Some of todays AI models arent just describing the worldtheyre being used to predict it. In finance, marketing, logistics, and even politics, the pitch is the same: feed a model enough data, and it will spot patterns early enough to act on them. That creates a weird cultural moment where prediction itself becomes the product. Were not only asking What is happening? but What happens next?and were willing to trust a machines answer if it seems to outperform human intuition.

Its tempting to call this an astrology meets AI era, because the vibe can feel similar: a system that claims to see your future by reading signals you cant easily verify. The difference is that AI doesnt look at stars; it looks at massive datasetsprices, clicks, supply chains, sentiment, weather, satellite imagery, transaction flows, and countless other traces of human behavior. Where astrology offers a narrative, AI offers a statistical edge, and that edge can look like foresight when it consistently beats a baseline.

The real advantage is speed and scale. Humans can form hypotheses, but were limited in how many variables we can track at once, and were easily fooled by stories that sound right. Models can sift through noisy, high-dimensional data and detect subtle correlationspatterns that are too small, too fast, or too complex for a person to notice in real time. In that sense, AI can act like a microscope for trends: not magical, but revealing something that was always there, just beyond ordinary perception.

Once you can detect trends earlier, you can try to convert them into money. Thats the straightforward economic logic: prediction creates leverage. If a model can forecast demand shifts, it can optimize inventory; if it can anticipate price moves, it can guide trades; if it can predict churn, it can trigger retention offers before customers leave. The profit doesnt come from being right in a philosophical senseit comes from being right enough, often enough, and early enough to beat competitors and reduce uncertainty.

But the astrology comparison still matters as a warning label. Prediction systems can look brilliant right up until the environment changes, the data shifts, or everyone copies the same signals and destroys the edge. They can also produce confident-sounding outputs that are really just reflections of past patterns, not reliable maps of the future. The challenge of this moment is learning to treat AI forecasts as toolsnot propheciespairing them with skepticism, stress tests, and an understanding that some trends are real opportunities while others are just well-disguised noise.

Agentic AI is the next frontier in AI. Power of LLMs is used to generate steps and then execute those steps one by one. As the steps change the external environment, the agent regenerates the next steps. An example of such agentic AI is asking an agent to shop on behalf of you while finding new shoes that can match your current wardrobe.

Another example of an agent is self driving car. The car is continuously observing the world around it and then taking actions towards a specific goal. That is reaching a particular destination.

Features of Agentic AI.

1. Agents work autonomously.
   This means agents do not need explicit instructions. Just give it a goal and it figures out what to do within the constraints.

2. Agents are goal oriented
   Agents are given a goal to achieve after which they stop. They constantly update their state to maximize this objective function.

3. Agents act in a dynamic environment
   If we were working in a predictable environment, agents are not needed. Agents are useful where the world is dynamic and were wide range of events could happen.

Agentic AI in finance

Agentic AI will find many applications in finance. Finance industry is by nature about dynamic environment and it is often about goal orientation. Maximizing profits, investment returns, lowering risks etc.

While this field is remarkably new, we would expect things to change rapidly in coming years. Mastercard, Visa etc. have already launched agentic AI libraries.

The reason for such move could be that both retail giants want to familiarize themselves with the space and be ready if the stablecoin revolution is around the corner. It does not necessarily mean they will actually launch them in recent future. They are building technical capacity for stable coins.

But why the stable coins ?

The biggest benefit of stable coins is that they can bypass the visa and mastercard fees and also recover money through fraudulent transactions. When a company issues you a stable coin, it is supposed to keep an equivalent of USD in the bank. The money earns interest which the stablecoin purchased by user does not (in most cases). This means larger the stable coin usage, higher the income Amazon and Walmart will have from those deposits in the bank.

It also means that everyone is sort of locked in into that currency. Amazon Merchants might receive stablecoins too which they might have to convert to USD if they want to cash out but there is a good chance Amazon might partner with various institutions to avoid the need to cashout.

It remains to be seen how this space would evolve.

Some of the biggest merchants are exploring how to issue or use stablecoins, potentially shifting the high volumes of cash and card transactions that they handle outside the traditional financial system and saving them billions of dollars in fees.

Walmart WMT 1.08%increase; green up pointing triangle, Amazon AMZN -1.33%decrease; red down pointing triangle.com and other multinational giants have recently explored whether to issue their own stablecoins in the U.S., according to people familiar with the matter.

Read more on : https://www.wsj.com/finance/banking/walmart-amazon-stablecoin-07de2fdd

Though Gen-AI has many benefits, it also presents a number of unique challenges that are changing the way financial institutions (FIs) function.

There are conditions associated with implementing any new technology in the financial industry, as every CFO or fintech leader knows. Let's get to the bottom of all the challenges that GenAI presents in finance.

6 Gen-AI challenges in finance you should know

Generative AI is transforming industries left and right, but in financial services, things aren't going so well. Almost every bank and financial institution (FI) values GenAI's predictive powers, but as a finance executive or CXO, you should be aware that Gen-AI introduces a new set of difficulties.

Here are some of them.

1. Limited data and privacy concerns

When it comes to finance, good data is essential for GenAI's predictive analysis. However, unlike other sectors, the availability of public financial datasets is quite limited. Why? Because financial information is both sensitive and brittle.

Nobody wants their personal financial information out in the open, and financial institutions are naturally concerned about data protection.

Consider BloombergGPT, for example. It's one of the few GenAI models designed specifically for finance, trained on massive amounts of both proprietary and public data.

However, not every organization has access to this level of data. Even if you do, data privacy concerns and legislation make it difficult to migrate data to the cloud for Gen-AI training.

So, is there a suitable solution? Experts suggest that synthetic data could help by providing false data that resembles real financial patterns while protecting privacy.

However, synthetic data has disadvantages as well such as accuracy and overfitting. Essentially, the more you hunt for excellent data for Gen-AI, the more privacy concerns arise.

2. Unique nature of financial data

Financial data poses distinct issues for generative AI models. Compared to other areas, financial data frequently deviates from the basic statistical assumptions that underpin many AI algorithms.

• Non-Gaussian distribution

AI often assumes data follows a normal (Gaussian) distribution. However, financial data, particularly stock prices, frequently does notit contains "heavy tails" and skewness. This means it is more susceptible to abrupt, dramatic changes, which regular AI models may struggle to manage effectively.

For instance, stock values can fluctuate abruptly owing to crises or noteworthy developments, which AI algorithms may overlook based on traditional statistical assumptions.

• Complex interconnectedness

Financial markets are also highly intertwined. Economic variables, political events and company-specific news/development can all have an impact on worldwide markets. Traditional AI algorithms may overlook these subtle connections.

Geopolitical events, such as trade wars, can cause global volatility. Understanding complicated political and economic relationships is required to predict its influence, which goes beyond simple numbers.

• Time-Series nature

Financial data is a time series, implying every data point is dependent on the previous one. This sequential structure makes it difficult to accurately capture trends, especially when dealing with volatile and noisy data.

Identifying long-term trends in stock prices can be challenging for investors due to daily fluctuations.

Finally, you also have to consider the financial data quality and noise. These data may contain inaccuracies or missing numbers. Cleaning things up is necessary but difficult. If not done correctly, AI algorithms may produce inaccurate predictions.

