SoFi begins Mastercard card settlement with SoFiUSD

SoFi began settling debit and credit card transactions with Mastercard using its SoFiUSD stablecoin. SoFi is migrating its entire card program to the system. SoFi expects the program to process more than $25 billion in annualized volume. A SoFi spokesperson said the change does not remove intermediaries from card settlement. The spokesperson said the system provides an alternative blockchain-based settlement rail. SoFi cardholders will continue using their debit and credit cards normally. The spokesperson said onchain settlement allows the bank to settle transactions faster. Visa said in April that its stablecoin settlement pilot had reached a $7 billion annualized run rate. Visa expanded the pilot to nine blockchains. Visa described blockchain settlement as a viable complement to traditional settlement rails. Federal Reserve researchers wrote in a March note that stablecoins could change payment economics without necessarily eliminating banks. Martins Benkitis, co-founder and CEO of Gravity Team, said the change did not amount to disintermediation at this stage. Benkitis said Visa, Mastercard, banks, and payment networks would remain involved. Benkitis said the network would continue calculating obligations. Benkitis said the network would continue managing transactions. Benkitis said the network would continue deciding how participants interact with it. Varun Datta, founder of Truth Ventures, said continuous settlement could reduce payment delays. Datta said continuous settlement could reduce the capital firms keep in different locations for payments. Datta said this could be particularly relevant for cross-border payments. Datta said faster settlement would not necessarily make payments cheaper. Datta identified conversion, compliance, integration, and stablecoin-management costs as factors. Datta said evidence of lower total costs and better liquidity management at scale was needed before the economic case could be considered proven. Benkitis said dollar-denominated stablecoins can move between balance sheets within minutes. Benkitis said emerging-market payments can be more complicated because local currency liquidity can be thinner. Benkitis said fewer banks may handle the flows in those markets. Benkitis said access to domestic banking systems is still required. Benkitis said stablecoins can move value quickly, but local liquidity is still needed to complete the payment.