Stripe may enter L1: Analyzing the payment giant's Blockchain strategy

Recently, there have been rumors in the crypto circle that a certain payment giant intends to launch its own L1 Blockchain network. After completing two major acquisitions, launching a dedicated chain may be the next step in its layout in the blockchain field. As a top global payment service provider, the company plays a technical bridging role between merchants, acquiring institutions, card networks, and issuing banks, ensuring that transactions are efficient and secure.

If the L1 mainnet is really launched, under basic scenarios it may support stablecoin payments, with deep integration of customer payments and merchant settlements; in ideal scenarios, it could completely reshape the payment system, including:

1. Bypass direct payments to card organizations and banks;

2. Micropayment subscription model that is difficult to achieve with traditional systems;

3. Generate income by holding a short-term deposit balance.

Currently, the company primarily operates as a payment gateway and acquiring institution. If it launches its own L1 network, it is expected to replace some roles of traditional issuing banks and card organizations, which could become a historic turning point in the payment industry.

Will the L1 mainnet really be launched?

Rumors about the company launching an L1 Blockchain have been raised by several observers in the cryptocurrency field. Although there has not yet been an official confirmation, multiple sources have mentioned this matter. Similar to a well-known investment platform launching stock tokenization features based on Arbitrum, this payment giant could be the next major fintech company to enter the market.

The company's mission is "to enhance the Internet GDP," focusing on building global economic infrastructure to help everyone from startups to large enterprises manage online payments, operations, and growth. From this vision, Blockchain is undoubtedly a highly attractive technology.

In February of this year, the company acquired a stablecoin infrastructure company for approximately $1.1 billion, further strengthening its strategic position in the stablecoin financial infrastructure sector. Subsequently, at the company conference in May, it officially launched the "Stablecoin Financial Account" service.

This service has launched in 101 countries, and businesses can:

• Hold two mainstream stablecoins;
• Deposit and withdraw stablecoins via ACH/wire transfer for USD and via SEPA for EUR;
• Access USDC on-chain through multiple mainstream public blockchains.

This means that businesses can easily access dollar-based stablecoins on the platform and achieve efficient fiat deposit and withdrawal operations through a seamlessly integrated traditional banking system.

In addition, the company acquired a Web3 wallet infrastructure startup in June this year, which provides functions such as wallet creation, transaction signing, key management, and Gas abstraction based on email or SSO login. Combining the existing stablecoin infrastructure with wallet technology, launching its own Blockchain mainnet to achieve system collaborative development seems to be a natural progression.

What changes will the launch of the L1 mainnet bring?

Although the launch of the L1 mainnet is still rumored, if it becomes a reality, it could empower a range of financial services that were previously unattainable. Below are several conceptual directions based on existing businesses and potential expansions.

Existing Features

As one of the most well-known payment service providers, the company acts as a technological bridge between merchants, acquirers, card organizations, and issuing banks, ensuring a smooth and secure payment process. The main services include:

• Payment Gateway: Collects user card information, encrypts it, and transmits it to the card network and issuing bank;
• Supports multiple payment methods: supports credit cards, digital wallets, bank transfers, and local payment methods;
• Fraud detection and security safeguards: Detect fraudulent transactions through machine learning, adhering to security standards such as PCI-DSS;
• Multi-currency and international payment support: Automatically convert multiple currencies to facilitate global sales;
• Reporting and analysis tools: Provide merchants with insights on transaction records, success rates, user behavior, etc.;
• Technical Integration and Operational Support: Provide APIs and SDKs to assist businesses in deploying payment systems, and handle refunds, billing, customer support, and other matters;
• Customer experience optimization: Supports payment scenarios such as subscriptions, installment payments, refunds, etc.;
• Merchant Settlement Intermediary: Collaborates with acquirers or handles funds settlement from issuers to merchants independently.

Before the emergence of payment service providers, merchants had to integrate multiple payment methods on their own and sign contracts with acquirers one by one, which greatly affected operations and user experience.

the potential transformation it may bring

If the company launches an L1 Blockchain network, it may bring about the following changes:

Basic Scenario

1. Merchant Stablecoin Account Integrated with L1

The company currently offers stablecoin account services in 101 countries, allowing merchants to hold mainstream stablecoins and transact through traditional banking systems or on-chain networks. If an in-house L1 is launched, it is expected to further support transactions through its own chain, improving operational efficiency and expanding application scenarios.

2. Stablecoin Settlement Options

As a payment service provider, the company often collaborates with acquirers or takes on settlement functions itself. If a proprietary L1 is introduced, merchants may choose to settle sales revenue in USD stablecoins, which is particularly significant for merchants with high demand for USD but limited access.

3. User Wallet Services

By acquiring the company, the infrastructure for creating wallets for users is already in place. Although the current focus is on the merchant side, if combined with its own L1 and existing services, it is possible to provide individual users with an easy-to-use wallet that supports payments and other Web3 financial activities.

4. Customer Stablecoin Payment Options

Currently, the company primarily supports traditional payment methods such as credit cards and bank accounts. If Web3 wallets (provided by the company or a third party) are supported, customers will have the option to use stablecoins for payment.

Ideal Scenario

1. Direct payment between customers and merchants

Payments made through credit cards or bank accounts rely on traditional financial networks. However, if a self-owned L1 allows users to pay merchants directly with stablecoins, it is expected to bypass issuing banks and card organizations, significantly improving settlement speed and reducing costs. However, it is important to note that the on-chain payment cancellation or refund mechanism is relatively complex and requires the introduction of a complete protection mechanism.

2. Subscription Services Based on Micropayments

Blockchain has micro-payment and streaming subscription capabilities. Current subscriptions are mostly billed on a monthly or yearly basis, but our own L1 can support a per-minute billing model, enabling automatic settlement based on actual usage time, bringing a new business model for service providers and consumers.

3. The DeFi Utilization of Short-term Deposits

The current payment system has a long settlement cycle, partly due to the need to address issues such as fraud, cancellations, and refunds. Even if customers are supported to pay merchants directly with stablecoins, some funds may still need to remain in the system for a short period.

These short-term deposits will form a massive liquidity pool that can be used for DeFi protocols, lending markets, or bond investments, thereby enhancing capital efficiency and generating additional returns.

Conclusion

After long-term attention to the stablecoin industry and observing the related ecosystem, it is not difficult to find that the rumors about the company launching its own L1 mainnet are indeed quite noteworthy. So far, several payment giants have only treated Blockchain and stablecoins as additional features to their traditional businesses. If the company truly releases its own L1 mainnet, it could potentially mark an important beginning for the paradigm shift in payment systems.

In the past, the company's main role was as a payment gateway or acquirer, but once the L1 Blockchain is built, it may simultaneously take on the functions of both card issuers and card organizations on a technical level. More importantly, the proprietary L1 has the potential to leverage Blockchain technology to comprehensively enhance payment efficiency and expand new functionalities that traditional systems find difficult to reach, such as micro-payment-based streaming subscriptions and automated management of short-term idle funds.

Currently, payment systems are on the brink of a blockchain-driven wave of innovation. Whether the rumors are true or not, any blockchain-related actions by the company could have a profound impact on the payment industry landscape. Whether we will usher in an era where blockchain reshapes payment infrastructure remains to be seen.