3. The high cost of fine-tuning Gen-AI for finance

There is no one-size-fits-all approach to AI in the complex domain of financial transactions. Extensive fine-tuning must be performed for data-hungry Gen-AI models to comprehend the nuances and specific nomenclature of the financial industry.

One of the most significant challenges is the requirement for high-quality, human-labeled financial data. This data is frequently private, sensitive, and subject to stringent laws. Acquiring and processing such data can be costly and time-consuming.

CTOs and financial professionals working in banking and financial institutions often have to shoulder the enormous costs and hassles involved with this procedure.

Techniques such as Low-Rank Adaptation (LoRA) can be useful for fine-tuning financial models. However, applying these techniques necessitates specialized technical knowledge.

Plus, financial phrases might have different meanings depending on the context. For example, the word "bank" might refer to a financial institution, a real bank or a verb that means to rely on something. Fine-tuning the model to grasp these nuances complicates the procedure.

4. Enormous computation costs associated with GenAI models

Gen-AI models are computationally heavy, which makes them costly to train and operate. The sheer volume of financial transactions completed each day exacerbates the cost.

Training large-scale Gen-AI models from scratch requires a significant amount of resources and can cost billions of dollars. This is because training these models on large datasets requires a significant amount of processing power and energy.

Even after training, using these models to make predictions or generate content, often known as inference, can be costly. In finance, where billions of transactions take place every day, operating Gen-AI models at scale can be prohibitively expensive.

In short, the high price tag burden might be a severe limitation, especially for smaller financial institutions.

5. Regulatory compliance issue

Gen-AI models in finance also carry their own set of risks, such as data bias, data leakage and even "hallucinations" - when an AI generates false information. Consider the consequences of a Gen-AI model providing faulty financial advice based on incorrect data.

Bias is another issue. Different regions have different monetary legislation, and Gen-AI models may accidentally reflect these biases. This raises ethical difficulties, particularly when Gen-AI is utilized in credit rating or fraud detection. You do not want your AI to make biased decisions based on regional data idiosyncrasies.

Finally, privacy rules, such as GDPR in Europe, mandate stringent data protection. Even if data is destroyed, some models may keep remnants of it, posing a regulatory danger.

6. Getting the right talent

The skills gap is a major obstacle that many financial institutions have when adopting generative AI. Despite being masters in their fields, many finance professionals might not have the technical know-how needed to deploy and oversee AI systems successfully.

Additionally, you may experience difficulties finding top-notch GenAI expertise in finance who understand the complex subject matter of machine learning, data science and AI ethics.

For startups or small fintech companies, the cost of recruiting and training such expertise can also become unaffordable.

Whats the bottom line?

GenAI is opening up electrifying possibilities in the finance sector, but its not without its challenges. From data dilemmas to cost concerns, theres a lot to ponder.

While many banks and FIs are very optimistic about the potential of generative AI in back-office operations, it is essential to approach its adoption with caution.

Staying ahead as a financial expert requires more than simply knowing the markets; you must also connect with top-tier talent, be aware of developing issues and invest proactively in the quality of your data. Continuous monitoring is essential for detecting and mitigating biases.

Finally, collaboration with finance subject matter experts (SMEs) and talented AI engineers can help you gain a competitive advantage.

1. The Basics of Finance

• Not just code, but cash flow: You don't need to be a Wall Street guru, but understanding fundamental financial concepts is crucial. This includes things like interest rates, loans, credit, debt, and basic accounting.

• How money moves: Grasp the flow of money in the systems you're building. Whether it's payments, lending, or trading, knowing the underlying financial mechanisms will help you design more robust and efficient solutions.

2. Security is Paramount

• Trust is everything: In fintech, you're dealing with people's money. A security breach can have devastating consequences, both financially and reputationally.

• Security best practices: You MUST be well-versed in secure coding practices, encryption, authentication, and authorization. Stay updated on the latest cybersecurity threats and how to mitigate them.

• Compliance is key: Familiarize yourself with regulations like PCI DSS (for payment card data) and KYC/AML (Know Your Customer/Anti-Money Laundering) to ensure your applications are compliant.

3. Data is King (and needs protection)

• Data-driven decisions: Fintech relies heavily on data analysis to personalize services, detect fraud, and manage risk.

• Big data skills: Learn how to handle large volumes of data efficiently. This includes database management, data warehousing, and data processing technologies.

• Data privacy: Understand the importance of data privacy and comply with regulations like GDPR. Implement robust data protection measures to safeguard sensitive financial information.

4. APIs are the building blocks

• Connecting the dots: APIs (Application Programming Interfaces) are essential for integrating different financial services and platforms.

• API design and development: You'll likely be working with APIs extensively, so it's crucial to understand how to design, develop, and consume them effectively.

• Security is vital: Pay close attention to API security, as they can be a vulnerable point of entry for attacks.

5. Emerging Technologies

• : The fintech landscape is constantly evolving, so you need to be a lifelong learner.

• Blockchain: Understand the basics of blockchain technology and its potential applications in finance, such as cryptocurrencies and smart contracts.

• AI and Machine Learning: These technologies are transforming fintech, enabling things like fraud detection, algorithmic trading, and personalized financial advice.

• Cloud Computing: Cloud technologies provide scalability and flexibility, which are crucial for fintech companies.

6. The User Experience (UX) Matters

• Money can be stressful: Dealing with finances can be anxiety-inducing for many people. Your applications should be intuitive, user-friendly, and instill trust.

• Design for accessibility: Ensure your applications are accessible to everyone, including people with disabilities.

• Feedback is crucial: Continuously gather user feedback to improve the user experience and ensure your applications meet their needs.

7. Communication and Collaboration

• Cross-functional teams: You'll be working with people from various backgrounds, including finance professionals, designers, and business stakeholders.

• Explain complex concepts: Be able to explain technical concepts clearly and concisely to non-technical audiences.

• Teamwork is essential: Fintech projects often involve complex systems and require close collaboration between team members.

Perplexity today announced that it has partnered with PayPal to power agentic commerce across its Perplexity Pro platform. Starting this summer in the U.S., consumers can check out instantly with PayPal or Venmo when they ask Perplexity to find products, book travel, or buy tickets.

"Perplexity wants to have accurate, trustworthy answers wherever people are making decisions. PayPal is a natural partner because we share a vision for how important trust is in the age of AI," said Aravind Srinivas, Cofounder and CEO of Perplexity.

"This partnership unlocks new possibilities, where conversations now drive commerce,"said Alex Chriss, President and CEO of PayPal."We're making it easy and secure to shop right in the chat when inspiration strikes. It's a powerful step in making conversational commerce a reality."

The entire process, including payment, shipping, tracking, and invoicing will be handled behind the scenes with PayPal's account linking, secure tokenized wallet and emerging passkey checkout flows, which could eliminate the need for passwords and streamline the experience to a single user query or click.

The newly announced partnership between Perplexity and PayPal signals a significant step towards the realization of truly integrated conversational commerce. By embedding PayPal's robust payment infrastructure directly within the Perplexity Pro platform, users will gain the unprecedented ability to seamlessly transition from information discovery to purchase completion within a single conversational flow. Imagine asking Perplexity for the best noise-canceling headphones, receiving insightful recommendations, and then effortlessly checking out with PayPal or Venmo without ever leaving the chat interface. This frictionless experience, encompassing everything from product search to payment, promises to redefine online shopping convenience and empower users to act on their informational needs instantly.

