What are stablecoin-backed corporate cards and how do they work?

How stablecoin-powered corporate cards are influencing global trade

Integrating blockchain technology with traditional financial systems is transforming global trade, with stablecoins playing a central role. Corporate cards supported by stablecoins demonstrate this integration, allowing companies to use digital currencies for meeting everyday expenses. 

Stablecoin-powered corporate cards convert stablecoins into local currencies at the point of purchase, enabling smooth transactions at any merchant that accepts Visa, a global leader in digital payments. Visa has partnered with platforms like Bridge and Baanx to enable these corporate cards. 

Bridge, a subsidiary of Stripe, provides a single application programming interface (API) that enables fintech developers to issue Visa cards linked to stablecoins in various countries, including Argentina, Colombia and Mexico. Baanx focuses on self-custodial wallets, allowing users to spend USDC (USDC) directly from their cryptocurrency wallets through smart contracts for real-time currency conversion.

These efforts represent a significant move toward incorporating digital currencies into routine financial activities, connecting decentralized assets with traditional payment systems.

Stablecoins are seeing a significant surge in adoption, with their average circulating supply growing by about 28% year-over-year, according to the World Economic Forum. In 2024, their total transfer volume reached an impressive $27.6 trillion, outstripping the combined transaction volume of Visa and Mastercard in 2024.

Types of stablecoin-backed corporate cards

Corporate cards backed by stablecoins are connected to digital wallets holding stablecoins, rather than conventional bank accounts or credit lines. This allows instant currency conversion at the point of purchase. 

Compared to traditional corporate cards, which depend on centralized banking systems, stablecoin cards provide quicker transaction processing, reduced fees and improved access, particularly in areas with limited banking services.

Two primary models of stablecoin-backed corporate cards are custodial and self-custodial. 

• Custodial models: In custodial models, third-party platforms like Bridge handle user funds, converting stablecoins to fiat currency on behalf of the business through systems integrated with APIs. This streamlines the user experience but requires reliance on a third party.
• Non-custodial models: Conversely, self-custodial models, such as Baanx’s Visa card solution, allow you to maintain full control over your funds. Transactions are processed using smart contracts, enabling direct spending from the blockchain without surrendering asset control. These cards mark a significant advancement in blending cryptocurrency functionality with traditional financial systems.

Did you know? Stablecoins can earn yield through DeFi protocols, allowing users to generate passive income while maintaining price stability, something not possible with traditional bank savings.

How do stablecoin-backed corporate cards work?

Corporate cards backed by stablecoins function by connecting digital wallets holding stablecoins, such as USDC, to a payment card system. It allows businesses to make transactions in fiat currency while retaining cryptocurrency they hold. 

Here’s a step-by-step breakdown of how stablecoin-backed corporate cards work:

1. Funding the card: You begin by topping up your corporate cards with stablecoins such as USDC. You deposit the funds into a custodial wallet (managed by a platform like Bridge) or a self-custodial wallet (used by services like Baanx).
2. Initiating a transaction: Tap or swipe your card at a point-of-sale terminal to initiate a transaction. These cards also support digital wallets like Apple Pay and Google Pay for contactless mobile transactions.
3. Real-time deduction: Stablecoins are deducted from your wallet in real time.
4. Stablecoin-to-fiat conversion: The platform (Bridge for custodial models and Baanx for self-custodial models) immediately converts the stablecoins to the corresponding local fiat currency on the back end.
5. Transaction settlement: Visa’s global payment network processes and finalizes the transaction, ensuring merchants receive fiat while users seamlessly spend crypto.

This streamlined mechanism bridges blockchain and traditional finance, making crypto spending as easy as a regular corporate card.

Key features and advantages of stablecoin-backed corporate cards

Stablecoin-backed corporate cards offer businesses innovative tools for seamless transactions. Leveraging stablecoins like USDC, these cards bridge digital assets and fiat, enhancing financial flexibility.

Here are key features and advantages of stablecoin-backed corporate cards:

• Global acceptance: Accepted at over 150 million merchant locations worldwide through Visa’s extensive network, ensuring businesses can use these cards for diverse purchases, from office supplies to travel expenses.
• Financial inclusion: Enables businesses in regions with unstable currencies or limited banking access to participate in global commerce, fostering economic growth by providing reliable payment solutions.
• Efficiency: Offers lower transaction fees and faster settlement times than traditional banking, reducing costs and improving cash flow for businesses managing frequent or high-volume transactions.
• Transparency: Provides enhanced tracking and reporting tools, allowing businesses to monitor expenditures in real time, improving budgeting and financial oversight.
• Security: Utilizes blockchain’s secure framework, minimizing fraud risks through cryptographic verification.
• Flexibility: Supports digital wallets like Apple Pay, enabling contactless payments for added convenience.

Did you know? Some stablecoins are backed by gold, like Pax Gold (PAXG), which is tied to physical gold reserves. This offers crypto exposure with a hedge against fiat inflation.

