The opportunity
Every payout business needs capital available to fund payouts. Today, that capital is often tied up well before the underlying settlement obligation is due.
For a typical payout, a merchant may fund its PSP or bank 24 to 36 hours before the payout is made. For network products such as Visa Direct and Mastercard Send, which enable payouts to cards, accounts and wallets, the network may then collect the funds from the PSP or bank another 24 hours later. This creates a funding gap that requires merchants and their payment providers to keep significant amounts of capital parked in advance.
Stablecoins create an opportunity to fundamentally rethink this model. With continuous settlement, businesses can move closer to funding against real time exposure rather than a multi-day settlement window. The result can be shorter prefunding windows, more efficient use of working capital, and a better funding experience.
The problem with prefunding today
The core issue is not the payout itself. It is the time between when underlying funds need to be made available and when the payout actually occurs.
For high volume payout businesses, this can mean substantial amounts of capital sitting idle simply to support settlement timing. And there is an important economic consideration: the institution holding the prefunded balance typically captures the entirety of the interest income generated on that capital today.
Stablecoin based settlement creates an opportunity to rebalance those economics. Merchants and PSPs can potentially capture a share of the value generated by the capital they provide, while banks can generate net new deposit income and cross-sell by offering stablecoin native products that provide merchants with a more efficient funding experience.
How stablecoins change the model
1. Reduce the prefunding window
With stablecoins merchants and prefund same day and eventually at the transaction level materially shortening the prefunding window. Instead of funding a PSP or bank 24 to 36 hours ahead and maintaining liquidity until the network collects, funds can move closer to when they are actually needed. That means less capital needs to be parked to support the same level of payout activity.
2. Redistribute the prefunding economics
The prefunding capital that does need to remain available can potentially be held in appropriately structured reward bearing stablecoin solution rather than sitting idle in a traditional settlement account. This creates an opportunity for the economics of that capital to be shared more effectively across the ecosystem.
A new model for payout funding
The result is more than faster payouts. It isa more capital efficient funding model. For merchants, that can mean lower prefunding requirements and better economics on working capital. For PSPs, it can create new opportunities to participate in the value generated by more efficient liquidity management. For banks, it can create an opportunity to win net new deposits through stablecoin native products.
The stablecoin opportunity in payouts is not simply to move money faster. It is to reduce how much capital needs to sit still and create better economics for the capital that remains in the system.
