Coinbase Payments Lead on Who Actually Pays in Stablecoins and the PPRO + Checkout.com Partnerships

Good to see you, man.

Great to see you both. Thank you. Thanks for having me on. Because I think you know, we we've built all of this tech, and so we're constantly, like, iterating it and making it better, like, as we go live. So we'll hit you with a confetti cannon as we welcome you. We also have a I guess since since, you know, it's Coinbase. We'll we'll make it rain a little USDC. How about that too? See if this That's what I need. Yeah. We Yes. There you Payments product lead at Coinbase.

Man, thanks for being patient. Hey. We're pumped to catch up. Give us give us the give us the TLDR. Mean, I think the last time we spoke was at was at East Denver. But for the people that maybe don't know you, just kinda give us that. You just ran us ran into us at a conference. Who are you, and what do you do?

Yeah. A lot has a lot has changed since the Denver. So

I'm Justin. Two years ago. No. Two years was gonna say two I should say two years ago.

I know. We've come a long way. I'm Justin. I lead stablecoin payment products and payment acceptance at Coinbase. I've been here for four years, and so working on crypto payments pretty much that whole time. And when I started on our crypto payments initiative, Coinbase Commerce at the time, it was all about spending Bitcoin. We then pivoted to do every asset, every network. Then Then we tried Meme Coins. We tried so much stuff. We really never found the demand.

And, ultimately, we found a cool, really interesting cohort of people who wanted to use Stablecoins in a different way than we had ever seen before. We pivoted all in there, and now we build stablecoin payments infrastructure for enterprise and payment service providers to connect with this incredible group of a 150,000,000 plus people who are using stablecoins for real utility. So excited to tell you guys about it.

Okay. So I think the the biggest thing that I hear, you hear a 150,000,000. Most people right now, they think the Stablecoin payments, they go, Stablecoin cards powered by Visa and Mastercard. We can just stop here. Who's this other cohort of people, a 150,000,000 people that are like, actually, no. That's not what I want. I just want stablecoins at point of sale, bar none. That's what I want.

Yeah. So I think the the stablecoin cards are actually pretty complementary, and so there's nothing wrong with those. But what we found is there's this new cohort of people emerging that are holding stablecoins because they want access to the dollar and that this is what they consider their savings account. And so I talk to these folks every day. I don't think this cohort existed five years ago. Mhmm.

And what they tell me is I'm earning in stablecoins, or I'd rather hold the dollar than my local currency, or I can earn yield, or I can get better access to financial rails because I'm using Stablecoins in a Stablecoin wallet. And a fascinating statistic is over half of the people using our product today have no other assets in their wallet. And so these are truly Stablecoin native people.

And I think a stablecoin backed card works well for these people too, but oftentimes, they're in geographies or going through payment flows that might not be accessible with the card, or they might have to pay high interchange or high foreign exchange fees using the card directly. And so by being able to spend directly in Stablecoins, they can often transact for less, transact more immediately from their actual balance.

And so we see these folks are really excited about using Stablecoin Checkout, both point of sale and online via cross border commerce.

Can can you briefly touch on because I don't think this gets talked about hardly at all. I don't know if people know. There's a $5,500,000,000 Visa, Mastercard settlement just in The US for merchants being overcharged interchange fees. There's still a massive issue worldwide where even if you are using Visa, Mastercard, you're using the standard form of payment, interchange fees are extremely high. And but if you talk to most people, they might not even know what an interchange fee is.

And right now, it feels like the conversations are just on, you know, like I said, just general merchant processing fees or forex fees when people are going to use these cards. How crazy is the world of interchange fees?

I mean, interchange is certainly a tax. You know, interchange can cost a merchant between two to four or 5% on every transaction, definitely more if it's a foreign transaction or foreign currency. And oftentimes, you'll see that merchants pass those fees to the buyer, either directly in checkout as you might see it. You know, you you go to your local bodega. They'll tell you 3% more if you use your card, or indirectly via the cost of the goods. And that's certainly a tax.

But I think there's also an additional tax, which is it is expensive to transact if you are someone who is residing in a country different from where you're transacting. Those foreign transaction costs are passed to the buyer almost every time, and that's really, really expensive, especially if you're transacting across borders frequently. It's also expensive for the merchant. And so I talked to you know, I was just talking to a hotel, for example, who was telling me they earn in dollars.

