Visa is taking steps to encourage cryptocurrency for use in transactions and settlements.
Visa has started a pilot project with Crypto.com, a payment and cryptocurrency network, with hopes to expand the program later next year. Inc announced on Monday that it will accept the cryptocurrency USD Coin to resolve payments on its payment platform, reflecting the latest example of popular implementation of cryptocurrencies. The USD Coin (USDC) is a stable coin cryptocurrency that is tied directly to the US dollar.
Visa’s announcement followed the adoption of many cryptocurrency exchanges by financial firms like BNY Mellon, BlackRock Inc, and Mastercard Inc, fueling projections of whether cryptocurrencies will be a frequent part of investment portfolios.
Elon Musk, the CEO of Tesla Inc, stated last week that bitcoin could be used to buy this company’s electric vehicles, marked a huge leap forward with bitcoin’s use across the business. If a customer wishes to pay for a beverage with a Crypto.com Visa card, the digital currency maintained in a cryptocurrency wallet must be converted into traditional money.
Traditional fiat currency would be transferred in a bank and wired to Visa at the end of the day to settle any transactions, increasing the expense and volatility for companies. Visa’s new change, which will allow the use of the Ethereum blockchain, excludes needing to convert digital currency into fiat currency in exchange for money.
Visa’s latest step, which will use the ethereum blockchain, strips out the need to convert digital coins into traditional money for the transaction to be settled. Visa said it has partnered with digital asset bank Anchorage and completed the first transaction this month.
Visa’s move comes as finance firms including BNY Mellon, BlackRock, and Mastercard take steps to make more use of cryptocurrencies for investment and payment purposes. Tesla boss Elon Musk, a major proponent of cryptocurrencies, said last week that customers can buy its electric vehicles with bitcoin, hoping to encourage more day-to-day use of the digital currency.
Visa said the move is part of a pilot program to make life easier for cryptocurrency businesses. Visa wants to eliminate the hassle of it requiring customers to convert their cryptocurrency holdings into fiat currency, like U.S. dollars, before settling up their accounts on the Visa network. The company said it plans to expand the feature to other members of its payments networks, and potentially to other virtual currencies, later this year.
How does this benefit ordinary people?
The consumer cardholder experience doesn’t change. They have a balance of crypto that they’re able to spend at a merchant. What changes is the process behind the scenes? Now, these businesses don’t have to keep balances in a traditional bank account. This will make it easier for more crypto wallets to offer Visa card programs to consumers, and that’s ultimately going to benefit consumers as they’ll have more options to pay using crypto.