Shopify announced yesterday that merchants can now accept stablecoin payments through a collaboration with Coinbase and Stripe. The feature requires no action from merchants unless they prefer receiving payouts in the USDC stablecoin rather than their local currency. An interesting aspect of the alliance is joint work involving Coinbase and Shopify on a smart contract or “e-commerce payment protocol” that mimics the two step card process of authorize and capture.
Shopify is an international platform and the announcement positions this as enabling cross border payments “with no foreign transaction or exchange fees” where the merchant will receive their local currency by default. We’d note that unless the merchant receives dollars, to get another currency will necessitate a foreign currency transaction presumably processed by Stripe. With foreign currency, the exchange rate often has a bigger impact on costs than fees.
On the one hand, cross border emerging market payments are viewed as a killer mainstream app for stablecoins. The big question is whether e-commerce payments will be the second one, given there’s far more competition from cards and other payment methods. The fact that Shopify partnered with Coinbase and initially only accepts USDC on Base (founded by Coinbase), points to it catering to existing crypto users at this stage. USDC issuance on Base amounts to $3.6 billion or around 6% of the total stablecoin’s value across all blockchains.
It’s not surprising that Shopify would be amongst the first large e-commerce firms to adopt stablecoins. Alongside Stripe, it was one of the members of the Facebook-founded Libra stablecoin initiative.
Next week Ledger Insights plans to publish a series of articles exploring the e-commerce potential of stablecoins. Watch this space.
A new stablecoin e-commerce payment protocol
The collaboration introduces a smart contract based payment protocol that mimics traditional card payment processes. Like conventional e-commerce, it uses a two step authorize and capture system – customers authorize payments that lock stablecoin funds into escrow, then merchants capture funds when shipping goods. This prevents issues when items sell out between checkout and fulfillment.
However, crypto payments create a fee problem. While merchants typically pay card processing fees, blockchain gas charges fall on customers, potentially hampering mainstream adoption. The new protocol addresses this by introducing an “operator” role – likely a payment service provider controlled smart contract that can release escrowed funds to merchants. But it won’t have the ability to change the recipient or authorized amount.
Until now, most e-commerce stablecoin payments have relied on traditional card rails. The key innovation here supports native crypto payments directly. Current usage remains minimal—crypto payments haven’t exceeded 1% of e-commerce transactions in any country, including those with high crypto adoption like India, Nigeria, the Philippines and Turkey. Coinbase and Shopify are betting this native approach can change that trajectory.