The implications of this collaboration extend beyond mere transactional ease. Aravind Srinivas' emphasis on shared values of accuracy and trust underscores a commitment to building a reliable and secure AI-driven commerce environment. PayPal's established reputation for secure transactions, coupled with Perplexity's focus on providing trustworthy information, creates a powerful synergy that could alleviate user concerns about transacting within an AI interface. Furthermore, the integration of PayPal's behind-the-scenes handling of shipping, tracking, and invoicing, potentially leveraging emerging passkey checkout flows, hints at a future where the complexities of online purchasing are significantly abstracted away, requiring minimal user input beyond the initial query.

Ultimately, this partnership between Perplexity and PayPal has the potential to democratize and accelerate the adoption of agentic commerce. By lowering the barrier to purchase and streamlining the entire process, it could empower users to engage in spontaneous and contextually relevant transactions. This integration not only enhances the utility and stickiness of the Perplexity Pro platform but also positions both companies at the forefront of a rapidly evolving digital commerce landscape where natural language interactions become a primary driver of purchasing decisions. As conversational AI continues to mature, this collaboration serves as a compelling example of how strategic partnerships can unlock new levels of convenience and efficiency for consumers.

Depending on how this new number is generated, it might be scoped to the specific party which means, the party that tokenized it alone can use it to charge money and it wont work for anyone else.

The parties involving token are typically merchants such as Amazon.com or Wallets such as Google Wallet or Paypal. Stripe or similar payment processors too could act as parties here.

Advantages of tokenization are :

1. Better security : If the token leaks, it does not do any harm as no one else can charge money to the token accept the company that generated it.

2. Lower fraud : Since tokens are hard to generate without users consent or high quality data, it is much safer to use tokens.

3. Lower liability : Since cloud token exposure does not create harm, it means there is lower risk for merchants in storing this in their database.

4. Better operational costs: Normally when credit card is compromised, a new card is sent to the user. This also means any merchant that has stored the card would lose the card too. But with tokens, they continue to work even if underlying card was changed.

Types of credit card tokens

Cloud tokens or CPANs.

Cloud tokens are created by a merchant in the background without users consent as user consent is not required. Cloud tokens look exactly like users credit card numbers with 16 digit card number, expiry and CVV. However, they work only with the merchant that obtained them. For example amazon.com might convert your card into a cloud token. But then it would only work on Amazon.com and no where else. This means no one can steal it and do transactions beyond Amazon.com.

Cloud tokens can be created from any credit card. It does not require user permission. It happens behind the scene for the user.

Cloud token can be stored and reused for recurring payments. Even if the card expires, the cloud token associated may not expire. Even if card number changes, the cloud token can remain active. This helps billers like Netflix to continue charging your card even if you get a new physical card by mail. This is safe and also convenient.

Device Tokens

Device tokens are special. They are linked to a device and can not be used without the device. When user adds are card to their phone or smartwatch, behind the scenes the phone and card issuer (such as your bank) shared a secret key. Whenever you tap your phone to make a payment, the secret key is used to generate what is called a cryptogram. Which is basically transaction information encrypted.

The issuer then uses this cryptogram to verify that the card information is indeed coming from someone who has the secret key. How this secret key get stored on your phone depends on the operating system such as Android or iOS.

Device tokens are extremely secure as people rarely give away their phones to others. Also, every time the phone is used to make payment the user is supposed to unlock the phone using pin or biometric. This is also adding an extra later of security.

Virtual Cards

Virtual cards is another form of popular tokens. Virtual card is a unique card number generated in place of your physical card. This time however the virtual card number is visible to the user and the user has to manually enter it wherever they were supposed to enter the real card number.

The advantage of such a number is that you dont expose your real virtual card. Also you can revoke the card anytime thus cancelling any recurring payments you might have scheduled.

Virtual cards are less popular than other two but still being used. Google chrome has this feature today.

Card Tokenization

Tokenization is super critical fintech innovation that has made the payments secure and better. It protects users, billers and issuers. It makes life hard for fraudsters and credit card thieves. In 2023, worldwide payment card fraud losses reached $33.83 billion. This was a slight increase from $33.45 billion in 2022. The U.S. accounts for a disproportionate share of global credit card fraud. In 2023, while the U.S. represented about 25% of worldwide card spending, it accounted for over 42% of global fraud losses.

Tokenization is aimed at solving this problem and has indeed helped in keeping these numbers low.

It is reported that Paypal tool is coming with their Agentic toolkit to enable payments in agentic workflows.

We will keep you updated as we learn more.

The stablecoin market in April 2025 stands as a significant and rapidly evolving sector within the broader cryptocurrency ecosystem. With a total market capitalization exceeding $200 billion, these digital assets, designed to maintain a stable value relative to traditional currencies or other benchmarks, have become crucial tools for various applications, ranging from decentralized finance (DeFi) to cross-border payments. Dominant players like Tether (USDT) and USD Coin (USDC) continue to command a substantial market share, while newer entrants are beginning to gain traction. Regulatory developments across the globe are shaping the operational landscape for stablecoins, with major frameworks like MiCA in the European Union and ongoing legislative efforts in the United States setting the stage for a more structured future. Technological advancements are further enhancing the utility and accessibility of stablecoins, driving their adoption across diverse sectors. While the outlook for stablecoins in 2025 is largely positive, the market still faces inherent risks and challenges related to peg stability, transparency, and illicit use, which require careful consideration.

Market Size and Dominant Players

The stablecoin market has demonstrated substantial growth and scale by April 2025. Analysis from PitchBook researchers in the first quarter of 2025 indicated a total market capitalization surpassing $200 billion, representing a significant 15% increase from the final quarter of 2024. This growth underscores the increasing recognition and utilization of stablecoins within the digital asset space. Data from Bastion in mid-March 2025 further suggested an expansion, with the total circulating supply exceeding $227 billion. This progression from the Q1 figure suggests a continuing upward trajectory into April. CoinGecko's data from late March 2025 reported an even higher market capitalization of $236.7 billion , potentially reflecting intra-month market fluctuations or differences in data aggregation. Similarly, a report from ESMA in early April 2025 estimated the combined size of the stablecoin market to be around EUR 210 billion, which translates to approximately $220 billion USD. The consistency of these reports, all indicating a market capitalization well over $200 billion, confirms the robust scale of the stablecoin market by April 2025. The observed growth from the end of 2024 into the first quarter of 2025 signifies a sustained expansion of this asset class.

The level of trading activity within the stablecoin market is also considerable. PitchBook's analysis highlighted that stablecoin transaction volumes reached $1.8 trillion in the first quarter of 2025 alone. This figure, when annualized, points to a substantial volume of value transfer occurring through stablecoins. Data from Visa on-chain analytics, although not specifically for April 2025, showed a total transaction volume of $2.7 trillion on the unadjusted basis and $679.4 billion after adjustments. The significant difference between these figures likely reflects the complexities of on-chain transactions, including internal smart contract movements and exchange rebalancing activities. Notably, the average daily trading volume for Tether (USDT) had risen significantly to $182 billion by early April 2025. This substantial daily volume for a single stablecoin underscores its pivotal role in the overall trading landscape. The sheer volume of transactions, particularly when compared to traditional payment processors like PayPal (whose annual processed volume was less than the Q1 stablecoin volume), indicates the increasing integration of stablecoins into the broader financial ecosystem.

