Payments giant Visa has announced it is now settling payments in the USDC stablecoin on the Ethereum blockchain, becoming the first major payments network to use a stablecoin as a settlement currency.
According to Business Insider, Visa piloted the USDC payment option via cryptocurrency exchange Crypto.com, which will now be able to manage its crypto debit card business entirely in digital assets. Visa’s standard settlement process required the firm to settle in fiat currency, adding costs and complexity to its operation.
Now Crypto.com will be able to settle transactions using USDC directly and as such, it won’t have to convert to fiat currency. Visa’s chief product officer 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.”
Forestell added that it’s an extension of what the firm does, which is “securely facilitating payments in all different currencies all across the world.” Crypto.com co-founder and CEO Kris Marszalek, according to TheBlock, said the firm wants to allow “millions of consumers across the world to access and use digital currencies.”
Visa’s move to directly accept digital currencies is now allowing it to maximize the benefits of these currencies. The settlement agent for the USDC transactions is crypto bank Anchorage, which means Crypto.com sends USDC to Visa’s Ethereum address at Anchorage.
The founder and president of the crypto bank, Diogo Mónica, was quoted saying: “Visa came to us in 2019 with an idea—make secure, efficient, and seamless settlement payments possible in digital currency by linking Visa’s treasury with Anchorage’s custody platform.”
Mónica added that this will allow the next generation of crypto native issuers “the option to directly settle with Visa in a digital currency over a public blockchain.” The service is set to be launched for other partners “in the year ahead” as Visa continues testing USDC settlement and discusses it with clients, partners, and the regulatory community.
In the future, Visa may also settle payments in central bank digital currencies (CBDCs). Alfred Kelly, Visa’s CEO, has hinted the company may cover bitcoin and other crypto-assets in the future, not just stablecoins.
Last month Mastercard revealed it is planning on giving merchants the option of receiving payments directly in cryptocurrencies later this year, through a new functionality that would add on existing partnerships that let consumers pay in crypto, but converts the funds to fiat.