Visa, a global payments technology company, has announced plans to allow payment settlements on its platform using cryptocurrencies.
Settlement refers to the daily exchange of funds between Visa’s issuing and acquiring partners over VisaNet to exchange value for cleared and settled transactions.
It does not refer to the movement of funds from individual consumer accounts.
In February, MasterCard announced that it will begin to accept cryptocurrencies on its network.
Visa, in a statement on Monday, said it will use USD Coin (USDC), a stablecoin backed by the US dollar, to settle a transaction with Visa over Ethereum, one of the most actively used open-source blockchains.
Visa said it will pilot the system with Crypto.com, a cryptocurrency platform and one of its partners.
The firm said it would work with Anchorage, the first federally chartered digital asset bank and an exclusive Visa digital currency settlement partner, to launch a pilot that allows Crypto.com to send USDC to Visa to settle a portion of its obligations for the Crypto.com Visa card program.
It said it will offer the USDC settlement capability to additional partners later this year.
“Visa’s standard settlement process requires partners to settle in a traditional fiat currency, which can add cost and complexity for businesses built with digital currencies,” the statement reads.
“The ability to settle in USDC can ultimately help Crypto.com and other crypto native companies evaluate fundamentally new business models without the need for traditional fiat in their treasury and settlement workflows.
“Visa’s treasury upgrades and integration with Anchorage also strengthen Visa’s ability to directly support new central bank digital currency (CBDC) as they emerge in the future.”
Today, @Visa announced a major industry first: the use of USD Coin (USDC) to settle a transaction with Visa over the @Ethereum public #blockchain: https://t.co/QiCuOGns77 pic.twitter.com/GVVGrzuBgo
— VisaNews (@VisaNews) March 29, 2021
Reacting to the development, Jack Forestell, executive vice president and chief product officer of Visa, said the announcement marks a milestone in the company’s ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency.
“Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors,” he said.
Kris Marszalek, co-founder and CEO of Crypto.com, said the digital currency platform is enthusiastic about the announcement, saying it will pioneer an “exciting world-first in stablecoin payments”.
“We’ve seen record-breaking growth in our business and the broader crypto ecosystem over the last year. To continue accelerating the world’s transition to cryptocurrency, we need partners who understand the opportunity and the tools that will help us get to market faster and more efficiently,” he said.
“Having been a Visa partner for several years, we’re excited to deepen that relationship through our global agreement and to pioneer an exciting world-first in stablecoin payments.”
Cryptocurrency has continued to grow in global acceptability from brands, despite the Central Bank of Nigeria (CBN) directing banks and other financial institutions to close accounts of individuals engaged in crypto trading.
Tesla, an electric carmaker, had also invested $1.5 billion in bitcoin.
The CBN argues that cryptocurrencies pose the risk of loss of investments, money laundering, terrorism financing, illicit fund flows and other criminal activities.
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I only wish CBN can share their statistics on how they come to their conclusions.