The stablecoin market is dominated by a few key players. Tether (USDT) consistently ranks as the largest stablecoin by market capitalization. As of late March and early April 2025, its market cap was reported to be in the range of $143-$146 billion. This leading position can be attributed to its first-mover advantage and its widespread integration across numerous cryptocurrency exchanges globally. USD Coin (USDC) has firmly established itself as the second-largest stablecoin, with a market capitalization fluctuating between $53-$60 billion during the same period. USDC's emphasis on regulatory compliance and transparency has made it a preferred choice for institutional investors and businesses seeking a more regulated digital dollar. A notable development in 2025 has been the rapid emergence of Ethena USDe (USDe) as the third-largest stablecoin, boasting a market capitalization of approximately $5 billion. Its innovative approach as a "synthetic dollar" that generates yield for institutional investors has contributed to its swift ascent in the market rankings. Beyond these top three, other stablecoins such as Dai (DAI), First Digital USD (FDUSD), and PayPal USD (PYUSD) hold smaller but still significant market capitalizations. These stablecoins often cater to specific user preferences or use cases within the broader digital asset ecosystem. The combined market share of USDT and USDC remains substantial, estimated to be between 70% and 90% of the total stablecoin market. However, the rapid growth of USDe indicates a potential shift in market dynamics, suggesting that alternative stablecoin models are beginning to gain traction and attract significant capital.

The Evolving Regulatory Landscape

Image Source : https://linas.substack.com/p/stableslist

The regulatory landscape for stablecoins has continued to evolve significantly by April 2025, with major developments occurring across different regions.

In the European Union (EU), the landmark Markets in Crypto-Assets (MiCA) regulation, which came into full effect in December 2024, has established a unified and stringent regulatory framework for stablecoins across its 27 member states. MiCA mandates that stablecoin issuers must maintain reserves of liquid assets on a 1:1 basis, segregate customer funds, and obtain authorization as electronic money institutions (EMIs). A key aspect of MiCA is its effective ban on algorithmic stablecoins , reflecting lessons learned from past market instability. The implementation of MiCA has already had a tangible impact, leading to the delisting of prominent non-compliant stablecoins, including Tether (USDT), from major EU exchanges by the end of March 2025. Conversely, stablecoins deemed compliant with MiCA, such as USD Coin (USDC) and Eurite (EURI), remain available for trading and use within the EU. This comprehensive regulatory approach by the EU signifies a strong commitment to enhancing consumer protection and ensuring the financial stability of the stablecoin market within its jurisdiction. The proactive stance taken by the EU with MiCA could potentially serve as a blueprint for other regions grappling with stablecoin regulation.

The United Kingdom (UK) is also actively progressing towards establishing a clear regulatory framework for stablecoins, particularly those intended for use as payment instruments. The Financial Conduct Authority (FCA) released a 'crypto roadmap' in November 2024, indicating that a consultation paper specifically addressing stablecoins would be forthcoming in the first half of 2025. The UK government has also stated its intention to legislate that fiat-backed stablecoins must be fully backed by reserves of fiat currency. These developments suggest that the UK is adopting a cautious yet progressive approach to stablecoin regulation, focusing on ensuring stability and consumer confidence in digital payment methods. The alignment with the EU's emphasis on fiat backing for payment-focused stablecoins indicates a potential convergence in regulatory thinking across major European economies.

In Asia, the regulatory landscape for stablecoins presents a more diverse picture. Singapore has already implemented regulations under its Payment Services Act, with updated rules taking effect in early April 2025. These rules categorize stablecoin issuers and service providers as "digital payment token" (DPT) providers. Furthermore, specific regulations for stablecoins pegged to single currencies were finalized in August 2023, mandating licensing for issuers with a circulating supply exceeding S$5 million. Hong Kong has also expressed its ambition to establish a stablecoin regulatory regime in 2024 or 2025, aiming to position itself as a welcoming hub for regulated stablecoin activities and compete with Singapore in attracting crypto businesses. In contrast, Thailand has adopted a more flexible approach, approving the domestic trading of USDT (Tether) in March 2025 within its existing digital asset regulations. This varied regulatory landscape across Asia reflects different priorities and risk appetites concerning the adoption and oversight of stablecoins in the region.

The United States (US) has witnessed significant momentum building towards the creation of a comprehensive federal regulatory framework for payment stablecoins under the current administration. President Trump's executive order in January 2025 further underscored the priority of this issue. Several bipartisan bills have been under consideration in Congress, most notably the Guiding and Establishing National Innovation for US Stablecoins Act of 2025 (GENIUS Act) and the Stablecoin Transparency and Accountability for a Better Ledger Economy Act of 2025 (STABLE Act). The GENIUS Act, introduced in the Senate in February 2025, aims to regulate payment stablecoins by establishing standards for reserves, redemption rights, issuer licensing, and oversight and has successfully passed the Senate Banking Committee. Similarly, the STABLE Act, introduced in the House in March 2025, seeks to create a framework for dollar-denominated payment stablecoins, emphasizing transparency and accountability and has been ordered to be reported by the House Financial Services Committee in April 2025. Common elements in these bills include the requirement for one-to-one reserve backing, restrictions on the types of eligible reserve assets, and mandates for regular audits. Furthermore, both bills seek to clarify that payment stablecoins should not be classified as securities under federal law. The progress of this legislation in both chambers of Congress suggests a strong likelihood of a comprehensive federal regulatory framework for stablecoins being enacted in the US during 2025.

Adding to the US regulatory landscape, the SEC's Division of Corporation Finance issued a statement on April 4, 2025, clarifying its position on certain "Covered Stablecoins". The statement specifies that USD-pegged stablecoins that are backed 1:1 by low-risk, liquid assets and are designed for use in commerce and payments do not involve the offer and sale of securities. This clarification provides a degree of regulatory certainty for issuers of stablecoins meeting these criteria, potentially facilitating their use as payment instruments without necessitating SEC registration. However, this guidance explicitly excludes algorithmic stablecoins and those that offer yield or interest.

The evolving regulatory landscape is having a multifaceted impact on the stablecoin market. Increased regulatory scrutiny and the implementation of frameworks like MiCA in the EU are leading to higher compliance costs for major issuers. There is also a potential risk that overly stringent regulations could stifle innovation and make it challenging for smaller issuers to compete, possibly leading to market consolidation. On the other hand, the clarity provided by regulatory frameworks is expected to boost institutional investor confidence, encouraging greater adoption of stablecoins by traditional financial institutions. The anticipated passage of stablecoin legislation in the US could position US issuers favorably in the global market , while the EU's MiCA regulation might create barriers for non-EU issuers of USD-denominated stablecoins seeking to operate within the European market.

Innovation and Emerging Trends

The stablecoin market in 2025 continues to be a hotbed of innovation, with several new projects and technological advancements gaining traction.

