PEP Episode 098 — Tokenized Deposits vs Stablecoins: The Real Payments War | Stablecoins Become Payment Rails

Episode Description

Stablecoins and tokenized deposits are moving out of crypto headlines and directly into the retail checkout lane. In this episode of the Payments Experts Podcast, Adam T. Hark, Managing Member of Wellesley Hills Financial, joins the show to explore how wallet-based payments, tokenized bank deposits, and merchant-issued tokens are set to reshape merchant acceptance, card network dominance, and interchange economics.

For enterprise retailers facing staggering payment acceptance costs, stablecoin rails represent a line-item margin transformation. When analyzed at Walmart scale—where annual money movement costs reach between $3B and $5B across credit interchange, debit fees, and cash handling—operating a closed-loop token network enables a merchant to act as both issuer and acquirer. This episode breaks down the friction in traditional payments, the mechanics of smart-contract rewards, and the strategic roadmaps CFOs and ISOs need to adapt.

Key Discussion Points

• Walmart-Scale Payment Math: Examining the $3B–$5B annual cost of moving money for mega-retailers and why interchange models are facing structural disruption.

• Merchant-Issued Tokens & Closed Loops: How retailers can issue their own stablecoins to eliminate intermediary fees, increase pricing power, and retain margin.

• Tokenized Deposits vs. Commercial Stablecoins: How tokenized bank deposits and fiat stablecoins (like USDC and USDT) replicate cash and debit behavior with faster settlement.

• Programmable Smart-Contract Rewards: Replacing high-interchange card rewards with instant rebates, airdropped discounts, and store-credit staking yields triggered upon settlement.

• POS Flows & Ledger Reconciliation: Practical considerations for merchant wallets, point-of-sale integration, and accounting workflows.

• Education Gaps in Payments: What ISOs, CFOs, and acquiring partners must learn to keep pace with market-led infrastructure shifts.

• Regulation vs. Innovation: Navigating market progress alongside consumer protection regulations and compliance frameworks.

 

Strategic Takeaways for Merchants & ISOs

• Evaluate Alternative Rails: Assess how stablecoin rails and wallet-based checkouts can reduce reliance on high-cost card networks.

• Redesign Customer Incentives: Explore direct, low-latency rewards programs built into smart contracts rather than funding expensive third-party credit card points.

• Bridge the Infrastructure Gap: Work with payment advisors and technical partners to prepare POS architectures for multi-rail token settlement.

 

Featured Guest & Resources

• Guest: Adam T. Hark — Managing Member, Wellesley Hills Financial

• Website: Wellesley Hills Financial

Subscribe & Connect

• Subscribe: Follow the Payments Experts Podcast for deep dives into payments strategy, digital assets, and financial infrastructure.

• Share: Send this episode to a CFO, retail executive, or ISO leader evaluating next-generation payment rails.

• Review: Leave a rating and review to help more operators and fintech builders find the podcast!

Transcript

Adam T. Hark (00:00):

Or the Pfizer, the global payments, the FISs of the world. It may be direct with Coinbase and

Adam T. Hark (00:08):

Circle. Very interesting. I go back to that conference a month ago, there was an analyst there for equities and he was doing his presentation and he did this whole thing on the big names that we all know. And I asked him, it was a very straightforward question. Do you think that next year you, your firm will initiate coverage on Coinbase and Circle as payments companies? Payments companies. Now he answered in the negative and I just was curious as to what his answer would be. I left there thinking, that’s not right, man. They are payments companies. We got new payments companies in the ecosystem that are joining the party and that is a reality.

Jeremy Stock (00:58):

Welcome to the Payments Experts Podcast, a podcast of global legal law firm. We hope you enjoy this episode.

Leo Arzumanyan (01:13):

Amazon. I’m a big Amazon guy. Do you see Stablecoins being integrated into these daily functions that we all partake in, meaning online ordering through the Targets, the Walmarts? Is there any benefit to that, to the consumer, to the retailer?

Adam T. Hark (01:28):

Okay. Well, there are different constituencies there. So I think as it relates to the Amazon, okay, the Home Depots, the Walmarts, the Targets, the Costcos, there’s a real economic driver there. I mean, these are very large companies. Granted, they’ve all negotiated due to their volume of payments that they’re processing. They’ve negotiated, I’m sure, sweetheart deals. Oh yeah. The

Leo Arzumanyan (01:56):

Leverage they have, of course.

