Short answer
PSPs are exploring wallet-based payments because digital wallets and stablecoins have quietly become a serious payment method, and the merchants who want to offer them are starting to ask. It's not driven by crypto ideology. It's driven by the fact that stablecoin payments are faster, cheaper to process, and increasingly expected by a user base that's grown to nearly a billion people.
The hard part of getting here: regulation, infrastructure, scale. That's mostly sorted. What's left is integrating it.
The problem with how payments work today
If you've been in payments for a while, you know the infrastructure wasn't exactly built for the internet era. Cross-border payments still take one to three business days. Fees stack up to three to five percent once you factor in interchange, network charges, and FX. Everything stops at weekends. For a merchant in Southeast Asia getting paid by a customer in Germany, that means waiting days and losing a meaningful chunk of each transaction to a chain of banks most of them have never heard of.
Stablecoins solve this in a way that's hard to argue with. They're digital dollars (or euros, or whatever currency you need) that move over blockchain rails instead of correspondent banking networks. Payments settle in seconds. Fees are under 1.5% for cross-border. The network runs all day, every day. No batch windows. No chargebacks. No cut taken by three intermediaries before the money arrives.
That's why PSPs are paying attention. According to WalletConnect's State of Stablecoin & Crypto Payments 2026 report, $3.26 billion in stablecoin payments moved through the WalletConnect network in the past 12 months alone. The economics are real, and the gap between what stablecoin rails cost and what card rails cost is wide enough that merchants are starting to notice.
What "wallet-based payments" actually means
It's worth being clear on this because the term gets used to mean a few different things.
At one end, you have crypto debit cards. Someone holds stablecoins in a wallet, they pay with their card, the card network converts it to fiat behind the scenes, and the merchant gets a normal transaction. The consumer experience is familiar. The economics aren't that different from card, because Visa or Mastercard is still in the middle, taking their cut.
At the other end, you have direct wallet-to-merchant payments. The customer's wallet connects straight to the merchant checkout by scanning a QR code, tapping their phone, or clicking a payment option in an online cart. The payment settles onchain. No card network. No interchange. The merchant gets the money faster and keeps more of it.
Both approaches have a place. But they're not the same thing, and PSPs should understand the difference before deciding which one they're actually building toward. The card wrapper is a useful bridge to get started. Native wallet payments are where the real cost advantage sits.
The wallet user base is bigger than most PSPs realise
The perception that "crypto users" are a niche audience hasn't kept up with what's actually happened.
WalletConnect's network now connects to over 700 wallet providers and reaches an estimated 500 million users across 195 countries. Total stablecoin supply hit $305 billion in 2025, up from $5 billion in 2020. Monthly active stablecoin addresses peaked at 416 million last May, a 40% jump year-on-year. These aren't speculative traders. A lot of them are people who use stablecoins as a practical dollar substitute, particularly in markets where local currencies are volatile or banking access is limited.
The WalletConnect research is pretty striking on the demand gap: 96% of crypto holders say they want to pay with crypto, but fewer than 4% of merchants actually accept it. That's not a technology problem. It's a distribution problem that lives in the PSP and merchant stack. Whoever closes that gap first gets the transaction volume.
There's a revenue angle too. Wallet users tend to spend more: crypto customers show 15 to 25% higher average order value than card customers, and crypto card spending grew 525% in 2025. These aren't fringe users making tiny purchases.
Why the checkout experience keeps failing, and what that means for PSPs
Here's the uncomfortable truth about crypto payments right now: 76% of users have abandoned a crypto payment attempt in the past six months. Not because they didn't want to pay. Because the experience fell apart.
The most common reasons, according to the WalletConnect survey of 1,127 active users: gas fees were higher than expected (45%), the transaction was too slow (30%), and the error message made no sense (26%). One in five users hit the wrong token or wrong chain problem. They had money, just not the right money in the right place.
This is actually good news for PSPs. It means the demand is there. The obstacle is a fragmented, inconsistent checkout experience that nobody has properly standardised yet. There's no crypto equivalent of a card terminal: a consistent, familiar flow that works the same way regardless of which wallet someone uses.
That's the gap WalletConnect Pay is built to fill for PSPs: a single integration that handles the wallet connectivity, routing, gas, and checkout UX, so merchants don't have to figure it out themselves and customers don't walk away confused.
How it works in practice
The simplest way to think about WalletConnect Pay is as another payment method in the PSP stack, like adding Apple Pay or a local bank transfer, but one that connects to 500 million wallet users instead of a single network.
For in-store payments, the merchant POS shows a QR code. The customer opens their wallet, scans, and approves. Done. It feels the same as scanning for any other mobile payment.