Real-world applications of stablecoin-backed corporate cards

Stablecoin-backed corporate cards are transforming how businesses use digital currencies, providing practical, real-world tools that improve financial operations. 

By connecting blockchain with traditional finance, these cards offer companies more adaptable, efficient and globally accessible financial solutions:

• Expense management: Businesses can simplify purchases, travel expenses and recurring software subscriptions by using cards tied to crypto wallets. This removes delays and costs associated with traditional banking systems.
• Payroll solutions: Stablecoin-backed cards facilitate quick, low-cost reimbursements and payments to contractors. This is particularly advantageous for remote teams. Employees can receive funds in stablecoins and spend them instantly with the card, reducing dependence on slow international transfers.
• Treasury operations: Stablecoin-backed cards also improve treasury operations. Companies holding digital assets like USDC can manage their funds more effectively by spending directly from crypto reserves without manually liquidating or converting them. This offers exposure to stable digital assets while maintaining real-world spending capabilities.

Visa’s collaborations with Bridge and Baanx to facilitate stablecoin-backed corporate cards

Visa has partnered with Bridge and Baanx to bring stablecoin-backed corporate cards to mainstream adoption, enabling seamless crypto-to-fiat spending for businesses and individuals alike.

Visa’s partnership with Bridge focuses on Latin America

Visa collaborated with Bridge, a Stripe-owned firm, to launch stablecoin-linked corporate cards in multiple countries with a focus on Latin American countries, such as Argentina, Colombia, Ecuador, Mexico, Peru and Chile. Bridge offers a unified API that allows fintech developers to issue and manage Visa cards funded by stablecoins. In the coming months, availability will expand to countries in Europe, Africa and Asia.

Visa’s partnership with Bridge focuses on the US

In the US, Visa has teamed up with Baanx to introduce corporate cards linked to self-custodial wallets. Later, the service will expand to other countries. These cards empower users to spend USDC directly from their wallets, with smart contracts authorizing each transaction and facilitating instant conversion to fiat at the point of sale. This model offers enhanced user control and transparency without relying on intermediaries.

Both collaborations reflect Visa’s commitment to expanding the usability of digital assets and increasing global access to stablecoin-powered financial services.

Did you know? Stablecoins are increasingly used in developing countries for remittances and savings, offering a more stable store of value than local currencies affected by hyperinflation.

Challenges concerning stablecoin-backed corporate cards

Stablecoin-backed corporate cards provide exciting possibilities regarding business finance, but their use also introduces unique challenges that companies must evaluate before adoption. 

These challenges cover regulatory, technical and market-related issues that could affect operational efficiency and risk levels.

Key challenges and considerations include:

• Regulatory landscape: Businesses must deal with a complex mix of global rules about stablecoin use, financial compliance and cross-border digital payments, which can differ significantly between regions. Corporate cards provide real-time spending solutions in the EU, where Markets in Crypto-Assets (MiCA) regulates fiat-backed stablecoins. 
• Security concerns: Managing and using digital assets exposes users to cyber risks like wallet hacks and phishing scams. Robust security measures, such as multisignature wallets and hardware safeguards, are necessary.
• Market volatility: Although stablecoins aim to hold a steady 1:1 value with fiat currencies, not all are equally dependable. Concerns about the stability, liquidity and acceptance of certain stablecoins, particularly algorithmic or under-collateralized ones, can impact trust and usability.
• Competition with CBDCs: Stablecoin-backed corporate cards are emerging as a practical solution for businesses, offering rapid integration and flexibility, particularly in cross-border transactions. While CBDCs are being explored globally, their adoption varies, with some countries advancing in development and others, like the US, halting progress. The ability of stablecoins to operate within existing financial systems gives them a competitive edge in the current global business environment.

Understanding and tackling these issues is vital to fully leveraging the benefits of stablecoin-backed corporate cards while taking into account associated risks.

Future outlook of stablecoin-backed corporate cards

The future of stablecoin-backed corporate cards is set for substantial growth, fueled by technological progress, wider use and strategic collaborations.

As these trends progress, stablecoin-backed corporate cards are poised to become essential tools in the global financial landscape, offering businesses greater flexibility, security and inclusivity in their financial operations.

• Technological advancements: Combining artificial intelligence with stablecoin systems will improve financial management. AI can automate functions like tracking expenses, detecting fraud and streamlining treasury operations. Financial processes will become more efficient and secure.
• Broader adoption: Stablecoin-backed corporate cards are likely to be embraced by businesses of all sizes, particularly in developing markets. They will provide a reliable and efficient alternative to traditional banking, promoting financial inclusion for small and medium-sized enterprises (SMEs) and startups that may lack access to standard financial services.
• Continued partnerships: Partnerships between fintech firms and traditional financial institutions are expected to grow the stablecoin ecosystem. Collaborations, such as those between Visa and companies like Bridge and Baanx, are laying the groundwork for blending digital assets into mainstream financial services. It will boost the usability and global acceptance of stablecoins.