Payment giant Visa is starting to allow its partners to settle fiat transactions in cryptocurrencies. Specifically with the USDC stablecoin built on the blockchain of the cryptocurrency Ethereum.
Visa will start using the ETH network
Visa is piloting the settlement of stablecoin transactions on the Ethereum blockchain. The company announced today that it had accepted the first payment settled in USD Coin. In Monday’s announcement, Visa said that the crypto card issuer and Crypto.com became the first user of the fiat transaction system for cryptocurrencies. Visa plans to expand its offer to other partners later this year.
USDC is a stablecoin backed by a 1:1 US dollar from Circle. Its tokens are issued on blockchains:
- Ethereum as ERC-20 tokens,
- Algorand as ASA tokens and
- Solana as SPL tokens.
- Visa is accepting the USDC
Although Visa talks about the USDC on Ethereum, it is not yet clear whether it will use the other two blockchains on which the USDC is placed or whether it will also use other cryptocurrencies (stablecoins). Visa partners will, reportedly, be able to exchange USD coins (USDC) over the payment card payment network to settle transactions made in fiat currency. This means that, unlike a regular transfer, partners will be able to send USDC to Visa’s Ethernet address.
“Crypto-native fintechs want partners who understand their business and the complexities of digital currency factor forms,” said Jack Forestell, head of Visa’s product department. “Today, this announcement marks a significant milestone in our ability to respond to the needs of Fintech, who run their business in stablecoin or cryptocurrency.”
So far, only for fintech?
The pilot program is focused on fintech companies and neobanks trading in cryptocurrencies. According to Visa, billions of dollars worth of transactions are processed daily in this area. The company aims to enable these payments to crypto businesses, which means that it does not yet plan to provide similar services to regular customers. Strategically, this is a step towards the possible support of central banks‘ digital currencies (CBDC).
“We’ve found that many of our crypto partners use and build on the USDC, many of whom pay stablecoin to their employees and resellers,” said Cuy Sheffield, cryptocurrency chief at Visa. “It was natural.”
Conclusion on VISA and cryptocurrencies
Although this type’s first transaction has only been settled now, we first heard about plans to add a crypto option through a Visa business card in December 2020. It reportedly cost the company more than two years of effort.
With the upgrade, Visa’s partners will soon meet their obligations with the company directly at the USDC. The credit card company already works with 35 digital currency platforms, including Coinbase, Crypto.com, BlockFi, and Bitpanda, which have more than 50 million active users.