Among the new stablecoin projects is Pi Protocol, which aims to differentiate itself by being backed by yield-bearing real-world assets, such as bonds. This project is expected to launch on the Ethereum and Solana blockchains in the second half of 2025, representing a move towards incorporating traditional financial instruments to generate returns for stablecoin holders. Another notable project is World Liberty Financial USD1, a new stablecoin pegged to the US dollar that has the backing of President Donald Trump and his family. The reserves for USD1 will be custodied by BitGo, a prominent digital asset custodian. This project highlights the increasing interest in stablecoins from political figures and their potential integration into specific ecosystems. Ripple's stablecoin offering, RLUSD, announced its availability on global exchanges in December 2024, signaling the entry of established fintech companies into the stablecoin arena. The Wyoming Stable Token (WYST), an initiative by the Wyoming Stable Token Commission, entered its testing phase across multiple blockchain networks in March 2025. This project aims to be the first fiat-backed and fully reserved stable token issued by a public entity in the United States, representing a novel approach to government involvement in the stablecoin market. Furthermore, Avit Stablecoin was launched in March 2025 by Custodial Bank and Vantage Bank, marking it as "America's first bank-issued stablecoin on a permissionless blockchain," specifically Ethereum. This development signifies the increasing integration of traditional banking with blockchain technology and the potential for banks to issue their own stablecoins. These new projects demonstrate a continued drive for innovation within the stablecoin space, with a particular focus on real-world asset backing and navigating the evolving regulatory landscape.

Technological advancements are also playing a crucial role in shaping the stablecoin market. There is a significant emphasis on developing interoperability solutions that would allow for the seamless transfer and utilization of stablecoins across various blockchain networks. This is essential for enhancing the usability and reach of stablecoins across different decentralized applications and ecosystems. Another key trend is the increasing focus on real-world asset tokenization as a mechanism for backing stablecoins. By backing stablecoins with tangible assets such as gold, commodities, and U.S. Treasuries, issuers aim to enhance their stability and potentially link their value to real-world economic activity. Circle, a major issuer of USDC, is actively developing several technological enhancements, including Modular Smart Contract Accounts for advanced wallet functionality, Circle Paymaster to enable gasless transactions, and CCTP V2 for facilitating more efficient cross-chain transfers of USDC. These advancements are geared towards improving the user experience and reducing the costs associated with stablecoin transactions. Additionally, Visa's Tokenized Asset Platform (VTAP) is playing a significant role by enabling banks to issue and manage fiat-backed tokens and stablecoins, effectively bridging the gap between traditional financial infrastructure and blockchain technology. These technological advancements are crucial for unlocking the mainstream adoption of stablecoins by making them more user-friendly, efficient, and connected to the traditional financial system.

While facing regulatory scrutiny and having experienced significant failures in the past, innovation in algorithmic stablecoins continues in 2025. Examples of algorithmic stablecoins that remain active include Frax (FRAX), which operates on a fractional reserve system, and Ampleforth (AMPL), known for its unique rebasing mechanism that adjusts token supply based on price fluctuations. Terra Classic (USTC) is also attempting a comeback, focusing on enhanced governance and updated stabilization protocols. Furthermore, there is a growing interest in developing hybrid models that blend fiat collateral with algorithmic adjustments and the efficiencies of blockchain technology, aiming to achieve greater stability than purely algorithmic models. Despite these ongoing efforts, the widespread adoption of algorithmic stablecoins for mainstream business and everyday use remains uncertain due to persistent concerns about their reliability and the potential for depegging events.

Over-collateralized stablecoins continue to primarily serve a niche within the cryptocurrency market, particularly within the decentralized finance (DeFi) ecosystem. These stablecoins, such as Aave's GHO and Ethena's USDe (which also incorporates some algorithmic features), are backed by other cryptocurrencies, requiring the value of the collateral to exceed the value of the issued stablecoins to maintain their peg. This over-collateralization is necessary to buffer against the price volatility inherent in the backing crypto assets. As of early 2025, the combined market capitalization of all crypto-backed stablecoins was approximately $19 billion. While these stablecoins provide a decentralized alternative for various DeFi applications, their capital inefficiency due to the over-collateralization requirement makes them less practical for broader use in everyday transactions or cross-border payments.

The emergence and potential impact of Central Bank Digital Currencies (CBDCs) also remain a significant factor influencing the stablecoin landscape in 2025. In a notable policy decision, President Trump issued an executive order in January 2025 explicitly opposing the establishment, issuance, circulation, and use of a CBDC within the United States. This stance reflects concerns about potential threats to financial stability, individual privacy, and the sovereignty of the US, and it signals a clear preference for private sector-led innovation in the digital currency space, particularly through dollar-backed stablecoins. However, on a global scale, over 130 jurisdictions are actively exploring CBDCs at various stages of development, with some countries, including the Bahamas, Jamaica, and Nigeria, having already launched their own central bank digital currencies. This indicates a widespread international interest in government-backed digital forms of currency. The US policy aims to leverage the potential of dollar-backed stablecoins to ensure the continued international dominance of the US dollar in an increasingly digital financial world. This contrasts with the approach taken by some other major economies, such as the EU, where policymakers view CBDCs (like the digital euro and digital pound) as being more aligned with their goals of maintaining financial stability compared to cryptocurrencies and private stablecoins. While some analysts suggest that a US CBDC could potentially compete with privately issued stablecoins in the future , the current US administration's strong stance against a CBDC suggests a regulatory environment more favorable to the growth and adoption of private stablecoins within its jurisdiction. The divergent policy approaches between major global economies regarding CBDCs and stablecoins will likely continue to shape the future of digital currencies worldwide.

Sector Adoption and Use Cases

Stablecoins have witnessed increasing adoption across various sectors of the financial landscape by April 2025.

Decentralized Finance (DeFi) remains a cornerstone for stablecoin utilization. These digital assets are integral to the functioning of numerous DeFi protocols, serving as the primary medium of exchange and collateral for liquidity pools on decentralized exchanges (DEXs), lending and borrowing platforms, and yield farming initiatives. The price stability offered by stablecoins is crucial for the smooth operation of these decentralized financial applications. They facilitate seamless trading of other, more volatile crypto assets on DEXs and provide a relatively stable store of value within the often-fluctuating DeFi ecosystem. Notably, USD Coin (USDC) is increasingly recognized as a key on-ramp for institutional investors seeking exposure to the opportunities presented by DeFi, owing to its focus on regulatory compliance and transparency. Overall usage data indicates that stablecoin activity within the DeFi sector remains at historically high levels, underscoring their continued and critical importance to this evolving financial paradigm.

The use of stablecoins in cross-border payments has also experienced significant growth and adoption. Stablecoins offer a compelling alternative to traditional methods of international money transfer by providing faster transaction speeds, significantly lower fees, and enhanced efficiency. By circumventing traditional intermediaries such as correspondent banks, stablecoins can drastically reduce both the cost and the time required for cross-border settlements. In 2024, the total transfer volume of stablecoins even surpassed the combined transaction volumes of major global payment networks like Visa and Mastercard, indicating their growing prominence in facilitating international value exchange. Furthermore, major corporations and financial institutions, including Visa, PayPal, Stripe, and Revolut, are actively integrating stablecoins into their payment infrastructures to streamline cross-border payment processes.

The adoption of stablecoins for everyday transactions is also showing promising signs of growth in 2025. Stablecoins are increasingly being integrated into digital wallets and linked to existing payment systems, making them more accessible for consumers to use for everyday purchases, both online and in physical stores. Merchant acceptance is also on the rise, with major payment processors like PayPal and Stripe beginning to enable merchants to accept crypto assets, including stablecoins, as a form of payment. Stripe's acquisition of the stablecoin platform Bridge in 2024 was a significant step towards facilitating stablecoin settlements within its vast payment network. Moreover, PayPal's launch of its own stablecoin, PYUSD, is specifically aimed at facilitating faster and more cost-effective international transfers for both consumers and businesses, but it also holds the potential for broader use in everyday commercial transactions. While the adoption of stablecoins for everyday transactions is still in its early stages compared to their use in DeFi and cross-border payments, these developments suggest a growing trend towards their integration into mainstream commerce.

