Photo by Tristan Colangelo
Back at the start of the year when Visa told the world about its plunge into crypto, heads turned. Before this, some had viewed card issuers as part of the traditional finance sector that crypto was to compete against. But with Mastercard already looking for an on-ramp of its own (to come this summer via Gemini crypto debit card), Visa needed to catch up.
On Wednesday, the company announced that it would be partnering with some 50 exchanges and platforms in order to create the ideal consumer on-ramp. With the partnership, crypto holders will be able to pay with various cryptocurrencies they own worldwide without the merchant even needing their own crypto account. According to Cuy Sheffield, Visa’s head of cryptocurrency:
The merchants don’t have to change anything. It will be the same as any other Visa transaction to them. But on the backend, the crypto assets are instantly converted into fiat. You have this growing number of consumers with assets on crypto platforms, trading crypto, holding crypto – and then you have millions of merchants who don’t really understand crypto. They don’t want to have to update their point of sales and terminals and figure out what a blockchain is.
That idea, enabling merchants to simply accept crypto as though it’s any other form of payment, is absolutely key.
This news comes on the heels of Visa’s March 29 announcement that USD Coin (USDC) will be used to settle payments transactions on its network.
Visa’s efforts to make it even easier for customers to use crypto for daily payments aren’t without good reason. The company revealed that more than $1 billion was spent through its crypto-linked cards in the first half of the year. Though that’s a small chunk of the $18 trillion global consumer market, Visa is aiming to shift a lot more of that spending into crypto transactions.
The automatic conversion between crypto and fiat as part of Visa’s network is bound to be huge and lessen, if not altogether eliminate, the need for a merchant to know about crypto in order to be paid with it.
Automatic conversion de-risks transactions for merchants
Another barrier to merchant acceptance of crypto payments: volatility. No one wants to be paid in a currency that might drop in value before the payment even settles. Visa’s aware of this. Settling transactions in dollars or a stablecoin like USDC simply avoids the volatility issue.
Visa also said that with more than $100 billion of stablecoins in circulation and hundreds of billions exchanged publicly every month, the digital tethers are earning their merit.
That’s probably what Visa’s CFO Vasant Prabhu meant when he said:
We are doing a lot to create an ecosystem that makes crypto currency more usable and more like any other currency. People are exploring ways in which they can use cryptocurrencies for things they would use normal currencies for. There are lots of issues in terms of volatility, etc. But that’s up to the owners of cryptocurrencies to manage and track.
Fintech on the fast track
The Fintech Fast Track Program is just one example of Visa’s efforts to quickly get a grip on the crypto market and implement it in its network as adoption and demand grows. A recent survey of North American consumers by Mastercard showed precisely why both companies are seeking to stay ahead, with 93% of respondents stating that they plan to use crypto over the course of next year. The study also showed that 75% of millennials would like to get in on crypto if they had a better understanding of it.
The “better understanding” is bound to come as various payments processors look to make the use of crypto as easy as possible. For some, the most important takeaway might be just how rapidly the seeming competition between traditional finance and crypto faded away as the former recognized the latter’s value from both a technological and earnings-sheet standpoint.
Maybe the primary barrier to cryptocurrency adoption on Main Street is just understanding it? But really, how much understanding do you need to swipe a Visa card?
So maybe the primary barrier to crypto adoption among both merchants and their customers is they haven’t been able to use it simply, for making transactions, like other types of money? If so, that barrier is crumbling fast.