Adam T. Hark (01:57):

In terms of interchange. That being said, I mean, another one of our executive advisors, Wayne Johnson, is based in Atlanta, is just a brilliant, brilliant payments analyst. And he did this exercise. I asked him if he could help out, and he just kind of some back of the napkin math as it related to Walmart specifically. And people also forget that cash has a cost attached to it too, to accept cash. So he figured on a blended rate between credit, debit, and cash that a company like Walmart, based on the information that they do make public, probably pays between three billion to $5 billion a year in fees for payments processing. Wow. So imagine a company like this. Well, yeah, that’s real money.

Jeremy Stock (02:51):

Yeah, it’s real money.

Adam T. Hark (02:51):

That is real money. And his example, he said to me, I love this because he put it very starkly. Imagine you walking into Walmart’s CFO’s office and saying, “I have a way of saving the company maybe three to five billion a year.” We convert to Stablecoin. Okay. Our own Stablecoin. Effectively, you’re turning Walmart into issuer and acquire.

Leo Arzumanyan (03:15):

Wow. Yeah.

Adam T. Hark (03:15):

And merchant.

Leo Arzumanyan (03:16):

Almost like a closed loop system.

Adam T. Hark (03:18):

Essentially, yeah. They become Amex. Yeah. Their own Amex.

Leo Arzumanyan (03:21):

Wow.

Adam T. Hark (03:22):

So I think they’re real-

Leo Arzumanyan (03:23):

Don’t get these ideas away for free, man. We got to start charging people for that. Exactly

Adam T. Hark (03:27):

Right. So there’s real economic argument for big retail to jump in. I think at the end of the day though, as it relates to adoption, there are two things. There are two things in play. One of them is how do you get consumers to get on board? And I think you have to think of incentives, right? And you need to incentivize, which now, just to tie in a whole bunch of stuff and make this really interesting. The recent press release, it might’ve been last week where Visa and Mastercard, the Card Networks announced the proposed settlement on interchange and giving merchants the right to not accept certain types of cards because that reward piece is very expensive on the merchant side.

Adam T. Hark (04:14):

So that factors into this now because now you got a bunch of big merchants maybe to say, and we’re not going to take you consumer, we’re not going to take your Delta SkyMiles card anymore so you can get the … Yeah. So that factors into it because they’re taking away that lever of incentivizing consumers to use certain types of payments methods. And it leaves the door wide open for somebody on the Stablecoin side, like a Walmart to start … Remember, this is smart money. They can run … There’s smart contract capabilities here. You can do whatever you want with those stable

Leo Arzumanyan (04:50):

Parts. I think the friction’s going to be on the consumer side, getting the consumer to understand that it’s not as complicated as if they sound.

Adam T. Hark (04:56):

I agree with that.

Jeremy Stock (04:58):

It’s been the issue for years now. It’s been the issue for years.

Adam T. Hark (05:01):

And the other thing too to remember is that with Stablecoin, it’s mindful. We need to be mindful that … And this goes back to the JPMD thing, because here’s another thing that I don’t think people realize. When we think of Stablecoin and USDC or Tether, there really isn’t a credit product out there. This is stuff that’s going to replace ACH that’s going to replace debit cards and cash. Okay? JP Morgan with the tokenized deposits, they already have the infrastructure for our credit product. I mean, this is what I’m saying. To me, maybe it’s up to 12 times I read that print release because every time I read it, I was like, oh my God, this means this. This means they could do that. Holy.

Jeremy Stock (05:44):

Are you allowed to spread? Yeah.

Adam T. Hark (05:45):

Holy shit. Do whatever you want. This is a big deal. And coming in today, I was super stoked to kind of just riff on this because this is the first chance I’ve had to actually talk openly about it in a quasi public forum. And I just think it’s a big deal, man.

Leo Arzumanyan (06:05):

So in Jamie Diamond we trust, would you say?