Conclusion

In April 2025, the stablecoin market stands as a robust and increasingly influential segment within the cryptocurrency landscape, with a total market capitalization exceeding $200 billion. Dominant stablecoins like USDT and USDC continue to lead the way, but the emergence of new players and innovative models indicates a market ripe for further evolution. Regulatory developments worldwide, particularly the comprehensive MiCA framework in the EU and the promising legislative progress in the US, are laying the groundwork for a more structured and regulated future for stablecoins. Technological advancements are enhancing their utility and accessibility, driving adoption across key sectors such as DeFi, cross-border payments, and everyday transactions. While the expert outlook for the stablecoin market in 2025 is largely positive, fueled by regulatory clarity and increasing adoption, the market still faces significant risks and challenges related to peg stability, transparency, and illicit use. These issues will require continued attention and robust solutions to ensure the long-term health and trustworthiness of stablecoins. Ultimately, the state of stablecoins in 2025 reflects their growing importance as a bridge between traditional finance and the digital asset world, with the potential to redefine how value is transferred and managed globally, provided that the inherent risks are carefully navigated and the regulatory landscape continues to mature.

Traditionally, business have focused on handful business objectives. For example, Walmart might want to sell your groceries and Instagram might be just an app to share photos. In either case, a business once successful and grown to a certain extent ends up dealing with lot of money. A lot of this money comes via people though some of it might also come from other businesses.

At this point, the app or website or even brick and mortar store ends up allocating a lot of their resources to handle the money. For example, Costco or Walmart have actual humans that help you checkout products. They also have online payment processors that process payments on their behalf. Soon, these business are dealing with a complex web of financial transactions, associated laws, risk analysis, fraud detection etc.

As readers would notice that large businesses like Walmart might be dealing with more money than many small banks and might be doing nearly all the work that a bank also does such as fraud detection, customer support, check processing cashbacks etc.

Embedded Finance

Many businesses have discovered that at this point, it might actually make more sense for the business to officially provide financial services as part of their core business itself. However, in USA a lot of such activities require a banking license which is hard to obtain. Walmart tried for over 10 years and then gave up.

Embedded finance is an idea that the business closely partners with an existing bank or similar institution to provide financial services within the businesss own ecosystem/app/website etc. so seamlessly that the end user may never have to deal with the underlying real bank.

One good example of this is Apple Credit Card. Apple has partnered with Goldman Sachs and Mastercard to provide this credit card. However for customers this is pretty much an extension of their Apple Phone. Walmart also has partnered with multiple providers. JP Morgans embedded finance specifically targets Walmart marketplace sellers.

Pillars of embedded finance

In embedded finance often only a subset of financial services are provided to the user. For example, Apple provides an Apple credit card but not a checking account.

1. Payments

The most important pillar generally is payments. A lot of merchants do this through co-branded credit cards such as airlines credit cards. But some also provide close integration with banks to allow a checking account based payment. Walmart does this today.

2. Store of value

Many provide a store of value such as Amazon Gift Balance. Here you can trust some money with the business and then use to easily for payments. Sometimes you can also earn money and withdraw it to your bank account.

Apps like Wise for example allow you to keep money in multiple currencies and use it accordingly.

3. Lending

Another popular feature is lending. Credit cards is an example of this but many apps will allow you to earn you paycheck 2 days before the actual date.

4. Tax Management

Some apps will help you to manage your taxes better by looking at all your earnings.

5. Insurance

A lot of merchants allow you to buy insurance to protect your purchases. This is also a great example of embedded finance.

Conclusion

Embedded finance is when the non financial business provides financial services by partnering with real financial institutions within their product. It is a popular area of product development and is only going to grow.

The financial landscape is continuously evolving, and one of the most significant recent developments has been the rapid emergence and widespread adoption of Buy Now Pay Later (BNPL) services. This innovative payment method has swiftly moved from a niche offering to a mainstream financial tool, capturing the attention of consumers, retailers, and financial institutions alike. Its increasing popularity reflects a fundamental shift in consumer preferences towards flexible and accessible payment options, significantly impacting both the retail sector by influencing purchasing decisions and the broader financial industry by challenging traditional lending models. This article provides a comprehensive analysis of BNPL, exploring its definition and core mechanisms, historical evolution, recent trends, advantages, disadvantages, the current regulatory environment, and the future outlook of this dynamic market.

What is Buy Now Pay Later? Defining the Core Mechanism

Buy Now Pay Later represents a form of short-term financing that enables consumers to make purchases immediately and defer payment to a later date, typically through a series of fixed installments . Often described as a type of short-term loan, BNPL allows shoppers to acquire products and services without committing to the full payment amount upfront . These services are frequently utilized for a range of purchases, from relatively minor yet costly items like smartphones and luxury clothing to more everyday goods and services .

The fundamental mechanism of BNPL involves splitting the total purchase cost into smaller, more manageable installments, with the initial payment often due at the time of checkout . The remaining balance is then repaid over a predetermined period, typically in bi-weekly or monthly installments . A key aspect of this process is the role of the BNPL provider, which pays the merchant the full purchase amount upfront (minus any agreed-upon fees), thus assuming the responsibility of managing the subsequent repayments from the consumer . This immediate payment to the merchant, similar to a credit card transaction, is a significant factor in the appeal of BNPL for businesses .

Several common features characterize BNPL services. Notably, many BNPL plans, particularly those structured as "pay-in-four" models (where the purchase price is divided into four equal installments), are offered without interest, making them an attractive alternative to traditional credit options for consumers seeking to avoid finance charges . However, it is important to note that some BNPL providers may charge fees, such as late payment fees if installments are missed, or service fees, especially for longer-term financing options . The application process for BNPL typically involves a quick, often seamless integration into the checkout process, with providers usually conducting a soft credit check that does not negatively impact the consumer's credit score . This ease of access and convenience at the point of sale, both online and increasingly in physical stores, has contributed significantly to the widespread adoption of BNPL .

The Consumer Financial Protection Bureau (CFPB) has taken a closer look at BNPL products, particularly those structured as "Pay-in-Four" loans accessed through digital user accounts. The CFPB has interpreted these digital user accounts, which allow consumers to access BNPL credit as a payment method, as a form of credit card under Regulation Z . This classification has significant implications for consumer protection and the regulatory obligations of BNPL providers in the United States, suggesting a move towards treating certain BNPL offerings with the same regulatory scrutiny as traditional credit cards.

A Look Back: The History and Evolution of BNPL

The concept of deferred payment is not new, with the earliest forms of what resembles modern BNPL dating back to the 19th century . During this era, installment plans emerged as a way for consumers to purchase expensive goods, such as furniture, pianos, and farm equipment, which they could not afford to buy outright . This early model of BNPL made previously unattainable luxuries accessible to a broader segment of the population, fostering a symbiotic relationship between retailers and customers by increasing sales and consumer satisfaction . In the early 20th century, layaway programs and installment plans offered by stores and catalog companies like Sears and Roebuck further solidified the practice of deferred payments . Notably, the Singer Sewing Machine Company in the 1840s is often cited as an early pioneer, offering their products with a "dollar down, dollar a week" payment plan . Similar systems existed in other parts of the world, such as the traditional "Udhar Khata" system in India, where local corner shops kept credit ledgers allowing customers to buy provisions on credit and repay later .

