10 May Stablecoins: Visa’s Existential Threat or Overstated Narrative?

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April 2026 Insights

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Stablecoins: Visa’s Existential Threat or Overstated Narrative?

Visa, long considered one of the most defensible businesses in the world, is facing a rare moment of scrutiny. The rise of stablecoins has led some investors to question whether parts of its payments network could be gradually disrupted. As a result, despite rock-solid fundamentals, the stock has lagged over the past two years. So, is this a buying opportunity or the early stages of Visa’s fade into irrelevance?

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At its core, equity investing comes down to a simple question: what is a business worth today based on the cash it will generate in the future? The discounted cash flow (DCF) model is most widely used to answer this question. Key here is the terminal value, the estimate of what the business is worth beyond the explicit forecast period (typically 5–10 years). This often drives around 60 to 80% of the total valuation, meaning small changes in terminal assumptions can have an outsized impact on today’s share price. In practice, this makes valuation less about near-term precision and more about long-term judgement – particularly relevant in Visa’s case, where investors are debating whether stablecoins could alter the terminal value story.

But how likely is stablecoin disruption? Bulls point to transaction volumes growing 70% in 2025 to roughly $33 trillion, according to Artemis Analytics. This sounds enormous. However, context matters, as the vast majority of that volume was made up of crypto trading, not payments. In payments specifically, Bernstein Research estimates stablecoins still account for a negligible ~0.01% of global card volume. Off such a low base, material displacement is many, many years away.

Stablecoin adoption in payments faces a classic chicken-and-egg problem: it needs both widespread merchant acceptance and customer usage at the same time. Payments are fundamentally behavioural systems, and while stablecoins may lower costs for merchants, that benefit is not directly visible to consumers. Merchants have limited influence over how customers choose to pay. Even if some of the savings are passed on, that’s rarely enough to shift entrenched habits. History suggests change only happens when a new solution is at least ~2x better and ubiquitous – not just cheaper or more efficient.

Stablecoins are also functionally closer to debit not credit, which limits their addressable market. They currently cannot replicate credit card features such as lending, rewards funded by interchange and consumer protections tied to credit rails. As a result, disruption risk is largely confined to debit, and more specifically online debit as offline adoption remains constrained by infrastructure. Estimates suggest Visa’s exposure to online debit is limited to ~15–20% of revenue.

Ultimately, while stablecoins may improve cost and settlement efficiency, Visa operates a deeply embedded global network that is difficult to displace. Any meaningful shift would require a behavioural migration across consumers and merchants, not just a technical upgrade. Crucially, Visa’s value extends beyond payments processing, with built-in features like fraud protection, chargeback support, and rewards ecosystems that reinforce customer stickiness. While stablecoins may gain traction in niches such as emerging market remittances or cross-border, non-card payments, these largely sit outside Visa’s core economics. At current, we believe the disruption risk appears more theoretical than evidence-based and Visa remains a core holding across High Street funds.

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Unless otherwise stated, all performance and statistical figures provided in this article have been pulled from Bloomberg by the High Street Asset Management Research Team on 5 May 2026 and all the images provided in this article have been sourced from FreePik and have been used in line with their Acceptable Use Policy. The contents of our newsletters are frequently sourced from or verified through our various product providers and other third parties. Although every effort is made to ensure the accuracy of the information contained in the newsletter, it should not be construed as financial advice as defined in the Financial Advisory and Intermediary Services Act. Links are provided to third-party websites for convenience only. High Street Asset Management (Pty) Ltd cannot accept responsibility and does not endorse any information contained on a third-party site. For our full disclaimer, please see: https://hsam.co.za/legal/.

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