Here is the article from a16z about how stablecoins will change daily payments:
https://a16zcrypto.com/posts/article/how-stablecoins-will-eat-payments/
Their arguments look promising at first glance, especially about how low-margin business like grocery stores can immediately double their margin by simply getting rid of the 2-3% credit card transaction fees if they switch to stable coins.
Now, with only my consumer brain, does what they say actually make sense? Do merchants actually want to get rid of the 2-3% transaction fees?
They view these fees as a mere burden imposed to merchants by the financial system, however, I think the fees are actually the financial system helping the merchants. These fees enable consumers to potentially spend more than what they have, and also earn rewards (sometimes tied directly to particular stores, so a essentially a loyalty program) by spending. Hence I think paying these high transaction fees is essential in driving up sales.
Here is the dilemma of stablecoins in daily transactions. Sure we can eliminate the high transaction fees, and we can even setup a service for consumers to borrow stablecoins, but if transaction fees are removed, who is going to pay the rewards (and loyalty program) modern CC carry? I feel as a consumer this is a very hard sell. Merchants can force adoption of stablecoin payments if they are desperate to save the transaction fees, but isn't this just going back to the age when financial systems weren't developed enough to help merchants acquire and maintain customers ? Also, there are already ways to pay with low transaction fees like a debit card or third-party app.
The argument of a $2 coffee is convincing, on the ground that transaction fees can make up as much as 15% of the total transaction. However, there is almost no $2 coffee in the real world, and for those really low-value transactions normally the use of a credit card is just not allowed.
There is a very similar argument from the founder of coinbase 13 years ago (he is really way ahead): https://news.ycombinator.com/item?id=3754664
but again, are these just pipe dreams? Am I missing something?
you are absolutely correct about the centralized risks about modern systems, but this is not really something you can use to convince consumers to change their behaviors at scale, besides, cryptos have its own risks.
I am all for changes but they can't take vigors out of markets!
What would convince you as a consumer? If everyday products were 3% cheaper, would that impact you at all? 5% cheaper? At what point do you think people would care? What about cash only businesses? As a consumer would you prefer if you could use your phone instead of pulling out and handling cash?
If adoptions ever takes hold, I think it is unlikely to start with the replacement of payment cards. It is more likely to take hold is specific niches that currently suffer under the MasterCard/Visa duopoly as well as in emerging markets. In the adult industry, I'm sure products being 20% cheaper would sway consumers. Also not to mention the omission of purchases from your credit history which may be judged harshly by others. Low margin businesses could support online and international sales while offering competitive prices. Some markets aren't serviced well by the duopoly. Some consumers value pseudonimity/anonymity in their financial transactions. These can develop into niches where crypto has potential to take hold, and then from there it might expand and compete with the larger markets (and their vigor) if it grows into a competitive product based on fees and usability.
If it ever hits critical mass, vendors will surely either drop card support or strongly encourage cryptocurrency usage. Albeit that is a big "if" that likely comes down to solving a lot of scalability and usability issues right now. There is also a need for regulatory clarity. I think we are a long way away, but I wouldn't write it off simply because I personally find Visa/MasterCard to be convenient in my own life.