The introduction of credit cards in the 1950s revolutionized consumer finance, providing a more flexible form of deferred payment that allowed consumers to purchase goods immediately and pay back the credit card issuer over time . However, unlike many modern BNPL services, credit cards typically involved interest charges, annual fees, and required more stringent credit checks, which limited accessibility for some consumers .

The digital era, particularly the 2010s, ushered in a new wave of BNPL services that reimagined deferred payments for online shopping . Fintech companies like Afterpay (now Cash App Afterpay) , Klarna , and Affirm emerged, offering simple, interest-free installment plans with short repayment periods, often structured around four installments over six weeks . This model proved particularly appealing to millennials and Gen Z consumers, who were often wary of traditional credit card debt .

Several key milestones mark the evolution of modern BNPL. The early adoption by the fashion and electronics industries highlighted the potential of this payment method . Klarna's introduction to the US market in 2015, following Affirm's earlier start around 2012 and Afterpay's founding around 2014, along with the establishment of Sezzle in 2016, signified the growing presence of dedicated BNPL providers . The entry of major payment processors like PayPal into the BNPL space further validated its significance . Technological advancements, particularly the proliferation of e-commerce and fintech innovations, played a critical role by enabling seamless integration of BNPL options into online checkout processes and facilitating instant credit assessments . Strategic partnerships between BNPL companies and major retailers drove significant growth and expanded the user base . The COVID-19 pandemic in the early 2020s acted as a major catalyst, accelerating the adoption of BNPL as online shopping surged and consumers faced economic uncertainty . The increasing value and potential of the BNPL market also led to significant acquisitions and investments, such as Square's acquisition of Afterpay and PayPal's purchase of Paidy .

The evolution of BNPL illustrates a recurring theme in consumer credit, where the fundamental concept of installment-based purchasing has been adapted and refined for contemporary economic and technological landscapes. The modern iteration, driven by digital platforms and a focus on ease of use, has resonated particularly with younger demographics seeking alternatives to traditional credit.

Table 1: Key Milestones in BNPL History

BNPL providers like Klarna issue instant loans that you can pay over time. In some sense they are same as credit cards but they give their customers longer than 1 month to pay the bill without any interest. Customers arguably also have less consumer protection through BNL as chargebacks etc. could be either hard or impossible.

The hardest part for these BNPL companies is getting customers to signup. Post signup these companies want to know more about your credit history, your purchase habits etc.

Doordash like companies sell low value items to consumers and intuitively you might think that these are not candidate for BNPL purchases. While your intuition is right, you are missing another big point.

While doordash is low value it is a high volume ecommerce which means people order on Doordash often. Every time they order they have to select payment option and they end up seeing the BNPL companys name. This gives brand visibility. Secondly, BNPL company can give offers such as get $10 off your first order. Even if you are just ordering $12 Butter chicken, now it could cost your $2. You might be willing to signup just to get that $10. Once you signup BNPL company has your data. This helps them target you on other platforms.

Doordash - Klarna deal will have fine print that benefits both Doordash and Klarna. We will not know all the details so soon but the deal is certainly smart and I an see the benefit for everyone in it. It is not about food being expensive.

What is BNPL?

Essentially, BNPL is a short-term financing option that allows consumers to purchase goods or services and pay for them in installments, typically over a few weeks or months. Unlike traditional credit cards, BNPL often involves:

• Faster approval: Applications are usually processed quickly, often within seconds.

• Simplified process: The experience is integrated directly into the online or in-store checkout.

• Focus on smaller amounts: BNPL often targets smaller purchases, making it accessible for everyday items.

• Interest-free options: Many BNPL providers offer interest-free installments if payments are made on time.

Why is BNPL gaining so much popularity?

Several factors are driving the BNPL boom:

• Increased accessibility: BNPL provides access to credit for those who may not qualify for traditional credit cards or prefer to avoid them. This is especially true for younger generations and those with limited credit history.

• Budgeting and affordability: Splitting purchases into smaller payments makes larger purchases more manageable, helping consumers budget and avoid large upfront costs.

• Convenience and seamless integration: BNPL is often integrated directly into the checkout process, making it a convenient and hassle-free payment option.

• Transparency: Many BNPL providers clearly display the payment schedule and any potential fees, promoting transparency and helping consumers understand the terms.

• E-commerce growth: The rise of online shopping has fueled the demand for flexible payment options, and BNPL perfectly aligns with the online shopping experience.

• Avoiding Credit Card Debt: Many consumers are weary of high interest rates on credit cards, and BNPL offers a perceived safer alternative.

Why does BNPL matter?

• For consumers: BNPL offers greater flexibility and affordability, enabling access to desired products and services without immediate financial strain. It can also be a helpful tool for budgeting and managing cash flow.

• For retailers: BNPL can boost sales by increasing conversion rates and average order values. It can also attract new customers and enhance customer loyalty.

• For the economy: BNPL is influencing consumer spending habits and driving retail growth. It is also pushing traditional financial institutions to adapt and offer more flexible credit options.

Things to Consider:

While BNPL offers numerous benefits, it's crucial to use it responsibly.

• Overspending: The ease of BNPL can lead to overspending if not managed carefully.

• Late fees: Missed payments can result in late fees and potential damage to your credit score.

• Multiple BNPL accounts: Juggling multiple BNPL accounts can become overwhelming and lead to financial difficulty.

• Regulation: The BNPL industry is facing increased regulatory scrutiny, and changes in regulations could impact consumers.

In conclusion, BNPL is a significant trend reshaping the retail landscape. By understanding its benefits and potential risks, consumers can make informed decisions and leverage BNPL as a valuable tool for managing their finances.

We had in past covered Top AI substacks to follow.

Fintech Takes

Alex Johnsons interesting substack that covers a wide array of topics also gives very good links to other interesting content around fintech.

Fintech Business Weekly

Jason Mikula looks closely at the world of financial technology, like using a microscope instead of just seeing things in a positive light. He does careful research into the rules and how these companies work. People who pay for his newsletter get even more detailed information each week.

Net Interest

Every week, Marc Rubinstein explores a fascinating topic in the world of financial technology in great detail. If you pay for a subscription, you'll get even more insights on current events and invitations to join online discussions with Marc.

The Fintech Blueprint

Lex Sokolin explains many different parts of financial technology, from big, all-in-one apps to new, internet-based money systems. You can pay for different levels of his subscription to get even more information.

WTFintech?

Nicole Casperson writes a newsletter twice a week about what's new in financial technology. She pays extra attention to how technology is changing investing and making it more accessible to everyone.

Stripe saw $1.4 trillion in Total Payment Volume (TPV), growing 38% YoY, while Adyen wasnt far behind with 1.29 trillion processed (+33% YoY). Adyen maintained its 50% EBITDA margin, while Stripe finally hit full-year profitability, proving its business model can scale. [link]

Adyen is designed for large enterprises with complex payment requirements, focusing on businesses that require multi-channel payment solutions for both online and offline transactions. Adyen is used by Ebay and Etsy for example.

Stripe, on the other hand, caters to businesses of all sizes, with a particular emphasis on small businesses, e-commerce, and tech-savvy companies looking for easy API integration.

Key difference between Stripe and Adyen remains that while Adyen has nailed the sales aspect of the business, Stripe has nailed the technical aspect.

