Visa supports transaction settlement with USDC stablecoin – TechCrunch
Payment card network Visa has announced that transactions can be settled using USD Coin (USDC), a stablecoin powered by the Ethereum blockchain. Crypto.com is the first company to test the new capability with its own Visa-branded cards.
USDC is a stablecoin co-founded by Circle and Coinbase and by managed the Centre consortium. As the name suggests, USDC is a cryptocurrency that follows the value of USD. One USDC is always worth one USD — hence the name stablecoin.
In order to make sure that the value of USDC remains stable, USDC partners keep USD on bank accounts every time they issue new tokens. Those accounts are audited to make sure that there are as many USDC in circulation as there are USD in those accounts.
So why do stablecoins exist even though money is mostly digital these days? Like other crypto assets, stablecoins present some flexibility when it comes to sending, receiving and storing value. You don’t need a bank account and everything can be easily programmable. And you don’t need to support legacy systems, integrate with banks and pay transaction fees to other financial institutions.
While USDC originally started as a token on top of the Ethereum blockchain, USDC also supports two other blockchains — Algorand and Stellar. Visa has chosen to focus on the Ethereum variant of USDC for now.
The payment company already supports 160 currencies across the globe. That’s why you can seamlessly use your Visa card when you travel abroad. You’ll see a card transaction in your home currency on your card statement, but the merchant gets paid in their own local currency.
Thanks to a partnership with Anchorage, Visa is adding support for its first digital currency. Anchorage recently received a federal banking charter and is positioning itself as a digital asset bank. Visa was probably looking for a trustworthy partner for this program. As Anchorage got a thumbs-up from regulators, the partnership makes sense.
For Crypto.com, it means that it can send USDC directly to Visa. For instance, if a Crypto.com customer holds USDC in their wallet and makes a card transaction, Crypto.com doesn’t have to first convert USDC tokens to USD.
It can send USDC to Visa’s Ethereum wallet address at Anchorage to settle the transaction. The merchant then gets paid by Visa in their own currency. Visa says there will be more partners down the road in addition to Crypto.com.
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VISA WILL ACCEPT STABLE COIN USDC; JOINS THE CRYPTO ACCEPTING CORPORATE CLUB-Industry Global News24
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Highlights:
• Visa has decided to accept payment settlement made is USDC, a stable coin
• For the arrangement to work, Visa is partnering with crypto.com and Anchorage, a digital asset bank
Visa will now allow cryptocurrencies to make settlements. The cryptocurrency that Visa shall accept is a stable coin called the USD Coin (USDC). The valuatio….
Visa to start settling payments using a stablecoin backed by the US dollar
It’s been another busy month for cryptocurrencies, especially now that a stablecoin has a major backer that will allow customers to us it for payments.
Tesla, with its elusive founder Elon Musk, said that people can now buy its electric cars with bitcoin, just a month after announcing its intentions.
Last week, Fidelity Investments, one of the largest mutual fund companies in the US, unveiled plans to launch an exchange-traded fund (ETF) that tracks the price of bitcoin. Should the ETF be approved by the Securities and Exchange Commission’s (SEC), it would be the first US bitcoin ETF and mark a further push to bring cryptocurrencies to mainstream finance. The SEC has repeatedly rejected applications for bitcoin ETFs, but there is belief that this might be the one that finally goes through.
However, the biggest news came on Monday when payments giant Visa announced that it will enable customers to settle transactions in USD Coin (USDC), a stablecoin pegged to the US dollar in a 1:1 ratio, becoming the first big payments network to use a cryptocurrency to settle payments. The move marks another major step in bringing cryptocurrencies to mainstream finance.
Stablecoin bridges the worlds of traditional and digital money
A stablecoin is a type of cryptocurrency that are pegged to an external asset, such as a fiat currency (like the US dollar) or a commodity (like gold). If a person owns one USDC, they can always exchange it for one traditional US dollar. This means that stablecoins, or USDC in Visa’s case, are not subject to the highly volatile market prices experienced by the likes of bitcoin and Ethereum.
Visa partnered with Anchorage, a digital asset bank, and cryptocurrency exchange Crypto.com to settle transactions over the Ethereum network for the pilot program. The payments giant plans to add more partners later this year. The project did not materialize out of thin air, it has been an 18-month work in progress initiated back in 2019.
The move aims to facilitate transfers between digital assets and fiat currencies without incurring any extra fees, reflecting increased interest in the crypto space, especially from crypto-native FinTechs. Cuy Sheffield, Head of Crypto at Visa, said: “we see increasing demand from consumers across the world to be able to access, hold and use digital currencies”.
Why is the move by Visa such a big deal?
Visa’s pilot program eliminates the need for cryptocurrency platforms to convert digital currencies into traditional fiat currency before settling transactions with Visa. The fiat-denominated cryptocurrency USDC will, as such, be treated like any other the other 160 fiat currencies Visa clears and settles. This enables crypto-native companies to settle transactions with Visa without having to maintain a traditional bank account. This reduces complexity, speeds up the process, and reduce transaction costs. Visa is already partnering with around 35 digital platforms, including Coinbase, Bitpanda, and Crypto.com, all of which have more than 50 million active users.
Bridging the gap between digital and traditional fiat currency payment networks is essential for cryptocurrencies to become a widely accepted payment method used by consumers. Visa’s pilot program will facilitate a more widespread use of digital currencies.
Visa also gave another indication of how it thinks the market will development when it said that the upgrades to its infrastructure will allow the support for central bank digital currencies (CBDCs) as they roll-out in the future. CBDCs are exactly what they sound like, digital currencies issued and managed directly by a central bank.
Cryptocurrencies rise sharply on the news
Bitcoin, Ethereum, and other cryptocurrencies rose after Visa said its payment network will use USDC to settle transactions. Bitcoin jumped to a one-week high on the news, rising as much as 4.5% to $58,000 and heading back towards its all-time high notation of $61,000, hit earlier this month.