Adam T. Hark (06:08):

Well, listen, I’m a Jamie Diamond of file, whatever. He’s a God among men in the financial world. But I mean, I think, again, it’s the largest financial institution in the world. He’s been very fintech forward. He’s invested billions. He’s billions of dollars. They’re running way ahead of the pack. I mean, if you look at tier one financial institutions, I mean, there’s now separation between JPM and everybody else. I mean, they’re just so … Again, this is an opinion, but I mean, just so forward leaning and into this

Leo Arzumanyan (06:43):

Stuff. I got to agree with that. Yeah. I watch a lot of the stock market channels and podcasts. He’s everywhere. Everywhere I turn, Jamie Diamond’s on another show, on another podcast talking about all this.

Adam T. Hark (06:52):

He’s

Jeremy Stock (06:53):

A man. Yeah.

Leo Arzumanyan (06:54):

Yeah.

Jeremy Stock (06:55):

I’ve got a quick question, Adam. You mentioned earlier that what might be a result of this is that every merchant who already has a routing number, they’ve got their bank account that they’re set up with their processor, but now they’re going to have a wallet. A

Leo Arzumanyan (07:10):

Digital wallet.

Jeremy Stock (07:11):

Right. A digital wallet. Can you talk about that? I mean, is this merchant going to have to understand? Because I feel, we talked about this a little bit already, that the consumer understanding, even the merchant, your mom and pop merchant, they’re basically consumers when it comes to stablecoins. We’re all

Leo Arzumanyan (07:27):

Consumers.

Jeremy Stock (07:27):

We’re all consumers. Exactly.

Leo Arzumanyan (07:29):

That’s a good point because I just had a conversation this morning with a client of ours kind of explaining them digital wallets and because there’s different rules that apply to the type of wallet, whether it’s a staged wallet or pass through whatever the case may be. But yeah, go ahead.

Adam T. Hark (07:45):

I think this is where … There’s still a lot to play out, but I think this is where sponsored banks and then the FISs and the FiServs and the other core providers, solution providers become very relevant to the conversation. I think on the point of sale front, I mean, there’s some real questions here. I mean, there’s plenty of people in the industry who would say that this is an existential threat to their card networks. I mean, truth be told, I mean, you show me anybody who knows exactly what the cost basis is for interchange, and I’ll show you a liar. Exactly. That is a black box. Nobody knows. And that’s how they like it.

Jeremy Stock (08:30):

And

Adam T. Hark (08:30):

That’s how they like it. I was

Jeremy Stock (08:31):

Going to say that way.

Adam T. Hark (08:32):

So we don’t know, but we’re talking about fundamentally and completely different technology to transfer value electronically. And there are a lot of questions that remain, but I do think it’s going to be a piece. I don’t think that it replaces anything. I think people love choice. They still love cash. They love their credit cards. They love their rewards in the credit card. I think the younger generation definitely skews more towards non-credit products. I think they like to know exactly what their bank balance is all the time. So they prefer P2P payments using Zelle and Venmo, that kind of thing, and they like their debit cards. And I think that’s where you’re going to see, as it relates to the consumer case or a B2C case, I think that’s where you see stablecoin usage first. I also think we were kind of riffing a little bit on Bitcoin before, but I mean, I think it’s displaced the meme coins in the conversation as being legitimate forms of value transfer in real life everyday commerce.

Leo Arzumanyan (09:50):

I agree. And it’s just those few coins that displace the meme coins because the rest are truly meme coins. There’s not a lot of functionality on a lot of those coins.

Adam T. Hark (09:58):

Yeah. Value is based on … Bitcoin, I would argue is based on a marketing campaign. People familiar with financial history, booms and bust. I would argue that tulips have greater value. And I’m probably going to get smashed for that, but I don’t care. It is what it is. That’s my opinion.

Jeremy Stock (10:18):

It’s a great conversation.

Adam T. Hark (10:19):

But oh yeah, I’m sure you can drag me back in here as soon as I go out I’m going to get bloodied for that. But I think Stablecoin have … They’ve won the war. And again, this is like a month ago, I would have said Stablecoin has won the digital asset cryptographic currency wars. Okay. Now I’m looking at this tokenized deposits.

Leo Arzumanyan (10:45):

Now we got a whole new player.

Adam T. Hark (10:46):

Good word, man. And this is only 30 days from going back 30 days. Now we’re here. I’m like-

Leo Arzumanyan (10:51):

That’s what’s crazy. This industry just is constantly evolving and so quickly.

