The retail landscape may be on the cusp of a significant transformation, with giants Walmart and Amazon exploring the creation and use of their own cryptocurrencies. These digital coins, likely in the form of stablecoins, are being considered as a way to streamline payments, reduce transaction costs, and enhance customer loyalty programs.

Driving Forces Behind the Crypto Exploration

Several factors are fueling Walmart and Amazon's interest in cryptocurrency. One of the primary motivations is the potential to significantly reduce transaction fees. Merchants pay billions of dollars annually in interchange fees to credit card companies like Visa and Mastercard. By using their own stablecoins, these retailers could bypass these fees, resulting in substantial cost savings. In 2023 alone, US businesses paid $172 billion in transaction fees.

Stablecoins, designed to maintain a stable value by being pegged to a reserve asset like the US dollar, offer a more predictable and less volatile alternative to cryptocurrencies like Bitcoin. This stability is crucial for payment processing and consumer trust.

Potential Benefits for Retailers and Customers

The adoption of cryptocurrencies by Walmart and Amazon could bring several benefits:

• Reduced Transaction Costs: As mentioned earlier, bypassing credit card fees can save billions.
• Faster Transactions: Cryptocurrency transactions can be faster than traditional payment methods, enabling quicker checkout processes.
• Enhanced Customer Loyalty Programs: Retailers can issue crypto rewards as part of their loyalty programs, offering customers greater flexibility and control over their rewards. Crypto rewards can be easily transferred, traded, or converted to other digital assets, increasing customer engagement.
• Global Accessibility: Cryptocurrencies can facilitate cross-border transactions without the need for currency conversion, benefiting international customers.
• Financial Inclusion: Cryptocurrency can provide access to financial services for individuals who are unbanked or underbanked.

Walmart's Crypto Endeavors

Walmart has been exploring blockchain technology and cryptocurrency for several years. They've already integrated blockchain into their food supply chain to improve transparency and sustainability. In 2024, Walmart reached 200 million transactions through its $2 billion crypto integration with VeChain, tracking and underpinning food distribution.

Amazon's Crypto Strategy

Amazon's interest in cryptocurrency is also growing. While Amazon's coin reward program is coming to an end in August of 2025, they are exploring the use of stablecoins.

Regulatory Landscape and Challenges

The widespread adoption of stablecoins hinges on regulatory clarity. In the United States, the GENIUS Act, is under consideration and aims to establish a framework for private companies to issue stablecoins. The approval of such legislation would pave the way for retailers like Walmart and Amazon to launch their own digital currencies.

Despite the potential benefits, there are also challenges:

• Regulatory Uncertainty: The regulatory landscape for cryptocurrencies is still evolving, and companies need to navigate complex and potentially conflicting regulations.
• Security Risks: Cryptocurrency exchanges and wallets are vulnerable to hacking and theft, requiring robust security measures to protect consumer funds.
• Market Volatility: Although stablecoins are designed to be less volatile, they are not entirely immune to market fluctuations.
• Consumer Adoption: Educating consumers about cryptocurrency and encouraging them to adopt digital currencies for everyday transactions will be crucial.

Impact on the Financial Industry

The potential entry of Walmart and Amazon into the cryptocurrency arena has sent ripples through the financial industry. News of their explorations has already led to a decline in the stock prices of major credit card companies like Visa and Mastercard.

Conclusion

Walmart and Amazon's exploration of cryptocurrency represents a potentially transformative shift in the retail and payments landscape. By creating their own digital coins, these retail giants could reduce transaction costs, enhance customer loyalty programs, and drive greater efficiency in their operations. However, regulatory hurdles, security concerns, and the need for consumer education remain significant challenges that must be addressed before cryptocurrency can achieve widespread adoption in the retail sector.