SoK: Stablecoins in Retail Payments

TL;DR

This paper systematically compares stablecoins and traditional card networks in retail payments, highlighting their differences in infrastructure, costs, and user experience, and introduces the CLEAR framework for evaluation.

Contribution

It provides a unified analytical framework and the CLEAR evaluation method to assess stablecoins versus card networks in retail payment systems.

Findings

Stablecoins enable efficient, continuous, and programmable settlement.

They often reduce merchant fees and support 24/7 value transfer.

Stablecoins face challenges in consumer protection and acceptance.

Abstract

Stablecoins have emerged as a rapidly growing digital payment instrument, raising the question of whether blockchain-based settlement can function as a substitute for incumbent card networks in retail payments. This Systematization of Knowledge (SoK) provides a systematic comparison between stablecoin payment arrangements and card networks by situating both within a unified analytical framework. We first map their respective payment infrastructures, participant roles, and transaction lifecycles, highlighting fundamental differences in how authorization, settlement, and recourse are organized. Building on this mapping, we introduce the CLEAR framework, which evaluates retail payment systems across five dimensions: cost, legality, experience, architecture, and reach. Our analysis shows that stablecoins deliver efficient, continuous, and programmable settlement, often compressing rail-level merchant fees and enabling 24/7 value transfer. However, these advantages are accompanied by an inversion of the traditional pricing and risk-allocation structure. Card networks internalize consumer-side frictions through subsidies, standardized liability rules, and post-transaction recourse, thereby supporting mass-market adoption. Stablecoin arrangements, by contrast, externalize transaction fees, error prevention, and dispute resolution to users, intermediaries, and courts, resulting in weaker consumer protection, higher cognitive burden at the point of interaction, and fragmented acceptance. Accordingly, stablecoins exhibit a conditional comparative advantage in closed-loop environments, cross-border corridors, and high-friction payment contexts, but remain structurally disadvantaged as open-loop retail payment instruments.