Adam T. Hark (10:56):

And that goes back to the question you asked before about the merchants and even the ISOs out there, right? Now, what are they thinking? And I think a lot of them are kind of like, they’re trying very hard and I give them a lot of credit to try to just get their heads around it collectively. Ultimately, the ISOs need to service their merchants. And the merchants are asking questions and they’re really good questions. Where’s this going? We’re just

Leo Arzumanyan (11:18):

Going to bring this up. That’s a crucial point. One thing I’m going to predict is going to be a real big issue with all this. It’s there’s so many players in the chain who’s giving what information to the party beneath them. The ISO is saying something to their customers, the merchants have their own attorneys, the ISOs have their attorneys. Everyone’s kind of giving different information and that’s where I think there might be some problems is like the muddying of the waters.

Adam T. Hark (11:45):

I think you’re right. I mean, there is a level of complexity here. Again, it’s a brand new technology and you need to be connected to it. You need to understand how does it flow into a lot of merchants use QuickBooks. Okay. If I have bank accounts which are connected to my QuickBooks, I mean, how is my wallet, my crypto wallet going to be connected to

Jeremy Stock (12:08):

… Well, that’s kind of what I was going to get at, Adam. You had mentioned, so now a merchant potentially is going to have a wallet as well, right? Are they going to know how to use it? Will they use it?

Leo Arzumanyan (12:20):

They’re going to go to Adam.

Jeremy Stock (12:21):

Who’s responsible for educating them, right? Which is a major issue in the payments industry. There is very little education from the agent to the merchant, from the ISO to the merchant, et cetera. And in fact, when we had Anthony on, we thought it was pretty interesting looking at portfolios. He paid me to say that. Brought to you by Anthony Melton. Absolutely. He’s one of our sponsors for that. But yeah, no, he brought to light how little many people know about their own business. And I think this just adds another layer of complexity, which I wonder where do you see that going? How do you see that playing out? Well,

Adam T. Hark (13:10):

I think the market rules, okay? So if people want to use it, then merchants are going to have to take it. And so it’s not going to be a question of should they, shouldn’t they? Do they want to? Do they not want to? If you’re in business and you need to accept payment for goods or services, and people want to pay this way, then you’re taking it, period. Who’s responsible? That’s a great question. I mean, ultimately, if you think about an ISO today, I mean, can they have that conversation, a meaningful, productive, thoughtful, well-informed conversation with their merchant customers about how it will work when you have a wallet and have to accept these payments? I don’t know. And that’s not a knock on them. I mean, this stuff is literally unfolding in real time,

Adam T. Hark (14:05):

And we’re all trying to do our best. My firm, for our part, which we try to … I mean, I serve a different audience, I think, than my partner like Anthony, he’s a banker and my guy, Eddie in LA, who runs our West Coast office, those are bankers. For me, I’m a strategist for the firm and I am very forward looking six months, one year, three years out, what’s coming next so we can really provide value to our clients and try to answer these questions honestly and thoughtfully. But I mean, sitting here today, I don’t know exactly how that works, who’s going to be responsible, what that conversation looks like. I think it’s incumbent upon all of us in this ecosystem and this community just to be honest, do you think this is real? Yes. Is it coming? Yes. How soon? Think it’s already here.

Adam T. Hark (15:03):

Who should I talk to? Get on the phone, call Coinbase, call Circle, ask them about their products. How do they work? Because I do think there’s also the possibility, again, that this wallet that merchants ultimately will have is brought to them. It may be a different arrangement. It may not be through an ISO or the Pfizer, the global payments, the FISs of the world. It may be direct with Coinbase and

Adam T. Hark (15:32):

Circle. Very interesting. Yeah. I go back to that conference a month ago, there was an analyst there for equities and he was doing his presentation and he did this whole thing on the big names that we all know. And I asked him, it was a very straightforward question. Do you think that next year you, your firm will initiate coverage on Coinbase and Circle as payments companies, payments companies. Now he answered in the negative and I was curious as to what his answer would be. I left there thinking, “That’s not right, man.” They are payments companies. We got new payments companies in the ecosystem that are joining the party and that is a reality. I think we need to accept it. We should embrace it. And again, I think free markets will take care of everything ultimately. I look at open banking, that has been like a case study in a free market solution with the whole, JP Morgan is going to charge the big aggregators money for the API calls and stuff like that.

