Stablecoins are a crypto technology that solves persistent payment problems in global commerce: slow settlement, high fees, and limited access to stable currency. Stablecoins embody the idea of money that can move at the speed of the internet without losing its value, and they power corporate treasury transfers, ecommerce sites, and more. Using stablecoins for payments is not without challenges, but the blend of predictability and programmability is reshaping how value moves.

Below, we’ll explain what stablecoins are, how they work for payments, and their pros and cons.

What’s in this article?

• What are stablecoins, and how do they work for payments?
  
• What types of stablecoins are used for payments?
  
• What are the benefits of using stablecoins for payments?
  
• How do businesses accept stablecoins as payment?
  
• Who’s using stablecoins?
  
• What are the challenges of adopting stablecoins for payments?
  
• How are stablecoin payments secured and regulated?
  
• How Stripe Payments can help
  

What are stablecoins, and how do they work for payments?

A stablecoin is a kind of cryptocurrency designed to hold a steady value rather than fluctuate and be used in transactions. It’s pegged to an asset such as a fiat currency or gold. For each token in circulation, the issuer holds an equal value in cash or safe assets such as short-term treasuries. Without price swings, businesses and individuals can treat stablecoins like digital cash.

If you buy 100 stablecoins pegged to the US dollar (USD), the issuer adds $100 to its reserves. When you redeem those coins, the issuer returns the cash and removes the tokens from circulation. This 1:1 redemption keeps the price anchored at $1.

Stablecoins run on public blockchains such as Ethereum and Solana. Transactions are secured with cryptography, validated by the network, and recorded on a public ledger.

Stablecoins also enable cross-border payments with the speed of crypto and the reliability of fiat. Transfers settle in minutes at any time of day, anywhere.

What types of stablecoins are used for payments?

Stablecoins differ in how they keep their value locked to a target. The design matters because some approaches are better suited for payments than others.

• Fiat-backed: Every token is backed 1:1 by cash or cash equivalents such as short-term treasuries. Examples include USDC, USDT, and EURC. Their simple structure, direct redemption, and price stability make them the most common type for payments.

• Crypto-backed: These stablecoins are overcollateralized with other cryptocurrencies. For example, DAI is backed by crypto assets locked in smart contracts that mint stablecoins as overcollateralized debt. These stablecoins are fully on the chain and decentralized. But the value of collateral can fluctuate, which limits their appeal for mainstream retail payments.

• Commodity-backed: These stablecoins are tied to tangible assets such as gold and oil. Examples include PAX Gold and Tether Gold, which back each token with 1 ounce of gold. They’re less useful for paying everyday expenses because they still move with the price of the physical asset. Investors who hedge on commodities typically use them.

• Algorithmic: The price stability of these stablecoins is managed by programmed incentives and dynamic supply controls, not reserves. They’re historically vulnerable to collapse if market confidence falters: TerraUSD is the most famous example. Because of the increased risk, they aren’t used for payments as often as fiat-backed stablecoins.

Fiat-backed stablecoins (especially dollar- and euro-denominated ones) are the most prevalent type for payments. They blend the familiarity of national currencies with blockchain’s speed and global access.

What are the benefits of using stablecoins for payments?

Stablecoins are gaining traction in payments because they address persistent issues in traditional systems and other cryptocurrencies. Here are their advantages:

• Stable value: Stablecoin payments avoid the price swings that make Bitcoin or Ether risky for day-to-day transactions. This stability makes them usable for salaries, recurring payments, and retail pricing in a way most other cryptocurrencies aren’t.

• Fast settlement: Transactions confirm in seconds or minutes, regardless of bank hours, weekends, or holidays. Cross-border payments benefit most because they don’t involve correspondent banks, batch processing, or multiday delays anymore. A stablecoin transfer from New York to Nairobi can clear in minutes.

• Lower costs: Because there are fewer intermediaries, stablecoin transactions typically have lower fees than traditional cross-border transfers. Businesses can avoid the interchange fees that come with card payments, and lower transaction costs at scale can improve margins or create room for price flexibility.

• Global access: Anyone with an internet connection can hold and use stablecoins, with no bank account required. This makes them particularly useful in regions where local currencies are unstable or banking infrastructure is limited. That opens up new markets and customer segments for businesses without the cost and administrative challenge of local banking relationships.

• Lower fraud and chargeback exposure: Once they’re confirmed, stablecoin transactions are irreversible. This minimizes fraudulent chargebacks (a challenge with card payments) and gives businesses more certainty. Cryptographic wallet authentication makes it more difficult for fraudulent actors to initiate unauthorized transactions.

• Programmability and software integration: Because stablecoins run on blockchains, they can be embedded into software workflows. Payments can be conditional (e.g., released only when delivery is confirmed) or split automatically between multiple recipients. Micropayments become economically viable without the base fees that typically make them impractical in card systems.

Stablecoins change the tempo, cost structure, and reach of payments (particularly for global transactions) while keeping the value predictable. That’s why they’re being tested for applications that include cross-border payroll and ecommerce checkout flows.

How do businesses accept stablecoins as payment?

The best integration route depends on how much control businesses want and how much complexity they’re willing to handle. Here are the options for businesses that want to introduce stablecoins into their payment flows:

• Using a payments platform: Payment providers have built stablecoin support into their checkout and payout tools. A business doesn’t have to manage wallets, private keys, or crypto price risk. Funds land in the business’s bank account in its chosen currency, and reporting and reconciliation look just as they do for traditional payments in the dashboard.

• Accepting direct wallet-to-wallet payments: The business lists a wallet address and accepts stablecoins directly from customers or clients. The business gets full control over funds and the timing of conversions but also full responsibility for security and compliance. This method requires the business to manually exchange the stablecoin to fiat, if needed.

