VISA to allow USDC settlements via Ethereum on its network
The global payments network has so far shunned cryptocurrencies but is opening up to the sector. And it is starting with stablecoins.
Global payments giant Visa today announced it would allow the settlement of cryptocurrencies on its network, as per a report on Reuters.
“We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we’re seeing demand from our clients to be able to build products that provide that access for consumers,” said Cuy Sheffield, the head of crypto at Visa.
The firm has selected the USD Coin (USDC) as the first cryptocurrency to be settled on its global network. The USDC is a stablecoin that’s pegged on a 1:1 basis with the US dollar and is a joint project of crypto firms Circle and Coinbase.
The pilot is in collaboration with the payment and crypto platform Crypto.com. Visa plans to offer the option to more partners later this year, the report said.
A huge milestone for the industry as crypto and fiat networks begin to converge.https://t.co/v70qC8n4Yy
— Crypto.com (@cryptocom) March 29, 2021
Previously, Crypto.com converted all customer payments from crypto-to-fiat on a near-instant basis whenever they paid with the firm’s Visa card for goods or services. This meant providers like Crypto.com deposited fiat currency in a bank account and wired the funds to Visa at the end of the day to settle any transactions, adding cost and complexity for overall businesses.
Using Ethereum to settle transactions
The above is very similar to how traditional or crypto exchanges work, meaning the crypto itself was just converted to cash instead of being transferred. But now, Visa’s new move will see all payments occurring directly on the Ethereum blockchain itself.
That would, in turn, strip out the need to convert cryptocurrencies into fiat money in order for the transaction to be settled.
Meanwhile, the move comes a few weeks after Visa said it would develop a cryptocurrency business. As CryptoSlate reported at the time, the firm said the $1.7 trillion crypto sector was ‘too big to ignore’ and that it would work towards the acceptance of Bitcoin throughout its 70 million-retailer-strong network.
“We’re trying to do two things. One is to enable the purchase of bitcoin on Visa credentials. And secondly, working with bitcoin wallets to allow the bitcoin to be translated into a fiat currency and therefore immediately be able to be used at any of the 70 million places around the world where Visa is accepted,” said Visa CEO Al Kelly at the time.
Crypto-natives must be so thrilled right now.