Adam T. Hark (16:44):

And the open banking community freaks out and the crypto community freaks out and there’s a war of words and there’s press releases going back and forth. You figured it out.

Jeremy Stock (16:52):

Exactly.

Adam T. Hark (16:53):

Okay. It wasn’t for the government to step in and say, “You can’t charge, you can’t charge. And if you do charge, it’s as much.” It were for the different parties involved in the transaction to figure

Leo Arzumanyan (17:03):

Out- Market figured itself out. Yeah.

Adam T. Hark (17:05):

Some form of equilibrium where everybody can … There was value provided. It costs X amount. We can live with this, we can live with this, and there you go. I mean, it was a great example of free market forces kind of sorting through a morass and getting to a conclusion.

Jeremy Stock (17:21):

You love to see it. In 2025, free market force is still at work. It’s

Adam T. Hark (17:25):

A big team. Yeah. I was at family office conference this year and it’s funny, everybody’s so bullish because not getting political, but this administration is very hands off. It’s like let businesses do what they do. They’ll figure it out. I think that was a good example of that. There are also cases where it’s not so good. The government should step in and make sure protections are in place, especially consumer protections.

Leo Arzumanyan (17:48):

CFPB, for example, that’s a big one, if you’re

Adam T. Hark (17:51):

Familiar with that. Yeah. I mean, a defamed.

Leo Arzumanyan (17:55):

Exactly why I brought it up.

Adam T. Hark (17:56):

Yeah. Yeah. I mean, I don’t know if they’re swinging a big bat these days. It’s a stick. They’re still there.

Jeremy Stock (18:04):

Nominally. They’re still there. Yeah. So feel free to jump in, Leo. I was going to ask, Adam, our audience has made up a lot of ISOs, people in the payments industry specifically. Obviously, it’s all technology these days. Who is it that you want reaching out to you, Adam? You’ve got obviously, like you said, I love how you put this. You’re forward thinking, you’re thinking about next year, people who have questions. Who’s your ideal client?

Leo Arzumanyan (18:33):

And just to add onto that, I was just going to say the same exact thing. What’s your biggest takeaway that you want to leave with our listeners? Where do you want people to reach out to? What do you want them to take away from this?

Adam T. Hark (18:43):

So I appreciate the opportunity to say that. I think as a firm, I didn’t do this earlier when I introduced myself and the firm, but it’s important for me to say that we kind of operate in a unique sandbox. We are a lower middle market investment bank. It means that the companies that we represent have enterprise that values to kind of like put numbers or quantify between $10 million and $400 million. We’re not Morgan Stanley or William Blair. We work with smaller companies, typically not companies that are certain, not startup, not venture seed, series A kind of stuff. But I think it’s important if I’m pitching ourselves that founders should know that we have expertise in that segment of the marketplace. And really what we try to do is, it’s really important to me as one of the founders to create value that’s not always monetizable.

Adam T. Hark (19:45):

Now my other partners may shoot me for saying that, but we want

Leo Arzumanyan (19:49):

People- Anthony on the phone.

Adam T. Hark (19:51):

Yes, yes. I’m sure it’ll be a message, my phone. We want people spanning the spectrum. Anybody whose business involves the movement of money digitally is a potential client of ours, including software companies. And we want them to pick up the phone and ask questions because that’s kind of my favorite thing. That’s how we all learn. But being able to share our perspective, our expertise, we have a lot of visibility in … Being an investment bank, when you have visibility into transactions, it’s not just like you have a good sense of valuation out there, but you really see what people are buying, what they’re interested in. And I think that’s really important for founders across the entire fintech landscape. That’s really good information for them because at the end of the day, the objective, I think, should be value creation of your business. You shouldn’t be thinking short-term profitability.

Adam T. Hark (20:50):

Sometimes we all have … In the pandemic, we all had to retrench, so we had to run lean, we had to run mean. But what we’re really all trying to do is create value in the companies that we founded and that we continue to build and just send an email. And I’m always happy to chat. I don’t really discriminate. I’m more interested in these on the fringe vanguard type companies, truth be told. But I mean, across the board and within our organization, I mean, I think it’s fair to say that we love technology, especially financial technology. Broadly, our roots and our footprint and payments is very well healed. You’d be hard pressed to find any outfit. And I have no problem saying that. You would be hard pressed to find an outfit out there that has the same expertise that we do in payments. I think we’re very unique in that sense.