• Using crypto payment gateways: Services specifically built for crypto acceptance offer checkout widgets, QR codes, or point-of-sale (POS) integrations. These gateways can automate conversion to fiat or let you keep the funds in stablecoin, and they can integrate with existing sales channels without major infrastructure changes.

No matter the method, businesses must decide about :

• Conversion strategy: Will you keep stablecoins on hand or automatically convert them to fiat?

• Security: What security measures will you implement if you hold funds directly?

• Compliance: How will you ensure compliance with regulations in different regions?

The ease of integration is improving quickly, but businesses still need clear policies for conversion, security, and compliance before they go live.

Who’s using stablecoins?

Stablecoin adoption is increasing across multiple layers of the economy. Global corporations and gig workers alike use them every day. These are some of the users:

• Retail and ecommerce: Brands such as Gucci and Chipotle have experimented with accepting cryptocurrencies, including stablecoins, usually through crypto payment apps. Platforms have been doing so as well: for instance, Shopify accepts USDC at checkout, partnering with Stripe to handle settlement and fiat conversion in the background. Customers see a familiar checkout flow, and businesses get paid quickly.

• Cross-border payments and remittances: Migrant workers use stablecoins to send remittances home in minutes instead of days and avoid the high costs associated with traditional methods for international transfers. Businesses are settling invoices and moving funds internationally without delays or high bank fees. In countries with volatile currencies, stablecoins act as a practical substitute in many kinds of transactions.

• Corporate treasury and intercompany transfers: Businesses such as SpaceX accept payments internationally and then convert various currencies into stablecoins for their global treasuries. Multinationals are experimenting with stablecoins for intercompany settlements to reduce the friction of currency conversion. Stablecoins’ predictable value and quick settlement make them appealing for treasury efficiency.

What are the challenges of adopting stablecoins for payments?

Stablecoins solve some big payment problems but introduce risks and administrative hurdles. Businesses will have to address these issues to adopt stablecoins at scale:

• Regulatory uncertainty: Every jurisdiction has its own framework, and multinationals have to reconcile different regional requirements. Without clear, harmonized rules, it’s difficult for businesses to keep track of every regulation and ensure compliance across jurisdictions.

• Low confidence in reserves: A stablecoin is only as sound as the assets behind it. If reserves are mismanaged or hard to access, the peg can slip. Incidents such as the collapse of TerraUSD have heightened scrutiny. Issuers that publish regular, audited reserve reports can build confidence, but not all do.

• Security and custody risks: Losing private keys or falling victim to phishing can result in irreversible loss. Businesses must choose between self-custody, which gives them more control but also more responsibility, and using third-party custodians, which outsources the risk but can lead to dependency.

• Lack of legal protections: Stablecoins usually lack deposit insurance such as Federal Deposit Insurance Corporation (FDIC) coverage. Chargeback and error resolution mechanisms, which are common in card networks, don’t exist natively on the chain.

• Integration and skills gap: Even with third-party processors, finance and ops teams need to understand wallet management, blockchain fees, and reconciliation. Many businesses lack in-house expertise in crypto compliance, accounting, and security. Invoicing, reporting, and tax treatment might also need to adapt to handle on-chain payments.

• Customer perception: Many customers still don’t know how to send a stablecoin payment, or they don’t want to. Those who are open to it can be deterred if a business chooses the wrong stablecoin partner or mismanages funds.

Stablecoin adoption is a major decision that affects compliance, treasury operations, customer experience, and brand reputation. The technology is ready for serious use, but the surrounding systems, policies, and regulations are still catching up.

How are stablecoin payments secured and regulated?

Security for stablecoin payments comes from two layers: the technical safeguards built into blockchain networks and the legal and regulatory frameworks designed to protect users and maintain stability. Both are developing quickly, and the interaction between them will shape how safe and trusted stablecoins become as a mainstream payment method.

How payments stay safe on the network

• Blockchain-level protection: Stablecoins inherit the cryptographic security of the networks they operate in (e.g., Ethereum, Solana). Once a transaction is confirmed, it’s immutable and publicly verifiable.

• Controls for businesses: Multifactor authentication, multisignature wallets, and hardware key storage are now standard in corporate treasury setups. Institutional custodians use bank-grade security measures such as hardware security modules.

• Programmable safeguards: Payment protocols can mimic familiar card features such as “authorize now, capture later” or allow refunds through smart contracts.

• Fraud monitoring: Blockchain transparency enables real-time analytics on transactions. Issuers can freeze funds tied to sanctions screenings or fraud, and software can flag suspicious wallet activity during a transaction.

How different regions regulate stablecoin payments

• US: The GENIUS Act requires 1:1 reserves, with monthly reports on those reserves, and public disclosure of the redemption policy. Issuers must also meet the criteria for a permitted stablecoin issuer.

• Europe: The Markets in Crypto-Assets (MiCA) regulation requires issuers to obtain authorization, hold full reserves, undergo regular audits, and redeem at par. Noncompliant tokens might be restricted or delisted in the EU.

• Brazil: The Virtual Assets Law of 2022 requires providers to receive authorization and puts the Central Bank of Brazil in charge of oversight.

• Singapore: The Monetary Authority of Singapore regulates single-currency stablecoins with capital requirements and mandates that issuers redeem stablecoins at par.

• UK: There’s a movement to bring stablecoins under the payment regulatory framework.

Technical security for stablecoins is strong, but regulation is closing the gap between crypto-native systems and traditional payment protections. All stablecoin transactions must comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) laws, just like bank transfers.

How Stripe Payments can help

Stripe Payments provides a unified, global payment solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world. Businesses can accept stablecoin payments globally that settle as fiat in their Stripe balances.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment user interfaces (UIs) and access to 125+ payment methods, including stablecoins and crypto.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.

• Improve payment performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.