USDC pays for gas on Arc. How much demand comes from payments?

USDC transfers rose 49% in the third quarter, while average circulation rose 8%. Circle’s Arc gives payment firms a place to pay network fees and settle transfers in USDC, but the amount they need to hold will depend on how quickly they can reuse incoming funds and whether they have to pay customers before money arrives.

USDC has recorded $13.9 trillion in third-quarter onchain transfers, up 49% from a year earlier, while average circulation rose 8% to $73.3 billion. The gap gives Circle’s Arc blockchain a concrete test. Payment firms can move more dollars through the network without necessarily increasing the USDC balances they keep ready for the next round of payouts.

Circle disclosed the figures in its November 4 quarterly filing. A provider that receives USDC throughout the day can use incoming funds for new payments, while one that pays out before customers’ funds arrive has to keep more money available in advance.

Arc gives payment firms a network where they can use USDC to settle transfers and pay transaction fees. The bigger question for demand is how much they need to keep available between payments, particularly if they have to fund payouts before money arrives from customers or settlement partners.

JUST IN: Circle's CCTP now supports third-party ERC-20 tokens on Arc

The upgrade lets token issuers transfer assets across chains using Circle’s burn-and-mint infrastructure, without relying on separate bridges or wrapped tokens. pic.twitter.com/tmKP5Nugko

— crypto.news (@cryptodotnews) November 3, 2026

How much USDC a provider needs between payments

A payment provider can have a large volume of transfers and a small working balance if money moves through the business quickly. It can also have a relatively large balance because it needs to fund payments in advance. The difference comes down to the timing of incoming funds, outgoing commitments and how easily the provider can top up its accounts.

Consider a firm sending $100,000 of supplier payments per business day. If it receives enough USDC each morning and can process the entire day’s payments from that funding, the starting balance can be close to one day’s needs plus an operating buffer. If it must fund five business days before sending payments, the same schedule could require $500,000 before the buffer. The example gives the same payment volume with different amounts held.

A provider might choose to hold more because it cannot always replenish liquidity at the time a customer wants to pay. The relevant gap can be between a digital dollar transfer and the availability of the recipient’s local payout system. Sending the token is one operation. Arranging conversion and meeting the conditions for a local bank payment are others.

A provider can hold less if the same balances are available to meet incoming and outgoing obligations throughout the day. A business with many customers paying in opposite directions can use some inflows to fund other payouts. It still needs to account for currency mismatches, uneven timing and the possibility that a large group of customers sends money in one direction.

This is where a payments network can add to stablecoin demand. Recurring commitments can give businesses a reason to keep dollars onchain between transactions, especially when speed matters. Faster settlement can also help some firms use a smaller buffer by making their funds available again sooner. Both effects can operate at the same time for different users.

The useful question is how the balance changes when payment volume changes. If a provider doubles its volume and keeps the same balance, it has made each dollar work harder. If the balance grows because the provider funds more corridors or holds extra liquidity for a larger customer base, demand for inventory is rising as well. Neither conclusion follows from a single gross-volume figure.

JUST IN: Circle’s $USDC supply falls by $800M as redemptions outpace issuance

Circle redeemed $11.7B in $USDC and issued $10.9B in the week ending Oct. 29, bringing the stablecoin’s total circulating supply down to $70B. pic.twitter.com/gBYg0zVSr4

— crypto.news (@cryptodotnews) November 1, 2026

How transfer value pulled away from circulation

Circle’s published figures allow a rough comparison of turnover across the two quarters a year apart. Dividing $13.9 trillion in quarterly transfers by $73.3 billion in average circulation produces about 190 times. Using the reported growth rates to infer the earlier figures gives approximately $9.3 trillion in transfers and $67.9 billion in average circulation, or around 137 times. These are approximate ratios because the company reports rounded inputs.

Those ratios compare gross transfer value with average supply. They cannot tell us that a typical USDC unit changed hands 190 times or that the transfers were all payments for goods and services. The same inventory can move through an exchange, trading pool or settlement service many times while other balances remain untouched. The calculation shows how much more quickly measured activity grew than the amount held across the network of USDC users.

Circle Payments Network’s annualised volume is a separate measure. An annualised figure expresses the pace of activity as a yearly rate. It is not a record of how much the network has already processed over twelve months, and it should not be added to the quarterly gross transfers as if the totals cover the same activity. Circle had put the annualised rate at $14.7 billion at the end of June, based on the preceding 30 days.