Adam T. Hark (21:47):

And so, like I said, anytime anybody wants to discuss what’s going on, we’re always down for a phone call.

Leo Arzumanyan (21:54):

What I took from that was you can expect basically white glove service, personalized service.

Adam T. Hark (21:59):

I think that’s one of the things that we have the luxury of being able to provide our clients given in the area of the marketplace that we work in. Once you go to the $5 billion deals that the real middle market Wall Street banks are doing and stuff like that, I mean, they’re working with armies and the armies have different divisions and the different digital

Leo Arzumanyan (22:20):

Stuff. So you don’t have that level of personalization with who you’re working with.

Adam T. Hark (22:22):

That’s right. I mean, for the companies that we serve, they get their own lead banker, they get their own deal team, and they have access not just to management level, C-level personnel, but also our executive advisors who are really … They have deep roots in this industry, and they are tremendous resources for anybody, especially the more peculiar, the more niche a question is, maybe the harder it is to even answer, the more we enjoy.

Leo Arzumanyan (22:55):

That’s where you guys come

Adam T. Hark (22:56):

Out. Yeah. I think that’s where we … Yeah, that’s our sandbox, man.

Leo Arzumanyan (22:59):

Well, look, man, this was a great conversation. I want to end it off with two things. One, I don’t think you told them where they can reach you, like the specific email or specific contact info. And two, something I want to start doing with our podcast, Jeremy, at the end of each podcast, I want to ask the guests one thing they’re looking forward to. So either there’s just a trip that’s coming up, I don’t know if a good movie you’re going to go watch, whatever the case may be, just let us know one thing you’re looking forward to in the near future.

Adam T. Hark (23:23):

Okay. So as it relates to contacting myself, I think the simplest way to do it is just find me on LinkedIn, Adam T. Hark, Wellesley Hills Financial, because we kind of have a long domain name. Yeah.

Speaker 4 (23:39):

LinkedIn’s all the

Leo Arzumanyan (23:39):

Easiest.

Adam T. Hark (23:40):

It’s too easy to misspell. I’ll make everything

Leo Arzumanyan (23:43):

Down. Reach out to us and we’ll give you these contacts, whatever

Adam T. Hark (23:46):

The case may be. And in terms of things I’m looking forward to, this is a very selfish thing. I love being right. All right. So I want to see in the next 12 months, where we are at the end of 2026 with Stablecoins-

Leo Arzumanyan (24:01):

No, it can’t be work related. It’s got to be personal thing you’re looking forward to. I got to cut you off there.

Adam T. Hark (24:05):

Oh, it’s personal. I want to be right. No, I think for me personally, I take a lot of … I’m a builder.

Speaker 4 (24:18):

Okay.

Adam T. Hark (24:19):

When people, especially people applying for an internship or something like that, they say, “Why did you get in this business? What is it that brings you into the office every day? What is it about your personality?” I said, “I like building things and I like doing it with teams and my teammates.” And I love my teammates. I love what we’re building and to be able to continue that trajectory is extremely fulfilling and rewarding and I’m looking forward to that in 2026.

Leo Arzumanyan (24:49):

We still tied it to work, but we’ll let it slide. Yeah, absolutely. He’s a worker.

Jeremy Stock (24:53):

Yeah, no, it is. It’s a great answer. Adam, it’s been a real pleasure having you on the podcast. This has been the Payments Experts Podcast, a podcast of global legal law firm in studio today joining us, a transactional attorney, Leo Arzomanian, as well as our special guest, Adam Hark. He’s the managing member over at Wellesley Hills Financial. All the information you’ll find down below. Gentlemen, it was great. We’ll see you on the next one. Bye-bye. Thank you. Thank you. Thank you for listening to this episode of the Payments Experts Podcast, a podcast of Global Legal Law Firm. Visit us online today at globallegallawfirm.com. Matters discussed are all opinions that do not constitute legal advice. All events or likeness to real people and events is a coincidence.