Payments Surge as Stablecoins Shake Up the Game

The latest updates in payments highlight new records in merchant processing fees, a decline in funding for payments companies, the growing role of stablecoins, and an exciting new Google Wallet feature for kids.

Welcome to Today in Payments, I’m your host, Patti Murphy, here with your daily dose of payments notes.

Acquirers & Partners Made $187 Billion in Merchant Processing Fees Last Year

First up, new data on card transactions and processing fees from the Nilson Report. The Nilson Report has been a go-to source for transaction data for decades.

Credit, debit, and prepaid cards issued in the U.S. were used to pay for $11.9 trillion in goods and services last year – a new record. Another new record: merchants paid $187.20 billion in processing fees, according to Nilson.

According to David Robertson, publisher of the Nilson Report, merchants paid $1.57 in fees for every $100 in card payments accepted. He noted that over the past 10 years, the weighted average of fees has fluctuated between 1.45% and 1.57%.

Purchase volume on credit cards alone reached $6.464 trillion last year. That number was 5.1% higher than in 2023. Merchants paid $148.52 billion in processing fees to accept those cards. That’s a 9.3% increase over 2023.

Debit card payments accounted for $5.439 trillion in payment volume last year. That’s 6.7% more than in 2023. Merchants paid $148.52 billion in fees to process those transactions – a 9.3% increase over 2023.

Prepaid cards account for $5.439 trillion in purchase volume, up 6.7%. Merchants paid $36.68 billion in fees, a 6.7% increase over 2023.

Payments Companies Face Funding Challenges

Despite increases in card payments and associated revenues, capital investments in payments players fell last year. That’s the bottom line of an S&P Global Markets Intelligence report.

I was really surprised reading a review of the report published by the website Payments Dive. It revealed that venture capitalists invested 47% fewer dollars in payments companies last year compared to 2023. The number of deals fell 23% to 392. Venture capitalists have become extremely selective when it comes to investments in payment companies, an S&P analyst told Payment Dive.

Among publicly traded payments firms, more than half had negative stock returns for the year ending on February 13, 2025. This despite the fact that more than three-quarters (77%) showed revenue growth.

Globally, the payments market counts about 8,400 companies with “a massive market opportunity,” according to the S&P report. The research firm projected that $172 billion will be “up for grabs by 2030.” And that’s just in the payment processing and merchant acquiring segment of the market.

That’s a huge opportunity. No wonder so many non-bank fintechs are jockeying for position in the market.

Stablecoins Triggering Tectonic Shift in Global Payments

An article published this week by Forbes Daily suggests the rise of stablecoins – with their growing role in cross-border payments, treasury operations, and tokenization – is triggering a tectonic shift in the global financial system. In 2024 alone, stablecoin transfers surpassed a staggering $27.6 trillion. That eclipsed the combined transaction volume of Visa and Mastercard by quite a bit.

Stablecoins seek to deliver on the long-promised potential of blockchain-based finance. That’s instant, low-cost, and programmable transactions without borders. Whether it’s facilitating merchant settlements, supporting faster remittances, or enabling treasury management for fintechs and neobanks, stablecoins are stepping in where traditional financial rails aren’t operating.

But here’s the rub: despite the promise of stablecoins, most financial institutions are caught between legacy banking infrastructure and early-generation crypto tools. And neither is well-suited for the demands of modern finance.

New Google Wallet for Kids

And finally, on a lighter note, Google just announced a new feature that allows kids to securely make payments and store passes.

Parents and guardians in five countries, including the U.S., can now give consent for their children to access payments using their Android devices. The new feature will be rolled out in a few weeks, Google said. It will allow kids to tap to pay in stores, as well as store supported passes, like event tickets, library cards, and gift cards in one convenient place.

Conclusion

Well, that’s it for Today in Payments. Keep coming back every weekday for your daily dose of payments notes.