Won Stablecoins Could Cut South Korean Merchant Card Fees by Up to $3.76 Billion a Year

Won-denominated stablecoins could cut annual fee costs for South Korean merchants by more than $3.76 billion if they replace part of the credit-card payment market, according to an analysis.

A report released on September 9 by the National Assembly Budget Office, parliament’s fiscal policy agency, estimated annual savings from replacing credit-card payments with won stablecoins at $270 million to as much as $3.76 billion.

The agency calculated savings under multiple scenarios using projected domestic payment-card spending in 2025. It adjusted assumptions for credit-card and stablecoin fee rates, along with the share of payments shifted from cards.

Under the most conservative assumptions, with merchant card fees at 1.1% and stablecoin fees at 0.5%, merchants would save about $270 million a year if 5% of card payments moved to stablecoins. If the substitution rate rose to 30%, the savings would increase to about $1.61 billion.

In the baseline scenario, the report assumed card fees of 1.3% and stablecoin fees of 0.3%. Under that case, costs would fall by about $445 million at a 5% substitution rate, $897 million at 10%, $1.79 billion at 20%, and $2.68 billion at 30%.

In the optimistic scenario, which assumed card fees of 1.5% and stablecoin fees of 0.1%, annual savings would reach about $3.76 billion if won stablecoins replaced 30% of card payments.

The report cited blockchain-based payment infrastructure as a key reason costs could fall. Unlike conventional payment systems, which pass through multiple intermediaries such as banks and the Korea Financial Telecommunications and Clearings Institute, transactions processed on the same blockchain network could reduce intermediate steps and related costs.

It also said efficiency could improve when business-to-business payments and settlements are automated through smart contracts or when stablecoins are used for cross-border remittances.

The stablecoin market is also growing quickly. As of July, global stablecoin market capitalization stood at about $312.3 billion, with dollar-based assets accounting for 98.8% of the total. Tether's USDT and USD Coin, or USDC, together made up more than 84% of the market.

At the same time, the report said wider use of stablecoins as a payment tool could create new risks for the traditional financial sector. A decline in card payments could reduce merchant-fee income for card companies, while a shift of bank deposits into stablecoins could affect banks' financial intermediation function.

The report also raised the possibility of broader disruption in bond and foreign-exchange markets if issuers were forced to liquidate assets all at once during large-scale redemptions.

In response, the agency proposed requiring reserve assets at least equal to the amount of won stablecoins issued and limiting those reserves to safe assets such as cash and short-term government bonds. It also said direct interest payments on stablecoin holdings should be restricted, while rewards tied to payments and usage could be allowed within certain limits.

The report also proposed designating certain tokens as "systemically important stablecoins" if their user base and transaction volume grow large enough to have a significant impact on financial markets. Those tokens would face stricter capital and liquidity requirements than general stablecoins.

Lee Doo-young, an economic analyst at the National Assembly Budget Office, said gradual institutional changes are needed to preserve monetary sovereignty, given the impact that the spread of dollar stablecoins could have on South Korea's payment and settlement system. A financial-market stabilization framework should be built through reserve-asset regulations and a separate designation regime for systemically important stablecoins, he added.