You know, their their customers pay them in dollars. They then receive the funds in peso, and so they're spending the foreign transaction fee there. But then they're paying for goods and services in dollars for their vendors. And so they're paying foreign exchange twice. And so by leveraging stablecoins, businesses and consumers can more efficiently manage their capital. They can avoid these these taxes, these fees.

And so that's why we're seeing such crazy volumes and such massive growth over the past few years in stablecoin adoption, stablecoin wallets, settlements, and and all the key metrics.

Yep. Justin, it's been it's been really cool to see the the evolution of the product and, like, how you you mentioned in the beginning, like, starting with let's, you know, let's help people spend their Bitcoin or spend their crypto into I remember, like, very the the conviction of Lauren of, like, USDC. Like, we need to make this all about USDC and the Stablecoin specific part of, like, payments.

And sounds like now the the payment product itself is more in this, like, infrastructure package or this, like, ecosystem of of products, not like a what it was probably when I was really familiar with this was, like, a standalone API or checkout product. How how are you seeing the payments specifically fitting into all of these other, like, parts of Coinbase business? Or how are you actually like, what are you calling this right now? Is it Coinbase business?

Like, give us a sense of the the product itself and where it fits within the the business a little bit.

Yeah. So my side is Coinbase Payments, which is a fairly new name. And Coinbase Payments builds the infrastructure to allow distributors and platforms to leverage Sablecoins to their advantage. And so one of our internal customers is Coinbase Business, which is our direct to business product. And so an SMB interested in using stablecoins or trading crypto can go sign up online at coinbase.com/business and get access to these same payment rails.

So they can accept invoices and Stablecoins, do payouts, do consumer checkout, and so on. We also sell that same infrastructure to payment service providers who are serving some of the largest enterprises in the world. And so that is the folks like p pPro and checkout.com who we both recently announced partnerships with, who provide payment functionality to many common household names. And so you can imagine Pepro has folks like Adobe and and Shein. Checkout.com has folks like Netflix and Spotify.

And those businesses, they don't want to reconfigure all of their checkout flows every time they wanna add a new payment method. And they're looking at stablecoins, and they're saying, I want these. This is gonna allow me to distribute my product to every country in the world. It's gonna allow me to tap into a customer base who might not have otherwise been able to check out. But they don't wanna come in and do a custom integration every time something like this comes up.

And so they leverage folks like checkout.com. It's simple as flipping on a toggle, and now they have access to these Stablecoin checkout rails and then can grow into additional services like stablecoin treasury or payouts.

Can we break down So so this the p pro relationship a little bit, like, how that started? And I'd also wanted just the treasury management side of this. I recall that was, like, a really interesting part of at least why they originally were engaging of, like, all like, a company like Adobe being able to help manage payments for them and move balances around with stablecoins. Like, is that something they're doing, or let's just break that partnership down a little bit. How did that come to be? What are they doing?

Bring us into the room a little bit with that. Yeah. A 100%. And PPRO has been a fantastic partner.

They're excited about pretty much the end to end journey, every single piece that you just mentioned. So I'll dive into a few things. The first is the stablecoin acceptance piece, kind of the stablecoins at checkout. This is typically the wedge to get into any big enterprise because it's as easy as flipping on a checkbox. Businesses want access to these customers. It increases end to end conversion. It increases revenue, and so it's really a no brainer. So they start with that.

But then PPRO is enabling them to use stablecoins to their advantage when managing treasury as well. And so the way that that would work is, you know, Adobe, for example, might have entities all around the globe who are accepting local currencies. They're exposed to those local currencies. It might take days, weeks, or more to bring those funds back into the dollar and back to The US so that those the capital can be productive. And with stablecoins, you can collapse all of that time to seconds. Right?

You can accept a payment. You can instantly bring it back wherever you'd like to any entity in stablecoins, in the dollar without paying foreign transaction fees. And that makes the the treasury folks at these companies unbelievably excited. You know, I I talk to VPs of treasury all the time, and they tell me that they have office buildings full of people doing just this job, figuring out how to get the dollars back into USD and back into a bank account here in The US so that it can be productive.

And their eyes light up when they hear that stablecoins can, you know, even shave off a day, two days, three days off of what otherwise might have been weeks.

And so I guess we we we think a lot of the times you know, as as CDMX last week, a lot of the conversations I would have is what what is the zero to one for stablecoins? And a lot of people always started with treasury, you know, with with kind of those those cross border payments oriented use cases. Would you actually say, hey. Actually, no. The forcing function to get hands on with stablecoins is just accept the missed payment from your customers first. Is is that the way that you think through it?

