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 now settles payments in USDC stablecoin on Ethereum blockchain
Visa announced Monday that it now settles payments in the USDC stablecoin on the Ethereum blockchain.
The development means Visa has become the first major payments network to use stablecoin as a settlement currency. Until now, Visa settled payments in fiat currencies only.
For its new USDC settlement capability, Visa is initially working with Crypto.com as part of a pilot program, letting the crypto firm manage its card business now entirely in digital assets.
Previously, Visa’s standard settlement process required Crypto.com to settle in a fiat currency, which added cost and complexity for the firm. Now Crypto.com won’t have to go through conversations and settle with Visa directly in USDC.
“The announcement today marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency,” said Visa’s chief product officer Jack Forestell. “And it’s really an extension of what we do every day, securely facilitating payments in all different currencies all across the world.”
Crypto.com co-founder and CEO Kris Marszalek said the firm wants to enable “millions of consumers across the world to access and use digital currencies,” and Visa’s capability to “directly accept and interact with digital currencies” helps enable it to maximize the benefits of digital currencies.
Visa’s settlement agent for the USDC capability is crypto bank Anchorage. That means Crypto.com sends USDC to Visa’s Ethereum address at Anchorage.
“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,” said Diogo Mónica, co-founder and president of Anchorage. “This would give the next generation of crypto native issuers the option to directly settle with Visa in a digital currency over a public blockchain.”
Visa said the new service is “one small step forward” for its settlement platform, but “one giant step forward” to integrate digital assets.
After further testing and additional conversations with its clients, partners, and members of the regulatory community, Visa hopes to launch the USDC settlement capability for other partners as well “in the year ahead.”
Eventually, Visa also plans to settle payments in central bank digital currencies (CBDCs). Earlier this month, Visa CEO Alfred Kelly said the company aims to cover bitcoin and other cryptocurrencies as well, along with stablecoins.
Visa rival Mastercard has also intended to capture business opportunities in the crypto and stablecoins space, as well as in the future CBDCs space.
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