The payments giant is piloting a new system to allow cryptocurrency transactions to be settled without converting to traditional currency.
In another major move for mainstream cryptocurrency acceptance, Visa has announced that it will allow some payments to be settled in crypto.
The payments giant is testing the use of the cryptocurrency USD Coin to settle transactions on its network, removing the need to convert digital cash to traditional money.
USD Coin is a ‘stablecoin’, which is a cryptocurrency whose value is pegged to that of a traditional currency. In this case, one unit of the cryptocurrency is worth one US dollar. This is similar to the approach used by Facebook in its crypto efforts.
Visa is working with cryptocurrency exchange and card issuer Crypto.com – which is in the process of opening a Dublin office – on the pilot programme.
There are many cryptocurrency debit cards on the market but they typically convert the crypto into traditional currency after use in order to settle the payment. While this happens under the bonnet and may not be noticed by the average consumer, it can add costs and delays in payment settling for businesses and merchants.
Under Visa’s pilot programme, Crypto.com will be able to settle payments in the USD Coin cryptocurrency, removing some of the steps that previously existed. Visa is using the Ethereum blockchain for the pilot, the second largest blockchain network after bitcoin.
Digital asset management platform Anchorage is also involved in running the pilot. Visa said it will extend the pilot to more partners later this year.
Jack Forestell, Visa’s chief product officer, said that the move will help fintech start-ups dealing with cryptocurrency to operate more smoothly with their partners and with 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,” Forestell said.
Over the last few months, more and more traditional financial institutions and other large companies have warmed to cryptocurrency.
Earlier this year, Mastercard announced plans to support some cryptocurrencies on its network and PayPal acquired cryptocurrency security company Curv as part of its venture into the crypto arena. Most notably, Tesla now accepts bitcoin as payment.