Behind Major Block Layoffs: Stablecoin Low Fees Disrupt Credit Card Model, AI Payment Era Approaching

On February 27, fintech company Block announced it has reduced its staff to approximately 6,000 employees, close to its 2019 level (around 3,800 employees), a significant contraction from the peak of over 10,000 during the pandemic. CEO Jack Dorsey stated that AI tools have improved the efficiency of small teams, but the deeper reason for this adjustment is that profit margins in the payments industry are being re-priced.

Block has long relied on earning 2% to 3% in card processing fees from merchants, which supports the business ecosystem between acquirers and credit card networks. However, stablecoin payments offer near-instant settlement and cost structures at a few cents, creating direct competitive pressure on traditional bank card channels. Citrini Research’s report “When Friction Drops to Zero” notes that as AI shopping assistants can automatically compare prices and choose the optimal payment route, transaction decisions will increasingly be based on cost and speed rather than brand preference.

In a machine-dominated payment environment, high-fee models are unsustainable. If merchants can significantly reduce costs through stablecoin channels, the profit distribution mechanism of the card network will inevitably be squeezed. The nearly 40% layoffs are also seen by the market as an early move to anticipate downward pressure on fees, rather than just a correction for overly rapid expansion during the pandemic.

Capital markets responded positively, with Block’s stock price rising over 23% after hours, though it remains about 80% below its pandemic high. As stablecoins gradually gain regulatory approval and AI-driven payment decision-making accelerates, the revenue structures and cost models of payment companies are facing a substantial stress test.