E-commerce giants are embracing stablecoins as encryption payments enter mainstream retail experiences.

Retail and e-commerce giants are either starting to use stablecoins or are considering the issuance of stablecoins.

Walmart and Amazon are considering the issuance of their own stablecoin, as well as online travel company Expedia and airlines.

The e-commerce giant Shopify has already started. It will introduce stablecoin payments for its merchants through the Ethereum Layer 2 network Base, under the cryptocurrency exchange Coinbase.

This feature will be available to a small number of "early access" merchants starting June 12, and is expected to be fully rolled out to all merchants using Shopify Payments later this year.

Once fully launched, merchants in 34 countries will be able to accept payments in USDC stablecoin issued by Circle on the blockchain, while receiving funds settled in local currency without incurring foreign transaction fees. Shopify stated that it plans to offer 1% cashback for customers who pay with USDC. Merchants can also choose to accept USDC and deposit it into their external wallets.

E-commerce strugglescredit card, hoping for stablecoin

Retail and e-commerce technology companies have vast networks of customers and employees, massive amounts of data, and loose regulations, which banks have long seen as a serious threat. If they are bypassed, they could lose billions of dollars in cash and credit card transaction fee revenue.

A stablecoin is a digital token whose value is pegged to real-world assets, and can be used to store cash or purchase other cryptocurrencies. Stablecoins maintain a 1:1 exchange rate with the US dollar or other government currencies, and are backed by cash or cash-like assets (such as US Treasury bonds) as reserves.

Currently, retailers are watching whether the U.S. Congress will pass the Genius Act, and they have formed a Merchant Payment Coalition) to lobby Congress for swift passage. Once a regulatory framework for stablecoins is established, the market expects stablecoin assets to surge to trillions of dollars within a few years.

Retailers not only have to pay fees to traditional channels such as banks and credit cards, but the entire checkout and settlement process can take several days, causing merchants to receive their payments late, while stablecoins claim to settle in seconds. The turmoil of trade wars has increased the interest of merchants with numerous overseas suppliers in stablecoins.

Merchants told Congress that using stablecoins would reduce transaction costs and increase their competitiveness with payment channels such as credit cards. Merchants have been trying to get rid of the credit card channels controlled by Visa and Mastercard, but little progress has been made. In addition to issuing their own coins, another option for retail and e-commerce companies is to join forces to adopt a stablecoin. However, the big banks are also considering forming a stablecoin alliance.

Tips for Stablecoin E-commerce

Note that consumers pay with stablecoins, while merchants ultimately receive local currency, not USDC itself. The stablecoin serves as an "on-chain payment medium" or "transmission tool" in this payment process. Specifically, the process is roughly as follows:

• Customers choose to pay with USDC (on-chain payment) when shopping on Shopify.
• Shopify + Circle payment system accepts USDC (for example, on the Ethereum or Base network),
• The system automatically converts USDC into the merchant's local currency (such as USD, EUR, JPY, etc.) and remits it to the merchant, who does not have to bear foreign exchange fees or handle cryptocurrency.

What role does the stablecoin USDC play here, given that it sounds so indirect?

It sounds so convoluted, so what role does the stablecoin USDC play here?

So why does Shopify still offer 1% cash back? This is actually to incentivize more users to pay with USDC: attracting Web3 native users or consumers holding crypto assets; increasing the usage rate of Shopify's own payment channel (Shopify Payments); and reducing the high fees associated with traditional payment channels (such as Visa/PayPal).

It sounds a bit unclear but impressive. How do Circle and Shopify complete off-chain settlements in this process? Does it involve clearing banks or compliance licenses? In other words, how do we ensure that both merchants and consumers feel that this transaction is still valid? Let's take another look; this still requires the involvement of banks, and regulators are keeping an eye on it. This is a structure of on-chain payments and off-chain settlements. (Note that this is also the controversial part recently, which is that stablecoins ultimately need to go off-chain to convert back to fiat (off ramp)) relying on the fundamental functions of banks, and there will be costs incurred, so where is the convenience?)

User payment is the on-chain part:

Users select USDC (stablecoin) as the payment method on the Shopify website.

This transaction occurs on a supported blockchain network (such as Ethereum or Base).

USDC is a compliant dollar stablecoin issued and held in reserve by Circle, 1 USDC ≈ 1 dollar.

Circle is the key to connecting on-chain encrypted payments with off-chain fiat settlement systems:

Merchant payments are the off-chain part. Shopify consolidates each order payment through its payment system (Shopify Payments) and converts it into the local currency set by the merchant (such as USD, EUR, GBP, etc.). What merchants see is a normal payment settlement report, with no need to manage or hold any crypto assets. All exchanges and rate settlements are automatically completed by the back-end system of Shopify + Circle.

Clearing still involves traditional financial infrastructure, namely clearing banks and fiat payment networks:

Therefore, this system is "on-chain transmission, off-chain liquidation", which is a typical model of Web3 and Web2 financial integration.

The use of stablecoins has long surpassed simply circumventing fiat transfers between cryptocurrencies; its use cases are rapidly expanding. This year, the supply has increased by 54% year-on-year and is being increasingly used for payments and cross-border remittances by companies such as PayPal and Grab. Over the past two years, the total global stablecoin payment amount has exceeded $94 billion. During this period, the monthly payment volume grew from less than $2 billion to over $6.3 billion.

The open-source payment protocol jointly developed by Coinbase and Shopify is leading a rising trend: simplifying global e-commerce processes with crypto-native infrastructure, reducing costs, and improving efficiency. The smart contracts and payment protocols can be directly integrated into merchants' order fulfillment systems.

Ant Group's Ant International and Ant Technology, as well as JD.com, are applying for a Hong Kong stablecoin license. Crypto payments are entering mainstream retail experiences, and more and more e-commerce giants are eager to get involved.