Visa: Stablecoins, Fee Deal, Security Costs

Visa: Stablecoins, Fee Deal, Security Costs

Over the past week Visa (V) has moved from experimentation to execution on several fronts that materially affect its business model and investor outlook. The company accelerated stablecoin settlement capabilities in CEMEA, moved closer to resolving a multiyear merchant-fee dispute, and flagged a higher-cost security environment that both demands investment and creates product opportunities. These concrete changes — measurable in dollars, basis points and security metrics — point to a reshaping of Visa’s revenue mix and cost structure in the near term.

Stablecoin Settlement Gains Traction in CEMEA

Visa expanded its stablecoin settlement initiative by partnering with Aquanow to enable settlement via approved stablecoins such as USDC across Central and Eastern Europe, the Middle East and Africa (CEMEA). Visa reports the program now supports an annualized run-rate above $2.5 billion, moving the project beyond a pilot toward commercial scale.

What this means for Visa’s payments franchise

• Faster settlement: Stablecoins can shorten settlement windows and reduce float costs — an advantage for cross-border remittances and B2B payouts.
• Lower-cost rails: Using digital-dollar equivalents reduces correspondent banking fees, improving margins on cross-border flows if Visa captures transaction or service fees on top of settlement rails.
• Infrastructure positioning: By integrating crypto-native rails, Visa acts as a bridge for traditional issuers and acquirers into tokenized settlement, which could broaden merchant and issuer stickiness.

Think of Visa’s stablecoin push as building a new highway alongside an existing interstate: the new lane can handle faster, cheaper traffic for certain users while the old system continues to serve the majority. Over time, higher-margin traffic may shift to the tokenized lane if regulators and partners embrace it.

Merchant-Fee Settlement Nears Resolution

Regulators and card networks are reportedly closing in on a framework that would resolve years of litigation and negotiations over interchange fees. The headline elements include roughly a $38 billion settlement, an average interchange reduction of about 10 basis points (from ~2.35% to ~2.25%), and a cap near 1.25% on standard consumer credit-card interchange for eight years. The proposal would also remove ‘‘honor all cards’’ rules, giving merchants more flexibility to decline premium cards at the point of sale.

Impact on revenue and margins

A straight swap: reduced legal and regulatory overhangs for Visa in exchange for a predictable, slightly lower interchange base. Two effects deserve attention:

• Short- to medium-term pressure on net revenue from narrower interchange margins, particularly in consumer credit transactions.
• Stronger incentive to grow non-interchange revenue — for example, data analytics, fraud prevention services, tokenization and the emerging stablecoin settlement business.

For investors, the settlement clarifies long-standing business risk but increases the importance of Visa’s services and volume growth to offset lower per-transaction fees.

Escalating Cyber Threats and Rising Security Investment

Visa’s Fall 2025 Threats Report highlighted a sharp uptick in payment-related cyber incidents: a 41% increase in ransomware attacks in the first half of 2025 compared with the prior six months and a 173% year-over-year spike in compromised account management system (CAMS) distributions. Visa says it has invested over $13 billion in technology and infrastructure over the past five years to harden the network.

Costs versus opportunity

Higher security spending raises near-term operating costs, but it also creates a product opportunity. If businesses and banks are willing to pay for stronger fraud prevention, Visa’s scale and data advantage position it to monetize protection as a high-margin service. In other words, security is both a cost and a potential revenue stream.

Analogously, consider cybersecurity spending like insurance premiums: they reduce short-term profit but protect the business and, if packaged as a value-added service, can become a revenue generator that customers prefer to buy from a trusted platform.

Guidance and Investor Takeaways

Visa’s recent guidance points to a transition to ‘‘mature growth’’ — management expects high-single-digit to low-double-digit revenue growth and low-teen EPS growth in the next quarter, with full-year targets in the low-double-digit range. That signals steady expansion rather than the hypercompounding of earlier years.

• Balance of forces: Stablecoin settlement and new services can drive long-term revenue diversification; interchange compression and higher security spending weigh on near-term margins.
• Execution risk matters: Success depends on adoption of tokenized settlement, the economics of merchant-fee changes, and Visa’s ability to monetize security services.
• Valuation lens: With a clearer settlement outlook and more predictable growth, investors may focus more on cash-flow quality and the trajectory of services revenue rather than raw transaction volume growth alone.

Conclusion

Recent, concrete developments — scaling stablecoin settlement in CEMEA, a likely $38 billion merchant-fee settlement, and a sharper cyber-threat backdrop — are reshaping Visa’s near-term P&L and long-term strategy. The net effect is a trade-off: less interchange per swipe but a clearer path to diversified, higher-value services (tokenized settlement, fraud prevention, data products). For investors, the critical questions are execution and adoption: can Visa convert these structural shifts into durable, high-margin revenue streams that offset tighter interchange economics? The answers will determine how the stock performs as the company evolves from a pure payments processor into a broader fintech infrastructure and services provider.

Key data points at a glance: >$2.5 billion annualized stablecoin settlement run-rate in CEMEA; ~$38 billion merchant-fee settlement framework with ~10 bp average interchange reduction; 41% increase in ransomware attacks and 173% rise in CAMS distributions; >$13 billion invested in technology/infrastructure over five years.

These are tangible, recent developments with direct implications for Visa’s revenue mix, margin trajectory, and valuation narrative.