On September 22 local time, U.S. fintech company SoFi announced that it had begun settling debit- and credit-card payments from its subsidiary SoFi Bank using its own stablecoin, SoFiUSD. The settlement applies to transactions on Mastercard's payment network. SoFi described the launch as the first time a U.S. nationally chartered bank has gone live with stablecoin settlement on the Mastercard network.
Settlement is the process in which financial institutions exchange funds after a card payment. Consumers continue using their cards as before, while SoFiUSD is used to settle the funds behind the transaction. The company said merchants neither need to hold the stablecoin nor change their payment systems.
Merchants receive the funds through SoFi's corporate-finance platform, Big Business Banking. SoFi CEO Anthony Noto said merchants using the platform can receive settlement funds immediately in a SoFi Bank account and withdraw them as cash without time restrictions or fees.
SoFiUSD is a crypto asset designed to track the value of the U.S. dollar and is issued by SoFi Bank under the supervision of the U.S. Office of the Comptroller of the Currency. The company said each SoFiUSD can be redeemed for one dollar and is backed by reserves composed primarily of cash. However, it is not a bank deposit even though it is issued by a bank. SoFi disclosed that the token is not protected by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation, that the bank does not guarantee its value, and that the value may decline.
The service follows a partnership announced by SoFi and Mastercard in March. SoFi projected that transactions processed in SoFiUSD under the card program would exceed $25 billion on an annualized basis. That figure is a projection, not actual processing volume. The announcement did not disclose the actual volume processed since launch, the blockchain used for settlement, or a timetable for expanding to international transactions.