Yeah. I mean, I think the if I'm thinking about kind of the flywheel here, the first thing that we've noticed that really happened organically is tens of millions and a 100,000,000 plus people just wanna hold the dollar. And so it starts with this natural demand of, hey. Help me hold the dollar. It looks like this thing called Stablecoins can help me do that. And so that kind of happened really naturally.

And then you have all these other ancillary functions around enabling those people who are now holding the dollar via Stablecoins to do more with it. Maybe it's spending it via card. Maybe it's spending it at checkout. Maybe it is paying out to those folks more cheaply via someone like Deal. There's there's this whole flywheel that happens when you service this latent demand of dollar access via stablecoins.

And I think that to answer your question directly, accepting those funds from customers is a hundred percent one of the the first kinda zero to one pieces that I think needs to get off the ground, and we've been seeing lots of demand for. But then, of course, you know, there's also payouts. These people wanna get paid in dollars. There's also, you know, treasury management. What happens once we have these stablecoins? Can we use them to our advantage?

And so I think all of these pieces are really complementary, and they ladder up nicely. We kinda give a a Lego box analogy here at Coinbase to these businesses saying, hey. You can start with one piece, but you'll notice that the more you can build, the more incredible things you can create.

Yeah. Based on my understanding of PPRO specifically, I don't know if Checkout falls I I would imagine they're falling into a similar bucket. But PPRO, from my understanding of that business, is they're really good at finding these, like, multinational businesses and then helping them with these types of problems in all these different markets because a company like Adobe will need to be doing business in all of these different markets.

And the the management of that, just from a treasury standpoint, is extremely complicated. So PPRO is kind of coming in, having that specialty, and then taking payments on behalf of those clients in those markets. And I remember specific markets like Argentina or no. Not Argentina. Was it Argentina? A very hyperinflationary country, like, couple years ago was the reason why they were like, hey.

We're holding funds on behalf of this company, and we need like, we we we are actively, like, painfully trying to get into dollars as fast as possible. Can we go create a Coinbase Prime account for this use case and just, like, do that swap? Are you seeing the like, how are you seeing the the custody and prime business be able to create these kinds of, like, treasury management architectures where you actually can onboard a p pro? And then how are they able to get these types of systems set up?

Are they how are they having to, like, go and spin up Coinbase Prime accounts for their clients, or is there a different system that you guys have started implementing there?

Yeah. It's a great question. The genesis of this infrastructure business we've built is that over the last ten years at Coinbase, we've built all of this advanced tooling custody and all the licenses and the money movement capabilities for ourselves as the first party. We custody $300,000,000,000 plus of of customer assets. And so we had to build all these things kind of the hard way, the compliant way over a decade.

And now our job is, you know, easy because we can take these things that we've already built at Coinbase for our direct customers and expose them as APIs to third party customers. And so we have fully managed I think we call it Coinbase direct accounts where someone like pPro can spin up subaccounts for each of their merchants if they'd like. We also have the licenses and the capabilities to just settle with pPro, and they can then settle to their merchants and fiat outside of our rails.

So we give them this flexibility. Hey. If your customers want stablecoin accounts, if your customers wanna move money in stablecoins, we can do it all already, or we can just deliver the fiat to you, and you can pay them how you already do. And so that's what I think is really interesting. It's all via this oh, yeah. I love the confetti. All via this Coinbase development platform. So the direct is so key. So is this, like, kind of the manifestation of this, like, Stripe Connect style

offering, like, this direct product where you can really start getting flexible?

Exactly. I mean, we it's all done via APIs. Businesses can create accounts on behalf of other businesses. They can create accounts on behalf of consumers. So we do crypto as a service, for example, where think about it for the consumer angle. We allow a business like PNC to offer crypto capabilities, trading, or stable stable coin hold holdings all in a white labeled package where it's Coinbase custody under the hood, but, you know, the PNC branding on the outside. So we we do it all, businesses, consumers.

And a lot of years of investment went into this, and I think we now have this product that is really best in class.

What what keeps you like, you've been in this. You've got to kinda see this full cycle. In some ways, it probably feels like you've made it. In other ways, you feel like you're just, you know, you just scratch it's just the tip of the iceberg. Like, where are you excited to go deeper?

Yeah. I think you're exactly right. I think for a long time, we were kind of searching what is the you know, how how are we gonna solve a problem? You know, I would I used to talk to Bitcoiners all the time to, hey. Why are using my product? And they say, oh, I'm taking gains, or, oh, I'm I'm deploying some dry powder I had. And it always made me a little sad. I'm like, this is a a vanity product. How can we actually solve a real problem? And I think you're exactly right.

