mostly just worked. You didn’t need to know who settled the payment, as long as it got settled.

As a user, you probably didn’t think twice about this process. When was the last time you asked how your favourite café gets its money after you tap your card? You paid, they smiled, life moved on. But for the merchant, those few percentage points add up, especially for small businesses operating on razor-thin margins.

Have you, to your frustration, come across a vendor or a neighbourhood store owner charging you a couple of bucks extra for a card payment vis-à-vis a cash or other form of digital payment? Now you know why.

Imagine if they could skip the delay, get paid instantly, with minimal fees. That’s what blockchains are promising. And that’s the model Visa and Mastercard are trying to either co-opt or be outpaced by.

Add stablecoins to the equation and it changes the dynamics of payment settlements even further. Over the past 12 months, stablecoins monthly volume has exceeded that of Visa.

With stablecoins, transaction can settle in seconds, directly from one wallet to another. No bank, no processor, no delays. Just code. On networks like Solana or Base, fees are a fraction of a cent. And finality is near-instant.

Read: Beyond Stablecoins

It’s not just theoretical. Freelancers in Argentina already accept USDC. Remittance platforms are integrating stablecoins to bypass correspondent banking systems. Crypto-native wallets let users pay merchants directly with no card needed.

The threat to Visa and Mastercard is existential. If the world starts transacting on-chain, their role could vanish. So they’re adapting.

Mastercard’s moves over the past year have been hard to ignore.

Its recent partnership with Chainlink aims to connect over 3.5 billion cardholders directly to on-chain assets. That’s more than 40% of the world’s population. The system uses Chainlink’s secure interoperability infrastructure, combined with the firepower of Uniswap and payments processors like Shift4, to create a fiat-to-crypto conversion bridge.

Add to that the partnership with Fiserv and the rollout of a stablecoin called FIUSD, which Mastercard aims to integrate across more than 150 million merchant touchpoints. Their goal? To make conversions between stablecoin and fiat as ubiquitous and seamless as email for their merchants.

Through its Multi-Token Network (MTN), Mastercard is also laying the foundation for stablecoin-linked cards, merchant settlement in digital assets, and tokenised loyalty programmes. Why trade off your card-linked loyalty rewards just because you decided to opt for on-chain payment options?

What’s in it for Mastercard? A lot, actually. Enabling on-chain settlements can bring down their internal processing costs by cutting intermediaries.

Mastercard’s $300 million investment in Corpay’s cross-border payments unit in April 2025 suggests they’re betting on high-volume, low-margin flows where cost efficiency is critical. Think of cross-border payments, one of Mastercard’s key differentiators from their competitor, Visa. Mastercard’s cross-border transaction volume went up 18% year-on-year in 2024.

They’re also creating new fee structures: while the traditional charges per swipe may fade, they can now charge for API access, compliance modules, or integration into MTN.

Visa, meanwhile, has joined hands with Yellow Card in Africa to experiment with cross-border stablecoin payments — something the continent sorely needs. It partnered with Ledger to roll out cards that let users spend crypto with cashback in USDC or BTC. And it continues to develop its Visa Tokenised Asset Platform, aimed at enabling banks to issue digital fiat instruments on chain.

With stablecoin settlements, Visa doesn’t need to route transactions through multiple banks or absorb as much FX slippage. The incentive is a reduction in cost and higher profit margins.

Across both companies, the philosophy is shifting. They are programming themselves to become infrastructure layers for programmable money. They’ve realised that the future might not be dominated by a card swipe, but instead, by a smart contract call.

There’s also something deeply personal underlying all this.

I’ve had to wait three days for a refund from a cancelled booking. I’ve seen international freelancers struggle with wire transfer delays and costs. I’ve wondered why my cashback arrives weeks after a transaction. For users like us, these inefficiencies, though inconvenient, have been quietly normalised. Web3 is now offering an alternative.

The biggest deal breaker for the payment giants will be cost. For merchants, a traditional card transaction might cost 2% or more. With stablecoins on-chain, the fee can drop to under 0.1%. For users, it means faster cashback, real-time settlements, and potentially lower prices. For developers and fintechs, it means building apps that plug directly into global payment networks without going through legacy banking.

Web3 will still have its trade-offs. Card networks offer fraud protection, chargebacks, and dispute resolution. Stablecoins don’t. If you send funds to the wrong wallet, they’re likely gone for good. For all its efficiency, on-chain money movement still lacks the consumer safeguards we’ve come to appreciate. The GENIUS Act, recently passed in the Senate, is likely to have addressed some of these consumer protection concerns.

Visa and Mastercard are not waiting. Instead, they see the gap as an opportunity. By layering traditional compliance, risk scoring, and security features onto stablecoin transactions, they aim to make Web3 safe for the average user. The playbook is to let others build the protocols, then sell them the rails that make those protocols usable at scale.

They’re also betting on volume. Not speculative trading, but real-world usage: remittances, payroll, e-commerce. If these flows move on-chain, the companies that help manage them stand to benefit, even if they’re no longer the toll collectors of old.

Visa and Mastercard are looking to become enablers for setting up such ecosystems from scratch. So, when your crypto wallet of choice needs a trusted KYC layer, or your bank needs cross-border compliance, there’s a branded API ready.

What does this mean for users? Potentially, a future where your wallet behaves like a bank. You get paid in stablecoins, spend them via a Visa or Mastercard interface, earn rewards in tokenised points, and settle everything instantly. You might not even notice which chain it travelled through.

And for someone like me, who’s juggled everything from banking apps to UPI to paying for coffee with crypto, the appeal is clear: I want payments that just work. I don’t care if it’s a token or a rupee. I care that it’s fast, cheap, and doesn’t break in the middle of a transaction. If the old giants can guarantee that, maybe they deserve to stick around.

In the end, it’s a race to remain essential. If Web3 wallets become the new payment norm, the beneficiaries could also be those who build the rails beneath them. And the card giants are betting that even if the currency changes, the infrastructure might still belong to them.

They want to disappear into the background again. Only this time, the pipes will be made of code.

That’s it for this week’s deep-dive.

See ya next week.

Until then … stay curious,
Prathik

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