The growth in the reported pace provides evidence that Circle’s payment network is seeing more activity. To establish how much that adds to demand for USDC on Arc would require identifying the share of those payments that settles on Arc and the balances needed to support it. Some activity could settle elsewhere, and some balances could move onto Arc from an existing account on another chain.

A provider’s daily volume can be especially sensitive to how it batches activity. Ten payments can settle individually or be combined in a smaller number of transactions between intermediaries. A count of network operations alone can therefore understate the number of customer payments, while a count of every transfer in a multi-leg route can overstate the final value delivered to recipients.

The same distinction applies when comparing the network with conventional payments services. A merchant may be interested in the total cost of getting money to its supplier, including the currency exchange and final payout. The blockchain fee covers one part of that cost. A shorter settlement window can help, but the customer still needs a provider willing to make the payout on the required terms.

The transaction data needed for an Arc comparison would include identified addresses and their roles. It would help to know which addresses are fee sponsors, which hold market-making inventory and which belong to firms paying customers or suppliers. Treating all addresses with a stablecoin balance as payment users could count unrelated trading inventory or transfers between accounts under common control.

With that classification, the first calculation would compare settled payment volume with the average balances of participating providers over the same period. The second would compare the change in those balances with net inflows onto Arc and net USDC issuance across networks. Together they could distinguish growth in activity, a shift in where existing funds are held and additional demand for newly issued digital dollars.

Circle’s earnings give investors several measures to track

Circle reported $865 million in third-quarter revenue and reserve income, up 17%. Its filing separately put Circle Payments Network at $41.3 billion in annualised total payment volume. That figure represents a run rate for the payments network, while $13.9 trillion covers reported USDC onchain activity during the quarter across networks.

Arc was public for only the final weeks of the quarter, so the company-wide figures cover a much larger set of activity than Arc alone. A closer measure of demand on Arc would pair payment and FX transactions with changes in balances held by identifiable payment providers, merchants and liquidity firms. Tracking minting, bridging and redemptions would help distinguish newly issued USDC from existing balances moved onto the chain.

Which measures would show recurring use

Measure	What it can help establish
Gross transfers	How much USDC moved, including repeated movement of the same coins.
Payment provider balances	How much USDC identified businesses hold between settlements.
Net issuance and redemptions	Whether circulating supply is expanding after funds returned to the issuer are taken into account.
Gas spending	How much USDC users or sponsors spend to submit network transactions.

The wallet classification is important. A large transfer between addresses controlled by the same organisation can look similar to a customer payment in raw transaction data. A payment provider may also combine many customer payouts into fewer settlement transactions. Counting transactions without identifying the activity behind them can therefore distort the result in either direction.

An Arc-specific comparison would need to track repeat users and retained balances over several periods, alongside evidence on what those accounts do. The quarter ended September 30, two weeks after Arc opened to the public. Circle’s next full quarter will provide the first reporting period covering a full three months after the launch.

Circle is also expanding the payout side of its business. It signed an agreement to acquire Singapore-based cross-border payments company Tazapay, which it expects to close in 2027 subject to regulatory approvals. Circle says Tazapay has local payout routes covering more than 100 markets.

Daily balance snapshots can miss some of those changes. A provider might hold substantially more USDC while it processes an afternoon batch and return excess inventory to a treasury account before the day ends. A snapshot taken at midnight would omit that intraday demand. By the same token, a large balance observed just before a payout batch can exaggerate what the firm usually carries. Tracking comparable intervals over several cycles would help distinguish a recurring need for funds from a balance assembled for one unusually large day.

The public chain can record transfers between identified accounts, but some of the steps that determine the customer outcome take place elsewhere. A payout to a bank account produces a different record from a transaction on Arc. An intermediary can group many customer payments into one settlement or use several transfers to complete one transaction. Interpreting counts as completed payments requires knowing how the provider uses its wallets and how those movements correspond to instructions in its own system.

Gas creates a dollar cost that can be budgeted separately

Arc’s choice of USDC for transaction fees gives businesses a way to budget network costs in the same currency they use for dollar settlement. Circle launched the public mainnet on September 16 with USDC gas and a founding group of institutional validators. The network design places the gas balance and the payment balance in the same unit of account.

A business can still manage them separately. The account paying for a large batch of transfers may be funded for network costs, while a treasury or payments account holds the much larger sum due to customers. A platform that handles gas for users can maintain its own balance and charge customers through its pricing. In that arrangement, the payer needs enough USDC for fees even if the customer rarely sees a separate gas deduction.

