- Visa has now become the first major payments network to settle its transactions in cryptocurrencies, allowing Crypto.com to make fiat payments in USDC.
- The move is in line with the payments giant’s plan to move into the CBDC arena as more central banks make moves in developing sovereign digital currencies.
One of the world’s largest payments networks is now processing fiat transactions in cryptocurrencies. Visa announced today that it will allow one of its clients to make its payments in USD Coin (USDC), a stablecoin, while settling the transactions on the Ethereum network.
Visa, which is the world’s second-largest card payment company after China’s UnionPay partnered with Crypto.com on the initiative. The pilot project will see the cryptocurrency exchange and card issuer send USDC to Visa to settle a portion of its obligations for the Crypto.com Visa card program.
EXCLUSIVE-Visa moves to allow payment settlements using cryptocurrency – Reuters News$V
— *Walter Bloomberg (@DeItaone) March 29, 2021
In its current status, Visa’s standard settlement process requires all its partners to settle in fiat currency, regardless of which sector the partners operate in. As the payments giant noted in its press release, this can be costly and unnecessarily complex for cryptocurrency companies.
Jack Forestell, Visa’s executive VP commented, “Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors.”
Visa also brought in Anchorage, the first federally chartered digital asset bank on the pilot, pledging to avail the service to more companies later this year.
The ability to settle in USDC can ultimately help Crypto.com and other crypto native companies evaluate fundamentally new business models without the need for traditional fiat in their treasury and settlement workflows, Visa noted.
“The announcement today marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency,” Forestell added.
Visa gets deeper into cryptocurrencies
Visa’s supremacy in the card payments industry can’t be overstated. While UnionPay leapfrogged it in transaction volume a few years back, the Chinese firm gets a majority of its business in its home country. Globally, Visa controls over 50% of the debit and credit card market.
With cryptocurrencies becoming ever so popular, Visa has sought to position itself strategically to ensure it doesn’t lose its market share. The US company has continued to integrate digital assets into its system while partnering with dozens of cryptocurrency companies.
David Puth, the CEO of Centre, the consortium that oversees the issuance of the USDC stablecoin remarked on Visa’s growing influence in the cryptocurrency industry, stating, “Visa is leading the market with its innovative approach to payments in many forms. We are very impressed with their efforts.”
Crypto.com became the latest to join the Visa global network two weeks ago. Other members include Coinbase, BlockFi, Nexo and Binance.
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As per local reports in South Korea, Visa is also trying to get into the cryptocurrency exchange sector. The company was reportedly one of the global firms that have been eyeing a stake in Bithumb, South Korea’s second-largest exchange.
In the long run, Visa is seeking to get into the central bank digital currencies game. Cuy Sheffield, the head of cryptocurrencies at Visa stated recently, “As we engage with central banks across the world, we think it’s really important for CBDCs to be integrated into the payments ecosystem.”