Fiserv is betting on stablecoins

Fiserv has been making a lot of headlines over the past week. The fintech, which started out more than 40 years ago performing backend processing for financial institutions, is going large on stablecoins.

Stablecoins got a big shot in the arm when the Senate passed the GENIUS Act, which seeks to build a regulatory structure around these cryptocurrencies that are pegged to fiat currency, like the U.S. dollar. The House still has to pass its stablecoin bill and the two chambers will need to work out differences before it heads to the President for a signing ceremony. But that’s expected in pretty short order.

With an air of optimism about the future of stablecoins, Fiserv has launched a new digital assets platform, including a new stablecoin (FIUSD) for use across the company’s multi-sided network. That network includes 10,000 financial institution clients and six million merchant locations processing 90 billion transactions a year. Fiserv said in a press release that it can offer the scale clients need to build new products and services tied to stablecoins, and that it plans to enable FIUSD through existing Fiserv technology at no additional cost to clients.

Fiserv said it will use the stablecoin infrastructure from Paxos and Circle Internet Group, with an eye toward making it interoperable with several leading stablecoins. Paxos and Circle issue and manage tokens that are used to represent the money behind stablecoins.

Fiserv said it will make FIUSD available through the blockchain platform Solana, which is said to be one of the most trusted and used platforms for stablecoins. The company also is “exploring” the use of deposit tokens to maintain the benefits of stablecoins in a more capital-friendly structure for banks. Proponents assert that the programmability of blockchain, with the stability and trust of fiat currency around stablecoins and deposits in traditional banking will take off quickly due to their ability to settle 24/7, streamlined processes and power use cases where existing options may be limited. “Through our privileged position as a trusted infrastructure provider to financial institutions, and their customers worldwide, we are relentlessly focused on delivering state-of-the-art innovation, efficiency and choice to all our partners,” said Takis Georgakopoulos, chief operating officer at Fiserv. “With our scale, reach and technology leadership, Fiserv is uniquely positioned to advance stablecoin-powered payments and help democratize blockchain access to financial services.” Fiserv said it was “in discussions” with other potential partners to advance use cases for stablecoins and tokenized deposits. And almost immediately after issuing a press release stating so, came news of partnerships with PayPal and Mastercard.

Interoperability between FIUSD and PYUSD

Fiserv said it’s working on interoperability between FIUSD and PayPal’s stablecoin, PYUSD. The move will allow both firms to expand the use of stablecoins and programmable payments for banking, consumer and merchant payments around the globe, it said. Fiserv already handles some payment processing for PayPal. “Our expanded relationship with PayPal furthers our mission to scale stablecoin-powered payments – leveraging our position at the intersection of banking and commerce to build more efficiency and optionality into the payments ecosystem,” Georgakopoulos said. “Businesses around the globe face common problems. They don’t receive funds fast enough, they are combatting inflation, and many face currency value fluctuations. Blockchain technology solves many of these challenges by enabling faster transfers, anytime of the day, nearly anywhere around the globe,” said Frank Keller, vice president at PayPal. “Together with Fiserv, we will help bridge the gap between traditional financial systems and new technologies, enabling faster, more cost-effective, and globally accessible payment options for merchants.”

Potential applications that can be addressed by the partnership include cross-border transactions, payouts and merchant solutions, the two companies said.

Mastercard doesn’t want to be left behind

Fiserv also struck a deal with Mastercard to integrate its new FIUSD stablecoin token across a range of Mastercard products and services. The move expands stablecoin adoption and utility for shared customers around the world, Mastercard said. People and businesses can use the new programmable blockchain-based token across more than 150 million merchants, Mastercard added.

Mastercard, in a press release, said the two companies will explore “key areas” to solve “real-world challenges and opportunities for stablecoin adoption and utility.” Examples include:

• Seamless on and off-ramping of funds, allowing consumers and businesses to transition smoothly between fiat and FIUSD. • Enabling merchants to settle in FIUSD, no matter how they are paid. • Connectivity to the Mastercard Multi-Token Network (MTN). • Enabling the issuance of stablecoin-powered cards.

“This work with Fiserv is setting the stage for a new era, where stablecoins are as ubiquitous and trusted as fiat currencies, driving choice and innovation for all,” said Chiro Aikat, co-president for Americas at Mastercard. “Leveraging the power of the Mastercard network, as well as our deep capabilities across digital assets, we are creating a robust ecosystem that bridges traditional financial services with digital assets.”

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