For online checkout, WalletConnect Pay shows up as an option alongside cards and PayPal. The customer clicks it, picks their wallet, and approves the payment. No card details typed. No redirects. Checkout completes in seconds.
For tap-to-pay, the customer taps their phone or hardware wallet. Biometric confirmation. Instant settlement.
In all three cases, the complexity (which chain, which token, how to handle gas, how to route the payment) is handled underneath. The customer just approves a payment. The PSP sees a settled transaction. The only thing that changes from the PSP's perspective is there's a new payment method available to their merchants, with better unit economics and no chargeback exposure.
Compliance is handled: here's how
The compliance question is usually the first thing PSPs ask about, and it's a fair one. Regulations like MiCA in the EU, FATF Recommendation 16, and the US GENIUS Act all place compliance responsibility on the regulated intermediary, which in most payment flows means the PSP.
WalletConnect Pay bakes compliance into the transaction flow rather than treating it as an add-on. Before any money moves, the system runs sanctions screening against OFAC, EU, and UK lists. Travel Rule data is collected and transmitted in the format regulators require. Every transaction is risk-scored against known exposure to bad actors. Wallet ownership is verified cryptographically, satisfying the EU's requirements without needing to ask the user for personal details upfront.
PSPs that already have their own compliance stack, a preferred KYC provider or in-house transaction monitoring, don't have to replace any of it. The architecture is modular. Most PSPs end up using WalletConnect Pay for the crypto-specific pieces (Travel Rule, wallet screening) while their existing tools handle the identity and risk side they already know.
The window for moving first
In 2025, Stripe, Visa, PayPal, and JPMorgan all launched stablecoin payment products in production. Not pilots. Live products, processing real transactions.
When Stripe is charging 1.5% for stablecoin payments versus 2.5 to 3.5% for card, that becomes the comparison merchants make. The "wait and see" posture is harder to hold when the biggest names in payments have already moved.
WalletConnect's report projects that by end of 2026, stablecoin payments will be a standard PSP offering. That's less than 18 months away. PSPs that integrate now have time to iterate, learn, and build a merchant base before it becomes table stakes. PSPs that wait will be catching up on a compressed timeline, without the benefit of the early-mover data.
Regulatory clarity is also largely there. MiCA hits full enforcement in July 2026. Hong Kong and Singapore frameworks are already live. The GENIUS Act in the US takes full effect in 2027. The "we're waiting for the rules" conversation is mostly over.
Frequently asked questions
What is wallet-based payment infrastructure for PSPs?
It's the ability to offer merchants a new payment option where customers pay directly from a crypto wallet using stablecoins, rather than through a card network. Transactions settle faster and at lower cost than traditional rails, and the PSP generates revenue on each transaction without needing to own any blockchain infrastructure.
What's the difference between stablecoin payments and regular crypto payments?
Stablecoins are pegged to a regular currency, usually the dollar, so there's no price volatility for the merchant to worry about. USDC and USDT are the two big ones, held by over 80% of active crypto users. For practical payment purposes, accepting stablecoins is closer to accepting digital dollars than it is to dealing with Bitcoin price swings.
Do merchants have to hold stablecoins?
No. WalletConnect Pay includes conversion to fiat, so a merchant can accept payment in stablecoins from a customer and receive their payout in regular currency. Merchants who want to hold stablecoins for cross-border treasury reasons can do that too, but it's optional.
How does compliance work?
The key regulations, MiCA, FATF R.16, UK MLR 2017, and the GENIUS Act, all put compliance responsibility on the regulated intermediary at the point of payment. WalletConnect Pay handles sanctions screening, Travel Rule data collection, and blockchain risk scoring at the infrastructure level, so PSPs don't have to build those capabilities from scratch.
Which wallets can customers use?
WalletConnect's protocol connects to 700+ wallets, including MetaMask, Coinbase Wallet, Trust Wallet, Phantom, and hundreds more. A PSP integrating WalletConnect Pay reaches the full network through a single integration, rather than negotiating individual wallet relationships.
How long does integration take?
WalletConnect Pay is designed to plug in like any other alternative payment method. No changes needed to existing settlement or reconciliation flows. Most API integrations go from agreement to live testing in weeks.
What stablecoins are supported?
USDC and USDT are the primary ones, which between them cover over 80% of active stablecoin users. Support spans the major chains, and merchants can configure which tokens they want to accept.
The bottom line
Wallet-based payments aren't coming. They're here. The user base is large, the infrastructure is solid, the big players have committed, and the regulatory frameworks that PSPs needed before they could move are in place.
Adding stablecoin payments through WalletConnect Pay is a pretty practical decision: one integration, better economics than card rails, access to a payment method a growing share of merchants are asking for, and no need to rebuild anything that already works.
The PSPs who figure this out in 2026 will be ahead. The ones who wait will spend 2027 catching up.