I I feel like we're finally there where people are coming to us using us because they desperately want a way to transact. They desperately want to give stablecoin access to their customers. And so I think we finally hit that one on the zero to one. And now what I'm so excited about is the one to 100. Big enterprises move slow, and I think that the people we're talking to right now are gonna knock your socks off a year from now. And that's just what it takes.

In in the enterprise world, it takes a while to get it going. But once they do It takes a while, man. Yeah. I mean, it'll be we'll be really proud as an industry to see how far we've come. And I teased you guys at Denver two years ago about all the stuff that we're doing now. So And it's a good it's a good sign that, you know, these things take time, but they ultimately come to fruition.

True. You need to give me a give us the alpha confetti or or something here. One question I think about a lot, Justin. You know, so much of this conversation has been focused around emerging markets, dollar access. The thing that I struggle with, and I don't know how much this is coming under your radar, is that payments still aren't great in The US. There's this vanity that they work great, that it's easy to go set Square up if you're an SMB.

But at the end of the day, like you said, going and paying at the bodega and going and paying at your favorite restaurant around town, like, it's either the option of pay by cash, which we're moving towards a cashless society, or you're the or you're getting charged 4%, or you're the merchant and you're saying, hey. Now I'm I'm raising it, you know, with inflation, with everything else. It's kind of the last thing that SMBs wanna think about.

When I just look at it from the perspective of what's a market that's kinda ripe for disruption, why hasn't domestic payments really took off yet? And what would it take to get them to take off?

Yeah. I mean, I think you're absolutely right. The way that we kind of look at it is shark bite versus mosquito bite in terms of level of pain. I agree. I mean, there are certainly problems with the payment experiences here in The US. It is costly. It is slow. I get you know, I I go crazy that it takes me days to get money when I wanna move them from one bank to another or from one account to another. Even RCTP is not not widely ex you know, widely available

It's insane. Financial institutions.

I agree. It is absolutely insane. But what I'll say is what we have found is there are markets and there are people who are experiencing much, much larger pains when it comes to moving their money. And we just kind of we wanna follow the demand. And if the people are kind of pulling the product out of us saying, hey. Here's exactly what we need in order to solve our problem and therefore use your product every day, it's very easy to say yes to.

And and those I consider more of these shark bites where they have no alternative. For example, we work with Shopify on stablecoin checkout as well as merchant stablecoin accounts. And Shopify can only operate in, call it, a 120 markets. So they're leaving out 80 countries of people who want to be able to sell things, who want to be able to buy things, who simply can't because the rails don't exist there. And stablecoins unlock that. And that is Yeah.

Shopify's mission, is giving everyone access to the ability to sell and the ability to buy. And so those are the sort of pains that we're focused on to start. But, of course, I think that stablecoin will be the rail that solve much of the pain you just described. And I'm excited to see probably under the hood, it'll probably be pretty hidden, how stablecoins can help businesses and and these payment flows so that they're more efficient and they're less of a tax on society.

Man, yeah, I guess I think what I I think we're I'm I'm, like, psychoanalyzing myself. Right? There is that humanitarian that you know, you wanna go solve the world's problems. You do wanna go solve the big problems. In the same breath, I wanna solve the problems in my backyard. You know?

I wanna solve the problems for the guy I know in church that's running a small business, and he's just like, man, I $60,000 a year would would mean the world to my business to, you know, send my daughter to college or to give my employees a bonus. So maybe just what I'm getting at is if there's anybody out there that wants to brainstorm, hey. How do you actually tackle the payments problem in The US with stablecoins? Let's talk. I I think about this this model.

They started popping up around my town of it's like a ad network. Right? I went into my coffee shop. There's a TV screen. It's just all it's playing is local ads. And the next thing you know, I go into the other business. They have one, and they have one. And now all of sudden, there's 20 business in town that have TVs just paying local ads.

What would it look like if you had a payment product built on stablecoins that was for local payments, and it was rewards, you know, centered around going and paying paying locally and using this form of payment instead, you know, passing that interchange back. I don't know how it would look. Those are the things I I throw out there because you're right. There's a lot bigger problems than we face, but I don't I don't wanna glance over the amount of money.

I I think I've seen some of the frustration with with merge SMBs, like, throughout The US that it's like, somebody's gotta go solve that. Probably not me, but somebody needs to.

