Stablecoin

Why do merchants care?

Because volatility between payment and settlement is a risk nobody asked for. A business selling a hundred dollar item wants a hundred dollars, and an asset that might be worth ninety-four by the time it settles turns a sale into a small trading position.

Stablecoins remove that, which is why accepting crypto payments usually means accepting them. The token is engineered to hold its peg, so the amount received is the amount expected, and the merchant’s treasury question disappears.

How is the peg maintained?

The dominant model is reserve backing. The issuer holds assets, mostly short-dated government debt and cash, and commits to redeeming tokens at par. The peg holds because arbitrage makes it profitable to correct any gap.

Other designs exist, including over-collateralised crypto backing. The catalogue records which providers settle in stablecoins. Algorithmic designs without meaningful collateral have failed repeatedly and are not used in merchant payments.

What should a merchant check?

Which network the stablecoin is on, because the same token on a different chain is a different token with a very different transfer cost. Whether the provider settles in the stablecoin received or converts it, since conversion carries a spread that often exceeds the processing fee, as the fees guide explains.

Whether the issuer publishes reserve attestations, if you intend to hold a balance rather than converting on receipt.

What to check if you hold rather than convert

Whether the issuer publishes reserve attestations, how often, and by whom. That is the whole of the issuer risk question, and it only applies if a balance sits with you across any meaningful period.

A merchant converting on receipt carries none of this. The peg has to hold for minutes rather than months, which is a much weaker requirement and one reason converting on receipt remains the default even where a business is comfortable with the asset.