Ten years ago, cryptocurrency wasn’t much more than a hobby for hipsters and tech nerds. Today, those who held onto the crypto they purchased are laughing all the way to the bank. Everyone else is scrambling to try and get on board.
That includes major companies around the world. Business leaders are starting to recognize the importance of cryptocurrency not just as an investment, but as a way to make daily transactions and online purchases.
On Monday, Visa announced that it now supports the use of cryptocurrency to settle certain transactions within its payment network. The move comes thanks to a partnership with Crypto.com. Visa aims to expand its crypto offerings to more partners as the year progresses.
The problem with using cryptocurrency to pay for things is that, in most cases, it needs to be converted to a fiat currency before the transaction can be completed. This not only takes longer to do but is also more expensive for payment processors.
Of course, that doesn’t deter crypto enthusiasts from wanting to make purchases with their digital coins. That’s why supporting direct cryptocurrency purchases is a big step forward for the payments industry.
Given the relative instability of things like Bitcoin and Ethereum compared to fiat currencies, processing transactions with crypto can be risky. To avoid that issue, Visa will use a stablecoin called USD Coin, which is tied to the value of the U.S. dollar. In a sense, stablecoins offer the best of both worlds. They have the convenience and blockchain backing of cryptocurrency and the stable valuations of fiat currencies.
With Visa’s new system, users will be able to pay for things using a Crypto.com Visa card. That itself isn’t new. Users have been able to make purchases with cryptocurrency using a Crypto.com card for some time. The difference is that, from now on, purchases won’t need to be converted from crypto to fiat before being processed. The system uses the Ethereum blockchain to settle transactions.
In a press release, Visa’s executive vice president, Jack Forestell, said, “The announcement today marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency, and it’s really an extension of what we do every day, securely facilitating payments in all different currencies all across the world.”
More to Come
While Visa’s move to accept cryptocurrency payments directly is a big step, it isn’t the end of the line. The company has plans to further its crypto offerings in the years to come.
In a company blog post, it says, “The implications of our work with stablecoins are potentially far-reaching—enabling our ability to one day support new Central Bank Digital Currencies (CBDC) as they become available.”
For those who aren’t familiar, CBDCs are digital coins meant to represent the fiat currency of a certain nation. Unlike other types of crypto, a CBDC is issued by the financial authority of that country and is both centralized and regulated.
Although no country has introduced a CBDC yet there are several discussing plans to do so. If (or when) that occurs, Visa will be in a good position to process payments in the currency.