Visa to settle payments using crypto-currency
Financial services firm Visa has become the latest big-name brand to embrace crypto-currency.
Yesterday, the company, in a blog post, said it is adapting the Visa network to accommodate new form factors for money.
“With this in mind, today we proudly shared some historic news about our digital currency efforts – the first transactions settled with Visa in USD Coin (USDC), a regulated stablecoin backed by the US dollar and transacted over the Ethereum blockchain.”
Stablecoins are crypto-currencies designed to minimise the volatility of the price of the coin, relative to some “stable” asset or basket of assets. A stablecoin can be pegged to a crypto-currency, fiat money, or to exchange-traded commodities (such as precious metals or industrial metals).
Crypto-currencies such as Bitcoin have of late been gaining value after being endorsed by big-name brands such as PayPal, Square, Mastercard and Tesla, among others.
Last month, Visa’s rival Mastercard said it will this year start accepting some select crypto-currencies on its network.
According to Visa, billions of dollars are cleared and settled each day with Visa’s settlement service – securely, reliably and predictably.
“While it [Visa] operates behind the scenes, it’s a system that has served the traditional financial sector – and everyday consumers and business owners – for decades. But what about fintechs and neo-banks that run their business in digital currencies like Bitcoin, Ethereum, or USDC? Take Crypto.com for example, the largest provider of crypto payment and trading services,” says the company.
“Crypto.com wants to enable millions of consumers across the world to access and use digital currencies,” says Kris Marszalek, CEO and co-founder at Crypto.com.
“We believe in the power of this technology to move money efficiently for our customers, which is why we have built our own business and treasury infrastructure on top of digital currencies. Partners like Visa who have the capability to directly accept and interact with digital currencies help enable us to maximise the benefits of digital currencies.”
Visa says its standard settlement process for purchases made on Crypto.com Visa cards each day requires Crypto.com to convert digital currencies into a traditional fiat currency that Visa accepts – adding cost, time and complexity to daily business processes.
Explaining how it settled for USDC, Visa says the stablecoin is nearing $10 billion in circulating supply, with a robust developer community and growing adoption across crypto companies and financial institutions alike.
Furthermore, it notes, USDC and the Centre Consortium (the governing body behind USDC) have also shown a track record of clear compliance and regulatory engagement to instil confidence in USDC.
“In addition to the explosion of supply and usage, we’ve seen the emergence of new use cases forming around USDC, including cross-border B2B [business-to-business] payments, trade settlement and remittances,” says Visa.
“Having selected the USDC stablecoin as our pilot asset, we set about making the infrastructure upgrades necessary to mesh key components of digital currencies with Visa’s treasury operations. We’ve been hard at work over the last several months, working to support a number of key functions.”