I agree. I agree. And I and I I think a lot of these businesses, they kinda follow consumer behavior. And so if you have I I think Cash App's a good example. Like, businesses want Cash App because consumers you know, there's 30,000,000 consumers at this point that that are wanting to pay with Cash App. And I think part of the problem we faced trying to tackle this problem in The US because I agree. I used to go door to door, and I would talk to these bodegas, and I'd say, hey.

How how much are you spending on interchange? What do you what do you spend on Stripe or on your terminal? And they'd say the same thing. Like, I could buy cars. I could pay my employees more. I could send my kids to college. And so I agree. However, it's extremely hard to change payer behavior. And so to follow where these 150,000,000 people already are is where we've seen the most success so far. Yeah.

Yeah. I think that's kind of the conclusion I've come to, which, I don't know, like, my degree was in psychology. So, like, I just think through, like, what is the psychology of consumer payment behavior? Like, what would it it's more just like solving a puzzle at this point. Like, what would it actually take to change? You know?

And you and you think about the evolution, like you said, from from checks to cat you know, from cash to checks to debit cards to credit cards to the Cash Apps to the Venmos, and it's like, what caused each of those jumps? Even look at the Starbucks app. I that I think that's a great example where that's a pretty big change in consumer behavior, but what did they have to give the consumers to to get them to do that? Drew, welcome back.

I think I'm back. Can you hear me okay? You're back.

The joys of of hotel Wi Fi.

Hotel Wi Fi is tough today. Justin, I just probably, I have one more time for one more question from my side. You mentioned the really unique advantage that Coinbase has due to the tenure of, like, ten plus years building all of this stuff in house, the licensing, the money movement, like, of the advantages that that comes with now in offering these types of solutions and these products that are very nuanced and not just, like, in theory, they're ready, but, hey.

Like, one the one of the largest, like, regulated crypto businesses on planet Earth have, like like, this battle tested, and here here you go. It's, like, ready to be used for you. That's a huge advantage. What other like, outside of that, what other key advantages do you see Coinbase having in this, like, next one to two year period that seems to be this, like, really crucial like, from our vantage point, like, consolidation is happening across startups. You have, like, a generally, like, macro bearish sentiment.

But if you really look at, like, the builders and the people that you're probably talking to every day, it's never been more optimistic in terms of what's possible. What are these advantages that you're seeing Coinbase having? Are these things that you're able to offer outside of maybe the the the the referenced example before? What other things are coming to mind right now that you're seeing or, like, raising eyebrows and winning deals?

Yeah. There's a few. So number one, like you said, it's the fact that we've built ten plus years of infrastructure that is already ready to go and we can externalize and solve so many needs because we've had so long to build all of it. So that's number one. Number two is trust, without a doubt. Definitely the most trusted brand in crypto. You know, we're a publicly traded company in the S and P 500. We hold hundreds of billions of dollars of customer assets. We've survived the many, many winters of crypto.

And so we've built that customer trust, and that's what's enabled us to work with the BlackRocks of the world and the largest companies in the entire world as the default and most trusted option. The third one, as I see lots of traditional payments businesses trying to enter the space, is I think we have amazing crypto chops. Like, a lot of the stuff is really hard to build, especially if we're doing it on chain. Smart contract development can be challenging.

Of course, crypto has a notorious and terrible hack probably every six months when it comes to contracts actually on the blockchain. And we know how to do that stuff like the back of our hand. We have incredible smart contract engineers. Love that. There we go. And just generally, a really, really talented and incredible team at Coinbase. And so I think that team is definitely an advantage.

And then you can name all the other things that make Coinbase great, the liquidity, deep banking partnerships, the licenses, so on and so forth. These are the things that are kind of no brainers at this scale, but also help us get these deals across the line. So the people we talk to, they they come to us, they tell us, you know, it's it's you or nobody. And I think that's a special advantage we have as Coinbase.

Yeah. Well said. I can't tell Drew's gonna say something or not. Justin, we're gonna wrap here. I'm queuing

up one last special goodbye gift for for Justin, a a USTC cannon, just for some reason. That's all that's all I got. Zach, you can you can wrap us up. No. Yeah. Justin, thanks for coming on, man. I hopefully, we talk to you sooner than than two years this time.

But, yeah, sounds like keep us in mind when the next exciting news drop. We'd love to have you on to to come do a do a breakdown outside of the article. And, man, just appreciate your support as always.

Of course, guys. This is great. Thanks again for having me on. Awesome. See you, Justin. Bye bye. Good work, man.