Visa has partnered with Crypto.com on a pilot program to settle payments on the Ethereum blockchain.
In October 2018, Visa Inc. CEO Alfred Kelly told CNBC’s Jim Cramer that cryptocurrencies are not a significant threat, but “if we have to go there, we will go there.”
At the time, Visa was a $300B+ company, and the combined market cap of all cryptocurrencies was $200B+. Today, things are looking different:
- Visa = $450B+
- Crypto (primarily Bitcoin/Ethereum) = $1.8T+
Well, earlier this week… Visa went there. Per Reuters, the payments giant will roll out a pilot program with crypto platform Crypto.com.
How it works
Crypto.com already offers its users a Visa card. However, any payments used by the cryptocurrency card have to be converted to fiat, which adds costs and complexities for merchants.
Here’s the new process:
- A Crypto.com Visa card purchase is made
- Instead of converting to fiat, Visa will settle the transaction using Crypto.com’s USDC stablecoin, which is pegged to the US dollar (to limit volatility)
- It will all be done on the Ethereum blockchain
This should reduce the friction in using crypto for payments.
Ethereum has its fee — called gas costs — to operate on the blockchain.
Such an improved process will go a long way to mainstreaming crypto for regular payments.
The cryptocurrency momentum is undeniable.
- PayPal will offer a checkout service that turns crypto assets into fiat to pay for goods across 29m merchants on its network
- Fidelity plans to launch a bitcoin exchange-traded fund (ETF)
- Goldman Sachs is on the verge of offering bitcoin and crypto services to its wealth management clients
JPMorgan Chase, BNY Mellon, BlackRock, and Mastercard are all making their moves in tandem.
It’s safe to expect more finance players to “go there” very soon.
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