Mastercard Says Stablecoin Remittances Still Face Fiat Conversion Bottlenecks, Need More Infrastructure

Stablecoins can improve payment speed and efficiency, but infrastructure linking fiat currencies and stablecoins still needs to be built for broader real-world adoption, Mastercard said.

Matthew Driver, Mastercard's executive vice president for services in Asia-Pacific, told CNBC on October 27 that stablecoins could be competitive in some cross-border remittance corridors and in thinly traded currency pairs.

"They cannot become a stablecoin sandwich," Driver said. If the process of converting fiat into stablecoins is slow, and converting them back into fiat also causes delays, faster transfer speeds in the middle do little to improve the overall payment process.

Infrastructure still needs to be built, he added, stressing the importance of connecting real-time payment networks on both sides of a transaction with stablecoin transaction systems.

Driver also said potential use cases differ by market. In countries such as Singapore, where retail payment infrastructure is already efficient, stablecoins may have greater potential in business-to-business payments than in consumer payments. He also cited smart contracts, which automatically execute transactions when preset conditions are met, as a potential use case in corporate payments.

Mastercard has recently expanded its stablecoin business as well. It completed its acquisition of stablecoin infrastructure firm BVNK in August, and this month launched its Global Money Platform, which allows banks and fintech companies to manage fiat and stablecoin payments through a single system.

Driver added that speed alone is not enough. He said it is also important to combine blockchain and identity data to achieve a level of reliability similar to traditional payment networks.