Stablecoin Payments (USDC, USDT, PYUSD): Volatility-Free Crypto for Merchants

Every merchant who has considered accepting cryptocurrency has faced the same fear: what if the value crashes between checkout and settlement? It’s a legitimate concern. Bitcoin and Ethereum can swing 10% in a single afternoon. For a business operating on thin margins, that’s not a feature — it’s a liability.

Stablecoins solve this problem entirely. Pegged 1:1 to the US dollar, stablecoin payments with coins like USDC, USDT, and PayPal’s PYUSD give merchants all the speed and global reach of crypto payments without the price volatility that makes other digital assets so difficult to use in commerce. Stablecoin adoption among businesses has accelerated sharply in recent years, and for good reason. Once merchants understand how these instruments actually work, the question stops being whether we should accept stablecoins. and starts being, which one is right for us?

What Are Stablecoins and Why Do Merchants Care?

A stablecoin is a type of cryptocurrency designed to maintain a stable value relative to a reference asset — almost always the US dollar. Unlike Bitcoin, which derives its value from speculation and scarcity, dollar-pegged stablecoins are backed by cash reserves, short-term U.S. Treasury securities, or other liquid assets held in custody.

This distinction is critical for merchants. If a customer pays the merchant $150 USDC, the merchant receives $150. Plus, there’s no risk of price changes overnight, and they avoid the need to exchange it for fiat. USDC payments work the same way as a digital bank wire, except the payment transaction settles in a couple of seconds instead of a couple of days. Settlement is available 24/7, and no banks are needed to facilitate the payment.

Merchants with customers in multiple countries can expect even more value. Traditional international payments take 3-5 business days to settle, and cost 3-7% of the payment amount. Payments to customers in foreign countries using the Stellar or Solana networks cost less than a cent and settle in under a minute. For these reasons, merchants are primarily using payment systems based on crypto stablecoins, and 2024 is the first year these systems are projected to settle more than $27 trillion. This surpasses Visa’s entire annual volume.

USDC (USD Coin)

USDC is issued by Circle and governed under the Center Consortium, which includes Coinbase as a founding member. It is widely regarded as the most transparent and compliance-friendly stablecoin available to merchants today.

Tokens valued at one dollar are backed by reserves maintained in segregated U.S. dollar-denominated accounts at U.S. federally regulated banks. Circle also publishes its reserves quarterly. These reports are audit-verified by a Big Four accounting firm, allowing merchants and their finance teams to confirm reserves at any time. This is a highly valuable tool for companies in regulated industries or companies that want to maintain a high standard of fiscal integrity to their partners/investors.

USDC natively operates on more than a dozen blockchains, such as Ethereum, Solana, Avalanche, and Base. Merchants can confidently accept USDC since many payment processors (Stripe, Coinbase Commerce, BitPay, etc.) offer support. Merchants can swap USDC for cash at a bank and often receive the funds the same day.

USDT (Tether)

USDT, issued by Tether Limited, is the oldest and most liquid stablecoin. It commands the largest market capitalization of any stablecoin and processes more daily transaction volume than any other digital asset — including Bitcoin on many trading days.

Tether’s reserve composition has come under fire. Past audits revealed that reserves consisted of commercial paper and backed loans and were not composed of cash or U.S. treasury bills. Tether has moved its reserves around and favored U.S. Treasuries, and issued quarterly assurance reports. There is a critique that many believe that assurance does not pass as a full independent audit. Merchants must factor that into counterparty risk assessments.

Tether has been a market leader, even amid challenges around USDT transparency. USDT has been widely adopted in the developing economies of Southeast Asia, Latin America, and Sub-Saharan Africa. Banking systems in these regions are significantly underdeveloped, access to U.S. dollars is even more constrained, and USDT is often the only digital asset available. Peer-to-peer transactions can be primarily USDT.

PYUSD (PayPal USD)

PYUSD is the 2023 stablecoin from PayPal. Paxos Trust Company distributes the stablecoin, and Paxos is compliant with the New York State Department of Financial Services. Each PYUSD is backed by other dollars from reserves, short-term treasury securities, and cash equivalents. The payment system Paxos publishes a monthly report on its reserves.

PYUSD has a different distribution compared to other stablecoins. PayPal is expanding globally with more than 430 million users. PYUSD is built into the PayPal and Venmo apps, allowing users to easily transact, make purchases, and send money. Users don’t have to set up a separate cryptocurrency wallet/exchange. Merchants using PayPal’s payment processing system don’t need many adjustments to accept PYUSD.

