The news: Fiserv will acquire StoneCastle Cash Management, giving its payment ecosystem a new source of liquidity.

StoneCastle provides liquidity as manager of a network of depository institutions, primarily credit unions and community banks.

How we got here: Fiserv plans to issue its own stablecoin, FIUSD, by the end of the year. Partnerships with PayPal and Mastercard give Fiserv interoperability with PYUSD and could help banks issue stablecoin-backed payment cards.

Where StoneCastle comes in: With the boost in liquidity, Fiserv can start pitching retailers to issue their own stablecoins on its network. 

To comply with the GENIUS Act, stablecoin issuers legally have to have dollars in reserve, and banks may be hesitant to set aside unlendable money. Retailers who also need to work with a financial institution to issue a stablecoin can also benefit from access to the reserve cash. 

Through major retail partners like Walmart and DoorDash, Fiserv could help retailers issue their own stablecoins—saving them a pretty penny on transaction fees and letting them offer faster payouts to people like gig workers. 

How the competition is reacting: Stripe also is leaning into stablecoins as the way forward for commerce—it also started letting merchants issue their own stablecoins, signaling that Fiserv’s stablecoin ambitions are shared among its rivals.   

Our take: Broadening its merchant services through stablecoin issuance may take the burden off of Clover to drive revenues, which has struggled recently with weaker adoption amid a stacked POS space.