Stablecoin payments cannot be reversed

Stablecoins can move money fast but what happens when something goes wrong?

Last summer I was in a Google Meet meeting pretending to listen while simultaneously signing up for a saas product that cost $3 per month. I wasn’t paying any attention to either task. Without thinking I had signed up for the $3k monthly plan. That’s over $30k a year! I don’t have that kind of wedge to waste or lose. I can tell you loss aversion kicked in at maximum level. And nothing wakes you up in a Google Meet meeting like accidentally losing $30k.

Now I was fully paying attention but not to the meeting.

My heart started racing. I tried to see if I could down grade on the product dashboard but it has no such option so I quickly emailed the saas vendor telling them what had happened. Then radio silence. I messaged them on X. Still nothing. Then I decided to contact my bank, and after being put on hold for 30 mins they said I needed to raise a dispute. They shared the form and I had to fill it out, It was like something from the 1980s but I was glad, it was at least a way of getting my money back.

Two months later I got my money back. It was slow, painful, annoying, frustrating and far more work than it should have ever been. But who cares I got my money back. If I had done this transaction with stablecoins, I would’ve lost $30k and I’d be now living homeless.

The reason businesses are excited by stablecoins is the very fact that there’s no chargeback process and the stablecoin transaction fees are far lower than standard Visa or Mastercard card transactions. A stablecoin transfer doesn’t have a chargeback policy and once the transaction is completed, that’s it, it’s done. Finito.

So who the hell pays when a stablecoin transaction goes wrong? If you put in the same protections around stablecoins for consumer payments, then all the Stablecoin benefits get eaten away. This is why I believe stablecoin payments are a bad fit for many everyday purchases. But there’s a way for both the businesses and customers to both win.

The customer can pay by card while stablecoins move the money behind the scenes. This approach makes far more sense to me. The buyer gets a familiar checkout and dispute process while businesses get faster settlements.

But there are use cases where stablecoin payments make sense. If the local currency is losing value or cross border payments barely work. Then in these situations a stablecoin payment that is final and awkward can still be better than the alternative.

Stablecoins could also become the default currency for machines and micro payments. The average rate for card payments is 3% plus a few cent. That makes a 1 cent card payment ridiculous. Tiny purchases forces a person to stop and decide if it’s worth it. The attention costs more than the purchase.

A company can fund a stablecoin wallet, set limits, approve sellers, and allow software to pay for data or computing without a person authorising each cent.

Software can also make a $30k mistake much faster than I did.