PayPal views the recent changes to the Solana blockchain favorably, which enable a faster, cheaper implementation of PYUSD. Merchants could use PayPal’s payment processing (especially for stablecoins) and its cryptocurrency services for a reasonable cost. Retailers may have to pay a minimal cost to accept PayPal’s services. Merchants could have a more crypto-friendly payment service from PayPal. PayPal is known for serving merchants, and with PYUSD, it could increase its profits.

How Stablecoin Payments Actually Work for a Merchant

The operational workflow is simple for business owners who are not well-versed in this area. The first step is to integrate with a merchant-side stablecoin payment processor, such as Stripe, NOWPayments, Coinbase Commerce, or CoinGate. Upon integration, the payment processor provides the merchant with a payment address or generates a payment QR code reflecting the chosen stablecoin. The customer sends the payment directly to the processor from their own wallet/exchange. The processor will confirm the transaction on-chain. This can take anywhere from 10 to 60 seconds, depending on the coin’s blockchain.

From here, the merchant can either hold the stablecoin in a business wallet, convert it to USD for a bank transfer, or use it to make purchases from suppliers that accept stablecoins. This is becoming increasingly common in B2B supply chains. Most major payment processors charge 0.5% – 1% per transaction, which is considerably less than the standard credit card interchange fee of 1.5% – 3.5%.

Chargebacks are impossible with stablecoin payments because blockchain transactions cannot be reversed. Many online merchants are familiar with the problems of chargebacks and the revenue loss due to chargeback fraud. With stablecoin payments, online merchants will no longer lose revenue to chargeback fraud. For businesses operating in high-risk verticals such as digital goods, software, and subscriptions, there is ample justification for incurring integration costs.

Compliance, Taxes, and the Regulatory Landscape for Stablecoin Payments

Stablecoin receipts cannot provide mechanisms for avoiding capital gains taxes. By the IRS, the receipt itself is considered to be the fair market value. As a result, US dollar-backed stablecoins are generally tailored for convenience, ensuring fair market value. If a person, for example, receives $500 in USDC, the stablecoin is considered a $500 revenue gain. There is the convenience of fair market value without the requirement to calculate the basis. However, the flexible conversion does produce taxation “moments” or points of taxation.

The transformation of legislation surrounding crypto is fast. Following the US Congress’s passage of the STABLE Act and the GENIUS Act, stablecoins were incorporated into several legislative proposals in 2025. Both legislative proposals are attempts at a federal stablecoin issuance licensing framework. If either of the legislative proposals to establish a framework of statutory stablecoins were to pass, for the first time, a federal reserve, audit, and consumer protection standards for stablecoins would be established and would result in legislative compliance with consumer protection standards for Congress.

The MiCA regulation, passed by the EU, regulates stablecoins and reserve requirements in the EU. Retailers in the EU should be wary of the swift changes being incorporated into the stipulations in their respective jurisdictions. The concerns for companies are to use stablecoins that are processed, comply with Anti-Money Laundering (AML) and Know Your Customer (KYC), and issue the relevant transactional records compatible with QuickBooks or Xero.

Which Stablecoin Is Right for Your Business?

Choosing between USDC, USDT, and PYUSD depends on your clientele, location, and risk preference. USDC is the best US-based stablecoin option for companies focused on regulatory compliance and transparent reserves. This is especially true for companies in the fintech or B2B space, or in any industry with partners who consider a counterparty’s reserve credibility when transacting. USDT is best for companies in developing markets, where it is the most widely used stablecoin for consumer wallets and peer-to-peer transactions. Lastly, PYUSD is best for companies that use the PayPal ecosystem and want a no-setup payment option.

Most businesses will likely accept several. Given that most payment processors allow easy multi-stablecoin configuration, there is usually no reason to be restricted to a single alternative.

Conclusion

Stablecoins mean a real turning point for merchant payments. They offer the functionality of blockchain infrastructure without the volatility that has historically made most forms of crypto incompatible with large-scale commercial market transactions. USDC offers transparency, USDT offers liquidity, and PYUSD offers the credibility of a business used by 400 million people. Combined, they make almost every merchant use case.

Those businesses that are building stablecoin payments are not investing in the crypto market. They are reducing the costs of processing payments, the risk of chargebacks, and the costs of servicing consumers in places not well served by traditional banking. This is not a trend, but a shift in how digital commerce transfers value.

Frequently Asked Questions