The dollar denomination makes the cost easier to compare with a service charge. It does not tell the business how much it will pay for every transaction. The work required by the operation and the conditions in which it is submitted can change the fee. A transfer, an exchange of currencies and a transaction involving several contracts can have different costs.

The number of transactions required also matters. A provider paying many customers can submit individual transfers or use an application that groups some of the work. Each arrangement produces a different relationship between payment count and network use. Comparing gas costs across providers requires knowing which operations are counted and how many customer payments those operations represent.

For USDC demand, the balance held by the fee payer and the amount spent over time measure different things. A provider that pays $1,000 in fees over a month might keep far less than $1,000 available at any given time if it replenishes the account often. A service that pre-funds for months can maintain a larger standing balance relative to its observed spending.

StableFX adds an inventory question for both sides of a trade

Circle has brought stablecoin foreign exchange to Arc through StableFX. It has also expanded CCTP to EURC and cirBTC on Arc, a separate change to how supported assets move across networks. Its request-for-quote model lets participants seek a price for exchanging one currency token for another. The payment-versus-payment arrangement links delivery of the two sides of an exchange, so the settlement mechanism can make one delivery conditional on the other.

A firm converting USDC into a local currency token may care about three prices. There is the exchange rate it receives, the fee it pays to settle and the cost of converting the received token into funds that can be paid out locally. A competitive quote on the trade addresses one part of that chain. The economics of the payment depend on the full route.

Liquidity providers need assets available to deliver on the quotes they make. That can mean holding several currencies and moving balances between services as demand changes. An inventory that supports a regular two-way market can be reused. A series of large trades in one direction can force a provider to rebalance or widen the terms it offers.

A dollar balance on Arc can therefore have a role even if it never belongs to the person making the payment. A liquidity firm could keep USDC to make quotes. A payments business could hold it to fund settlements. A customer could hold it to pay suppliers directly. If all three interact in the same transaction chain, an observer needs to avoid treating each movement as a separate new dollar of demand.

The presence of multiple currency tokens also means USDC can serve as a trading or settlement leg even when neither customer keeps a permanent dollar balance. That is useful for network activity and can be commercially relevant to the firms processing it. The standing demand for USDC comes from whoever retains the inventory needed to keep those routes open.

The outcome can also differ between payment routes serving the same customer. On a route where the recipient accepts USDC, the provider can deliver the asset directly. On a route where the recipient wants a local bank deposit, the provider needs access to a conversion and a payout service. The same amount sent in dollars can therefore involve different working balances, even before accounting for transaction fees. That is one reason a market list by itself provides limited information about potential stablecoin demand.

Moving USDC onto Arc is distinct from creating new supply

Circle’s interoperability products help move supported assets among networks. In a burn-and-mint transfer, the amount destroyed on the source chain and re-created on the destination chain represents a movement of the same economic exposure. The destination can gain USDC while the source loses an equivalent amount.

For an observer looking only at Arc, the mint can appear to be additional local supply. For an observer tracking USDC across networks, it is part of an offsetting transfer. The distinction matters when assessing whether Arc brings new dollars into the stablecoin system or attracts existing balances from other places.

The same issue arises when a business purchases USDC from another holder. The buyer’s balance goes up and the seller’s goes down. The purchase can support demand for the token at the transaction level, but it does not require Circle to issue another unit unless someone in the chain ultimately needs newly issued coins. Net growth across networks depends on issuance and redemption activity taken together.

Circle’s quarterly disclosure of approximately $104 billion in gross minting and a similar amount of redemption gives some perspective on that process. The totals are rounded, so subtracting them as displayed cannot establish the precise net change. A large gross total on both sides can coexist with a much smaller change in the amount circulating.

An analyst could compare Arc’s balances over time with activity on networks from which funds are arriving. Repeated inflows followed by quick outflows would describe a settlement route with rapid turnover. Inflows that leave balances with identifiable providers over several weeks would offer different evidence about the liquidity those businesses keep available.

Circle’s income statement contains a second Arc story

Circle reported $865 million in revenue and reserve income for the quarter. Its results include $658 million of reserve income and roughly $182 million from the ARC token presale within other revenue. The presale income is a separate line of business from the dollars Circle earns on reserves backing stablecoins.

That distinction changes how an investor reads the quarter. The reported total rose 17%, while reserve income fell 8%. Higher average circulation helped support reserve income, but a lower return on reserves outweighed that effect. The two figures can move in different directions because total revenue includes commercial activity beyond managing the reserve portfolio.

