Visa will settle transactions in USD Coin via the Ethereum blockchain
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Visa Inc (NYSE:V) will start allowing the cryptocurrency USD Coin to be used for payment settlements on its network. It's the latest sign that mainstream financial companies are starting to accept digital currencies.
Visa Starts Using USD Coin For Payment Settlements
According to CNBC, Visa launched the pilot program with Crypto.com, a payment and crypto platform. The companies plan to offer the option to use USD Coin to more partners to settle transactions later this year. The USD Coin's value is pegged to the U.S. dollar.
Mastercard, BlackRock and Bank of New York Mellon have also embraced cryptocurrencies recently, so many have started to speculate that they will become a standard part of investment portfolios soon. Tesla CEO Elon Musk announced last week that customers could use bitcoin to buy their electric vehicles, a key step toward broader use of the cryptocurrency in commerce.
Visa's crypto chief, Cuy Sheffield, told CNBC that they are seeing growing demand from consumers globally to be able to access, use and hold digital currencies. He also said they are seeing demand from their clients "to be able to build products that provide that access for consumers."
How the partnership with Crypto.com will work
Previously, when customers chose to use a Crypto.com Visa card to pay for something, the cryptocurrency had to be converted into fiat currency. The cryptocurrency wallet deposits traditional money into a bank account, and it's then wired to Visa at the end of the day to settle transactions. The process increases costs for businesses and makes things more complicated.
Visa's new plan will be completed on the Ethereum blockchain. It eliminates the need to convert digital currencies into fiat money for the settlement of the transaction. The credit card company said it partnered with Anchorage, a digital asset bank, to complete the first transaction involving USD Coin this month, using Crypto.com to send the digital currency to Visa's Ethereum account at Anchorage.
Visa Chief Product Officer Jack Forestell said in a statement that today's announcement "marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency."
Anchorage co-founder and President Diogo Monica said in a statement that Visa came to them in 2019 with the idea to "make secure, efficient and seamless settlement payments possible in digital currency." The payment company wanted to connect its treasury with Anchorage's custody platform, providing "the next generation of crypto native issuers the option to directly settle with Visa in a digital currency over a public blockchain."