Adyen is likely to remain a payment processor. Stripe will grow to be a behemoth like Google and Meta eventually if it is done right.

Either ways both companies are well suited for the the future of payments and likely to grow well and remain profitable. Though stripe hit profitability this year.

Klarna partners with Euronics: Klarna, the AI-powered payments company, has partnered with Combined Independent Holdings (CIH) to bring flexible payment options to 620 Euronics stores across the UK.

Affirm and Shopify expand globally: Affirm, the payment network, and Shopify are taking their multi-year partnership global, expanding their "Buy Now, Pay Later" services to more markets.

TMX VettaFi acquires Credit Suisse Bond Indices: TMX VettaFi, a subsidiary of TMX Group, has acquired Credit Suisse Bond Indices from UBS, expanding its indexing and analytics capabilities

PayQuicker expands clinical trial payouts: PayQuicker has announced the expansion of its instant payout services for clinical trials in the EU and UK

Waystar announces $800 million public offering: Waystar, a healthcare payments software provider, has priced its public offering of common stock.

CredCore raises $16 million: AI-powered credit investment platform CredCore has secured $16 million in Series A funding to accelerate AI-driven credit investing and management

Understanding business model around credit cards

Credit card lends money to the user in near real time. When you use a credit card you are essentially spending the banks money instead of your own. As long as you pay your credit card bills on time, you are fine. However when you spend more than you earn and cant pay the bills you have to pay an interest to the bank.

Contrary to what everything might think, banks do not want you default on your payment. Instead banks want you to pay your bills on time. Banks earn their profits from the 1-2% transaction fees they charge the merchant.

As we all know, lending money is a very tricky business. Some people are trustworthy and some are not. The banks encourage trustworthiness by offering 0 interest to those who pay their bills. For those who default the interest rate is determined by the market forces and competition.

What happens if interest rates are capped ?

If the interest rates are capped banks will suddenly find it way too risky to lend money to less creditworthy individuals. This basically would lead to scenario where poor people might not qualify credit cards at all. Hence such people will be forced to spend money they have in the bank. As we all know, this makes life hard for them. What is worse is that these people might have to resort to payday loans and other methods which charge even greater interest for their day to day spending.

Eventually this impacts the consumption as well. If people dont have credit cards they will spend less and as a result this would impact what local businesses earn. Less income for them also means less jobs for that area. Since American neighborhoods often are gentrified it would mean less jobs in poor neighborhood further making life of poor people even more difficult.

Helping people with credit card debt

Good economics also helps poor people. The correct way to help credit card debt owners is to allow banks to provide more innovative products. Increasing competition among banks and reducing regulations for low credit limit cards might go a long way in helping banks offer better products to poor customers.

Congress has often failed to pass sensible regulations here and instead have passed dubious regulations that have harmed the banking sector and consumers alike.

Large companies like Walmart were denied banking licenses for frivolous reasons. Had the Congress and other regulators had focused on passing sensible regulations that reduce red tape and increase banking competition we would have been in a much better shape than what we are currently in terms of credit card debt.

Under Biden administration, the crypto world was a bit in trouble as the administration was hostile to them and to tech in general. Post Trumps reelection, tech is much more enthusiastic and appointment of David Sachs as Crypto boss. This means the Trump admin is much more favourable to Crypto and tech in general. This move has probably made a16z decide to close its London office and focus more on US opportunities.

David Sacks will be the White House A.I. & Crypto Czar and lead the Presidential Council of Advisors for Science and Technology, the president-elect announced Thursday in a social media post. [link]

Albanese added:

This doesnt change our confidence in the UKs growing role in crypto and blockchain. We will continue to invest in great entrepreneurs no matter where they are in the world, including the UK. We also remain ready to help the UK with its ongoing crypto efforts.

Marc Andreessen has publicly stated that he decided to back Donald Trump for President following a disappointing meeting with the Biden administration. He has also noted that during the Biden administration, many of the crypto firms they have supported were debanked due to regulatory pressure.

In a blog post last week, a16z welcomed the change in government stating that as tech evolves so must the Securities and Exchange Commission (SEC) a regulator that has been decidedly anti-crypto the past four years.

New leadership plus the formation of a new crypto task force gives the agency an opportunity to take meaningful action and adapt. The time for that action is now: The market for crypto assets has grown in size and sophistication such that the SECs recent harmful approach of enforcement and abdication of regulation needs urgent updating. There is no other way to promote efficient markets, encourage innovation, and ensure investor protections are adopted as professional investment services begin to operate within this new industry. The principles underpinning the relevant securities laws disclosure, fraud prevention, and market integrity should remain sacrosanct. However, applying these principles in a way that reflects the distinct characteristics of crypto assets requires targeted regulatory changes.

This has sent however a bit of shockwave in London where tech sector is already struggling due to over-regulations and lack of talent. Europe is lagging behind in tech innovation and appears to have rather crippled by regulators who show very little understanding of technology.

This must be seen as crossing of a proverbial rubicon. Some call this grift and some might call this clever move but we will see more of this happening now that the celebrities have figured out a clever new way to grift off their fanbase. The hawk tuah girl too was accused of scamming her fans when she made millions off her memecoin earlier.

There are news reports that MrBeast, the most popular youtube start of these times is also planning his own memecoin.

One of the reason why we are here is because the Biden administration chose not to pass any legislation but rather arm twist tech firms through the shady regulations. Now the pendulum has swung in other direction and Trump admin will probably allow anything as long as he gets a cut.

Trump Memecoin is a cryptocurrency that leverages the polarizing and highly recognizable persona of former U.S. President Donald Trump. Often created as a satirical or humorous digital asset, Trump Memecoin taps into the internet's fascination with memes and political commentary. Like other meme-based cryptocurrencies such as Dogecoin or Shiba Inu, it thrives on community engagement, viral trends, and speculative trading. The coin's value is typically driven more by its cultural relevance and the enthusiasm of its supporters than by any intrinsic utility or technological innovation. While some view Trump Memecoin as a playful nod to political satire, others see it as a speculative investment or a way to express support for Trump's brand. As with all meme coins, it carries significant volatility and risk, making it a controversial yet intriguing addition to the crypto space.

Tell us what you think.

What do you think about Trump memecoin ? Tell us in comments.

A new Bloomberg Intelligence report reveals that artificial intelligence could lead to approximately 200,000 job cuts in global banks over the next three to five years, marking a significant transformation in the financial services sector. [link]

Citi bank in another report had said that 54% of their jobs have high automation potential.

Citi said in a report in June that AI is likely to displace more jobs across the banking industry than in any other sector. About 54% of jobs across banking have a high potential to be automated, Citi said at the time.

Together this job loss might result into around $180B savings for banks all together. This also means that tech companies who are into AI and automation will be responsible for executing this plan and hence would earn more from the banks.

Which are these jobs that can be automated? Customer support is certainly one of them but what could be others ? We do not have detailed intelligence on that yet but clearly the banks themselves have figured it out.

Who stands to win ?

Very likely foundational model companies such as OpenAI, Google, Microsoft, Anthropic all could stand to gain here. But also, specific banking functions might be outsourced to other products which too might end up becoming large companies.

Could the customer service be handled by one large company building models specific to their client bank ? Perhaps yes.

Risk analysis, mortgage approvals, data crunching, fraud detection, etc. could also be replaced with 100% AI agents. This is already underway for new banks but the old banks will have to get on it as well.