The amount a company receives from a sale and the amount it recognises as revenue during a given quarter can also differ. The published presale proceeds cover the transaction as disclosed, while recognised revenue applies the company’s accounting to a reporting period. Reading the two figures as if they were independent sales would double count the activity.

For a business considering Arc as a payment rail, the distinction is more direct. USDC is the asset used for fees and can be the asset it sends to a counterparty. The ARC presale relates to a different token and different arrangements. The presence of a token sale in the company’s results cannot quantify merchant balances or tell a supplier how much USDC it needs for its own settlement activity.

The operating figures are therefore most useful when read according to their scope. Earlier crypto.news reporting examined how much USDC income Circle keeps after distribution and other costs. A change in reserve income tells an investor about the combined effect of balances and yields. A change in other revenue can include token sale recognition or services. Payment volume measures activity. A balance retained by a provider measures liquidity committed to serving future payments.

The financial reporting question is narrower. If firms keep larger operating balances in USDC, those balances are part of global circulation while they are outstanding. Circle’s reserve income still depends on what the reserves earn and the amount held over time. A one-day spike in balances does not have the same effect as a durable increase through a quarter. Nor does a transfer that shifts an existing token from one chain to another change the issuer’s liabilities on its own. The reports can show those differences only if they separate supply from gross activity and network revenue.

Why payout routes can generate activity without leaving a merchant balance

Circle’s planned Tazapay acquisition is relevant because the recipient of a payment can want ordinary bank funds even when the sender or payment provider prefers to use a stablecoin. Payout networks connect those preferences by handling conversion and distribution. The stablecoin can be important to the provider’s settlement process without appearing in the recipient’s account.

A local payout provider needs the right currency when it makes the payment. It may pre-fund a bank account, arrange credit or convert incoming funds as it receives them. A dollar stablecoin can help it move value between partners, but the demand for USDC depends on which of those arrangements it uses and how long the funds stay in stablecoin form.

A provider could receive USDC for a payment, convert it immediately and retain only a small gas balance. Another could keep much of its dollar liquidity as USDC because it expects to fund several transactions later in the day. They can both report stablecoin-based activity, yet only the second arrangement necessarily leaves a substantial ongoing dollar-token balance at the provider.

Pre-launch disclosures identified providers preparing to route payment and settlement activity through Arc. Those relationships identify places to look for recurring use. The amount each provider handles and retains depends on what it has put into service and how its customers use the route.

An integration announcement can show that the necessary software and counterparties are coming together. The useful operational details would include which corridors are available, what portion of settlements actually uses Arc and whether the provider holds balances overnight. More local payout options can support more transfers while leaving the amount held dependent on the provider’s treasury choices.

The Tazapay agreement gives Circle a potential way to extend those routes. Circle disclosed that the company has payout coverage in more than 100 markets and expects the deal to close in 2027 subject to regulatory approvals.

A payment provider’s need for inventory can differ across the currencies on a single route. It may be able to replenish its USDC account around the clock while depending on a local banking partner that processes outgoing payments only at set times. If an instruction arrives after the local cutoff, the provider can wait, pre-position additional currency or pay through another partner. Those choices affect how much balance is needed, in which currency and for how long. Faster onchain settlement changes one part of the sequence.

Circle has given the market a specific commercial milestone with Tazapay. The announcement describes a plan to expand local payment connectivity and makes the transaction subject to regulatory approvals. The quarterly filing reports the USDC transfers and balances that Circle could already measure. The eventual launch of payment routes, and any disclosures on what providers hold to keep them running, would give readers a separate record of what Arc adds.

What to watch

• Provider balances. Identifiable operating wallets holding USDC between settlement cycles.
• Repeat settlement. Recurring payments by the same providers across multiple weeks.
• Supply changes. Net global issuance measured separately from USDC relocated onto Arc.
• Currency inventory. Persistent StableFX balances across the currencies used on active routes.
• Commercial rollout. Tazapay launch dates, approved markets and reporting on live volumes.

FAQ

Disclaimer: This article is for information and educational purposes only and does not constitute financial or investment advice. Figures reflect regulatory filings and reporting available at the time of writing and change with each disclosure. Nothing here is a recommendation to buy, sell, or hold any security or asset. Always do your own research. Information is accurate as of November 5, 2026. Legal questions should be discussed with qualified counsel.