The New Payment Tools in the Web3 Era: Challenges and Opportunities of Stablecoin Bank Cards

In the Web3 era, bank cards that use stablecoins for payments are emerging as a new virtual payment tool, attempting to connect traditional finance with the decentralized world, providing users with a more convenient and flexible payment experience. However, as laws and regulations have not fully adapted to the integration of this new technology with traditional systems, related enterprises often find themselves in a dilemma. Compliance issues hang over the industry like the Sword of Damocles, ready to fall at any moment due to policy adjustments or regulatory actions. Companies not only need to tackle the challenges of technological innovation but must also remain vigilant against potential legal risks; one misstep could lead to serious consequences.

This article will analyze the current status and challenges of the stablecoin bank card industry from an industrial perspective, and explore its development path in the payment field.

Industry Development Dilemmas

The stablecoin bank card industry is currently facing a dilemma of unclear compliance. This field involves rapidly evolving digital assets and is closely linked to traditional finance, creating a complex regulatory gray area.

In addition to compliance issues, the industry faces other challenges: high operating costs, intense market competition, and difficulties in profitability, all of which test the survival wisdom of issuers.

From an industrial perspective, compliance may not be the top priority for entrepreneurs at the moment.

Challenges Facing the Industry

1. Issuance Channel Dilemma

The most basic requirement for issuing stablecoin bank cards is to have a bank card, which requires specific qualifications from the issuing institution. This usually means that the enterprise must comply with a series of strict financial regulatory requirements and financial institution licenses. However, most related enterprises do not have the qualifications to directly issue bank cards. Therefore, these enterprises often choose to cooperate with banks or payment gateways that have obtained the necessary qualifications, using these institutions' APIs or infrastructure to provide services.

2. Channel Cost Dilemma

Due to the need to rely on others' channels for business completion, companies must pay various channel costs. In addition to the fees from the bank card issuer, the payment chain also includes various other channel costs such as API access services, currency exchange, international settlement channels, and payment endpoints. These accumulated costs significantly increase operational expenses.

3. Profit model dilemma

Rate Dilemma

In the profit model of stablecoin bank cards, renewal fees are an important part. When users use them, the issuer will charge related fees, including payment fees, cross-border fees, and exchange fees. The overall fee rate is usually around 1.5% or higher, depending on the scale and bargaining power of the issuer.

Although some cards may offer better rates in the short term, this is usually just to promote customer acquisition and cannot be maintained in the long run. The reason rates are difficult to lower is due to high operating costs, and long-term low fees may lead to the project being unable to sustain operations.

Fee Dilemma

Increasing the transaction fees seems to be a solution, but in reality, it is not feasible. Firstly, the industry is highly competitive, and user loyalty is low; a slight misstep can lead to a loss of market position. Secondly, if the fees are too high, users may opt for other withdrawal methods, such as through trading platforms or over-the-counter trading.

The dilemma of funding pool interest rate spreads

Although the issuers of stablecoin bank cards have a capital pool, most do not have channels for investment income spreads. Compared to trading platforms, they lack inherent advantages. For issuers without their own lending channels, relying on others' investment channels carries multiple risks, including safety and liquidity.

Funding Pool Depth Dilemma

Users typically do not deposit large amounts of funds into the card, but instead opt for a small amount used multiple times. This results in a smaller amount of idle funds available for long-term investment in the capital pool, with most funds only being used for low-yielding demand financial management.

4. Compliance Dilemma

Compliance and Self-Protection

Issuers need to conduct various audits, such as code audits, project audits, and fund audits, which are all unavoidable operational costs. At the same time, the fund pool requires third-party custody, which brings additional costs and risks.

Compliance and Regulation

Currently, the relevant regulatory policies and laws are still quite vague. The regulatory authority has limited enforcement power over the issuers, as they usually borrow credit card issuance qualifications, the entities are located in offshore areas, and the funds are held by third parties.

Anti-Money Laundering Compliance

Anti-money laundering is one of the biggest responsibilities faced by issuers. Although there are relatively mature anti-money laundering processes in the Web3 ecosystem, the associated costs are still not low.

Potential Compliance Risks

If issuers want to expand their business, such as increasing consumption scenarios and supporting fiat deposits and withdrawals, they will face more compliance challenges. The closer the business is to real-world scenarios, the higher the compliance requirements, which may lead companies into fierce competition with traditional Web2 businesses.

Industry Future Outlook

Currently, stablecoin card enterprises can adopt two strategies:

1. Continue to explore and move forward, seeking suitable operation models, profit models, and resource allocation methods. This is a high-risk investment strategy.

2. Focus on its own areas of strength, such as channel development, community promotion, compliance risk control, etc., to become a quality supplier in the industrial chain. This strategy has relatively low risk and stable income.

With the overall development of the Web3 industry, the stablecoin card industry will also benefit. In the future, when the U.S. stablecoin bill is passed, merchants will be able to directly accept stablecoins, and consumers will be able to seamlessly use Web3 wallets for payments, the first-mover advantage will be key for industry leaders.

Compliance work remains important, but it is necessary to balance business development needs with compliance investment costs. Risk control is the core of the entire industry, and managing the safety of funds is crucial.

Conclusion

The stablecoin bank card industry is currently in a critical stage of exploration and growth. The balance between innovation and compliance will determine its future development. Companies need to flexibly respond to market changes and optimize operational strategies while ensuring fund safety and strengthening risk control.

With the continuous maturation of Web3 technology and the widespread adoption of stablecoin payments, stablecoin bank cards are expected to become an important bridge connecting the digital economy with the real world, leading a new trend in the payment sector. Currently, the primary task for enterprises is to move forward steadily while waiting for the industry ecosystem to完善 and the regulatory environment to become clearer.