Card payment costs are presented as a single percentage — 1.5%, 2%, 3.5% — but the underlying structure is a stack of charges, each going to a different party in a chain that the merchant has no ability to renegotiate. Pay-by-bank already removes one set of those charges by routing payments through bank rails instead of card networks. Adding stablecoin settlement on top removes a second set: the cross-bank, multi-day settlement chain that sits behind the bank rails themselves. The result is a payment structure that does not need card networks or correspondent banks to function — and the cost difference is built into the architecture, not the marketing.

The card cost structure no one breaks down

A 2.5% card fee for a European merchant is, in rough terms:

  • Interchange: ~0.2% (debit) to 0.3% (credit) under EU caps, higher for commercial cards
  • Scheme fees: ~0.1% to the card network (Visa, Mastercard)
  • Acquirer margin: the rest — the variable component the merchant negotiates

Each of these is a fixed cost of the card model. Interchange is paid to the issuing bank; scheme fees to the card network; the acquirer margin compensates the acquirer for the risk, processing, and chargeback infrastructure it provides. The merchant pays all three.

For merchants in higher-risk verticals, the same cost stack expands to 3–6% as risk surcharges layer on top. Add chargebacks, refund handling, and reserve holdbacks, and the all-in cost can exceed the merchant’s own gross margin on the transaction.

3–6% Card cost — higher-risk verticals Before chargebacks, refund handling, and reserve holdbacks are accounted for. In some categories, payment cost alone is larger than gross margin on the transaction.

This is not a sign that any party in the chain is acting in bad faith. It is the cost structure of an industry built on multi-party clearing between banks, with risk allocation reflected in pricing at each stage. The architecture is what generates the cost.

What pay-by-bank changes

Pay-by-bank — built on the Payment Initiation Service introduced by PSD2 — routes payments directly from the payer’s bank account to the merchant’s bank account, without going through a card network at all. The payer authenticates with their bank using the same strong customer authentication they would use for any other payment, and the funds move via SEPA or SEPA Instant.

The cost consequence is direct. There is no interchange, because there is no card scheme. There are no scheme fees, because there is no Visa or Mastercard. The processor’s fee covers the PIS connection, the authentication flow, and reconciliation. For most pay-by-bank providers, the all-in cost lands well below 1%.

Pay-by-bank also carries advantages that cards do not:

  • No chargebacks. A bank-initiated, authenticated push payment is final. Disputes are handled through bank channels, not through a scheme chargeback process.
  • Higher transaction limits. Card limits are typically capped at a few thousand euros per transaction. Bank transfers move in any size.
  • Authentication is the customer’s own bank. No card-not-present friction, no 3D Secure step-up, no failure rates from outdated card data.

What pay-by-bank does not solve is the bank-to-bank settlement layer itself. SEPA Credit Transfer settles same-day or next-day. SEPA Instant settles in seconds, but is limited to participating banks within SEPA and to a per-transaction cap. International payments still go through SWIFT and correspondent banking, with the corresponding cost and time profile.

What stablecoin settlement adds on top

Stablecoin settlement does work that pay-by-bank alone cannot.

A regulated EUR or USD stablecoin — a MiCA-compliant Electronic Money Token — represents a unit of fiat held in safeguarded reserves at a credit institution. Moving the stablecoin moves a claim on those reserves. The settlement is on-chain, near-instant, and final, regardless of which banks the sender and receiver use.

When pay-by-bank is combined with stablecoin settlement, the payment flow looks like this:

  1. The payer initiates a pay-by-bank payment from their bank account.
  2. The funds arrive at the processor's safeguarded account at a credit institution.
  3. The processor issues the equivalent EMT — minting EURSM or USDSM against the new fiat balance.
  4. The EMT is credited to the merchant's account, on-chain, in seconds.
  5. The merchant holds the EMT, converts it, or redeems it back to fiat via SEPA or SWIFT at any time.

The combined flow removes the cross-bank settlement lag. The merchant does not wait for SEPA Instant to clear between two named bank accounts. The settlement is on the EMT’s blockchain, where the only counterparty is the regulated issuer, and the only operational requirement is that the issuer can process the mint event — which it can do in real time.

For domestic European payments, the time saving versus SEPA Instant is modest — both settle in seconds. For cross-border payments, particularly outside SEPA, the time saving is the difference between same-day and same-week. For high-frequency or high-value flows, the working-capital impact compounds quickly.

The combined economics

The cost structure of pay-by-bank with stablecoin settlement, taken together, replaces both the card network and the multi-bank settlement chain. What remains is:

  • The PIS provider’s fee for initiating the bank payment — typically a small percentage or flat fee.
  • The stablecoin processor’s fee for minting, settling, and (where applicable) converting or redeeming the EMT.
  • Bank-side transaction costs for the SEPA or SWIFT leg if the merchant chooses to redeem back to fiat — these are pass-through and depend on the rail.

For an EUR-denominated transaction settled in EURSM and held in a multi-currency account, the cost stack often comes in below 0.5% all-in. For a cross-border transaction that would otherwise have required SWIFT, the saving is larger still — SWIFT transaction costs are flat-fee per payment and can absorb 1–2% of a smaller transaction’s value on their own.

<0.5% All-in cost — pay-by-bank plus stablecoin settlement For EUR-denominated transactions settled in EURSM and held in a multi-currency account. Larger savings on cross-border flows that would otherwise route through SWIFT.

The argument is not about negotiating down the cost of cards. It is about removing the components of the card chain that generate the cost in the first place.

Where this works — and where it does not

Pay-by-bank with stablecoin settlement is not a universal replacement for cards. Cards have properties — global reach, instant authorisation at point of sale, embedded fraud protection, and consumer familiarity — that bank-initiated payments do not fully replicate. The combined model is strongest where:

  • The merchant operates online, where pay-by-bank’s authentication flow is acceptable in the user experience.
  • The transaction values are large enough that the cost saving is material — bank-initiated payments perform best above ~€50.
  • The merchant has international flows that would otherwise route through correspondent banking, where stablecoin settlement compresses both time and cost.
  • The vertical carries high card costs already — merchants in higher-risk categories pay 3–6% on cards and benefit disproportionately from removing the card stack entirely.

It is weakest at low-value, in-person, or impulse purchases — where the authentication friction of opening a banking app is meaningful, and where the absolute cost saving on a small transaction is small.

For most businesses, the realistic position is not “replace cards.” It is “add pay-by-bank with stablecoin settlement as a payment method, route the transactions where it makes commercial sense to it, and keep cards for the rest.” The cost saving is captured on the proportion of volume that migrates, which is enough to justify the integration when the gross margin profile makes 2–4% of payment cost material.

What this means for your business

The combined model is worth evaluating when:

  • Card payment costs are above 1.5% blended, or above 3% in a high-risk vertical.
  • A meaningful portion of the merchant’s volume is online and at transaction values above €50.
  • Cross-border flows are material to the business — particularly outside SEPA.

If two of these apply, the cost-saving math typically works. The integration question becomes which processor combines the regulated stack required to do this end-to-end — pay-by-bank, stablecoin issuance, settlement, and fiat redemption — under a single regulated relationship.

Stable Mint provides pay-by-bank acceptance and stablecoin settlement on a single platform, with EMI authorisation under MiCA and PSD2 and proprietary EUR and USD EMTs (EURSM and USDSM). Talk to our team to model the cost structure against your current setup.