I have been doing some research on stablecoins and that prompted me to revisit a book by Gottfried Leibbrandt and Natasha De Terán titled “The Pay-off” that I read a few years back. In the interests of full disclosure, I have used LLM models to help me draft the post below. Hopefully it still has something interesting a useful to say but you have been warned. In my defence, there is so much happening in this space it is the only way that I can stay on top of the topic.
This is a book about payment systems, but its real subject is political power. That I think is what makes it worth reading. Most people think about money more than payments, yet money only matters socially when people can actually use it to settle claims on one another. Once you start there, payments stop looking like a technical backwater and start looking like a way of organising access, cost, and control.
The book defines payment, in legal shorthand, as a means of discharging debt. That shifts attention away from the familiar image of money physically changing hands and toward obligations, trust, records, and institutions. It also helps explain why the authors lean toward the anthropological view that debt and obligation came before commodity money, not after it. If money is rooted in obligation, then payment is best understood as settlement rather than movement.
Risk, liquidity, convention
From there the book builds around three recurring problems: risk, liquidity, and convention. A payment has to be safe enough that each side expects completion, liquid enough that funds are available when needed, and conventional enough that the instrument is widely accepted. The third problem is one of the harder ones to solve. Payment systems do not win because they are elegant. They win because enough users, merchants, banks, and platforms coordinate around them at the same time.
That insight runs through the book’s strongest sections. The chapters on cards, for example, are less interesting as history than as political economy. The four-corner model linking cardholders, merchants, issuing banks, and acquiring banks created a structure that could scale across markets, while interchange made card use feel cheap to buyers and pushed visible costs onto merchants. Those costs then returned to consumers indirectly through prices, which is one reason the convenience of cards can feel greater than it really is. The book’s estimate that payment services extract roughly $1,000 per person per year in advanced economies gives that hidden structure a useful number.
The larger lesson they argue is about incumbency. Dominant payment systems do not always defeat challengers head-on. Often they absorb them. Internet commerce looked like it should have displaced the physical card, yet the card networks adapted and kept themselves at the centre of the transaction. What appears as disruption often ends up reinforcing the existing rails.
Cash and inclusion
Leibbrandt and De Terán’s discussion of cash notes the costs, the fixed nature of cash infrastructure, and the tension between anti-money-laundering politics and the continued circulation of large notes. But they also insist that cash has a property digital-payment enthusiasts too easily dismiss: universal access.
Cash does not require a bank account, smartphone, password, or internet connection. Remove it without a credible substitute and the system becomes narrower, not simply more modern. This is ultimately a political question.
International cases
The international chapters push the argument further. M-Pesa in Kenya, the Chinese platform model, and India’s UPI each show that payment systems succeed by fitting local habits and institutions rather than by conforming to some universal technical ideal. M-Pesa used simple text messaging and agent networks, China’s payment giants embedded themselves in commerce and social practice, and UPI combined public rails with open access at the interface layer. The lesson is that payments may be global in ambition, but they remain local in convention.
M-Pesa is especially suggestive because it raises a question the book never quite answers. Within its own network, it provided something close to routine monetary usability without being an insured bank deposit backed by the full architecture of commercial banking and central-bank support.
That does not make it equivalent to bank money. It does suggest that monetary adequacy is not all-or-nothing. For many users, the relevant comparison is not between an ideal form of money and a flawed one, but between a workable second-best instrument and high cost or outright exclusion.
The stablecoin question
That is where the stablecoin question enters. The Pay Off predates the full rise of stablecoins, but its framework travels well. Stablecoins are best understood not as magical new money but as another attempt to solve familiar payment problems under new technical conditions. Do they reduce friction? Can they become conventional enough to matter? What kind of trust do they actually provide, and for whom?
On one reading, the book gives good reasons for scepticism. Its analysis of incumbency suggests that many challengers end up leaning on the same old bottlenecks. Its discussion of instant settlement, especially in the UPI chapter, also points to a real fragility: systems promising immediate redemption can intensify a run once confidence weakens. Stablecoins do not escape that problem.
But the framework also complicates dismissal. If the relevant comparison is not a stablecoin versus an insured deposit in a well-functioning banking system, but a stablecoin versus an uninsured wallet, informal dollarisation, an expensive remittance corridor, or no reliable access at all, the judgment changes. A reserve-backed stablecoin holding short-duration government securities does not offer the same trust structure as bank money supported by public guarantees. Still, it may offer something materially better than the alternatives available to excluded users.
Its trust is however conditional and borrowed, resting on reserve quality, custody, and redemption practice rather than on the full public architecture behind bank deposits. That is why the 2023 USDC de-peg mattered. It showed both the weakness and the logic of the model. The token wobbled because confidence in part of the reserve structure wobbled. The trust in a stablecoin is not self-standing. It is layered on top of the institutions underneath it.
Why the book matters
That, finally, is where The Pay Off is most useful. Its enduring point is that payment infrastructure is not neutral. It allocates access, distributes risk, conceals or reveals cost, and decides who gets the benefit of strong public guarantees and who has to rely on something thinner. Seen in that light, the stablecoin debate is not mainly about whether a token counts as “real money.” It is about what degree of trust, convertibility, and usability is enough for participation in monetary life.
That is a better question than most payment debates ask, and it is the question this book helps bring into view.
Tony – From the Outside
From the outside 