Visa is now settling payments made by Visa partner Crypto.com in the USDC stablecoin (on the ethereum blockchain). This is a major step forward for the digital currency industry and marks one of the first instances of a legacy financial institution using digital currency in a crucial aspect of its operations–payment settlement.
“Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors,” said Jack Forestell, executive vice president and chief product officer at Visa. “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.”
How it works
Individuals using the Crypto.com Visa card are now able to make payments in digital currency that are then converted to USDC and settled in Visa’s erc-20 USDC address. The USDC payment settlement process is far more efficient than Visa’s standard settlement process which converts digital currency into fiat currency before sending a wire payment to Visa at the end of the day to settle the payment.
Visa has chosen Anchorage as its digital currency custodian to facilitate USDC settlement.
“Anchorage’s platform has been purposefully built for institutions like Visa to build new products in crypto. We’ve been with Visa every step of the way since 2019 and are extremely pleased to see these first stablecoin payment rails come to life through Anchorage APIs,” said Diogo Mónica, Co-Founder and President of Anchorage.
Obstacles on the Horizon
Visa’s USDC integration is positive for the blockchain and digital currency space. It signals that legacy financial institutions have their eye on both industries and the benefits that they are capable of providing. However, Visa might run into trouble when using ERC-20 USDC, as the Ethereum network increases in popularity and gains more users, transaction fees on the ethereum network tend to skyrocket, making it rather expensive to send even $1 worth of USDC.
Regardless, it is good to see Visa venturing into the world of blockchain technology and exploring the advantages it can provide when it comes to payment settlement. Although Crypto.com is the only Visa partner settling payments in USDC at the moment, Visa says it plans to offer the USDC settlement option to more of its partners later this year.