SoK: Stablecoins in Retail Payments

Paper: arXiv 2601.00196

Authors: Yuquan Li, Yuexin Xiang, Qin Wang, Tsz Hon Yuen, Andreas Deppeler, Jiangshan Yu

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.

Complexity vs Empirical Score

• Math Complexity: 1.5/10
• Empirical Rigor: 4.5/10
• Quadrant: Philosophers — conceptual discussion, limited math and data

Why this score: This paper is a Systematization of Knowledge (SoK) that introduces the qualitative CLEAR framework to compare stablecoins and traditional card networks. It is conceptually thorough and exceptionally well-written, though it lacks formal mathematical modeling, quantitative backtesting, or empirical dataset analysis.

Research Flowchart

  flowchart TD
    A["Research Question: Can stablecoins replace card networks in retail payments?"] --> B["Methodology: Systematize payment infrastructures & map transaction lifecycles"]
    B --> C["Analytical Framework: Introduce CLEAR (Cost, Legality, Experience, Architecture, Reach)"]
    C --> D["Comparative Analysis: Evaluate authorization, settlement, and risk-allocation"]
    D --> E["Key Finding 1: Stablecoins offer efficient 24/7 settlement but externalize user fees and dispute risks"]
    D --> F["Key Finding 2: Card networks dominate open-loop retail via consumer subsidies and standardized recourse"]
    D --> G["Outcome: Stablecoins have conditional advantages in cross-border and closed-loop contexts"]

Cited References (243)

1. What drives the adoption of crypto-payments by online retailers? (2019)
2. Payment Systems Worldwide: A Snapshot—Summary Outcomes of the Fourth Global Payment Systems Survey (2018) — link
3. XSGD launches on Coinbase — link
4. OKX Pay Singapore: Scan-to-pay with stablecoins at GrabPay merchants — link
5. OKX Singapore launches stablecoin payments at GrabPay merchants — link
6. The dark side of licensing cryptocurrency exchanges as payment institutions (2020)
7. Crypto Basics: A Nontechnical Introduction to Creating Your Own Money for Investors and Inventors (2022)
8. A peer-to-peer electronic cash system (2008)

0 of 243 cited works are in the corpus; resolved via arXiv source bundles, Semantic Scholar and OpenAlex. Corpus-wide: 2518 linked papers.