Visa Signals Further Crypto Ambitions With API Pilot for Bank Customers to Buy Bitcoin

Visa Signals Further Crypto Ambitions With API Pilot for Bank Customers to Buy Bitcoin

Visa is piloting a suite of application programming interfaces (APIs) that will allow banks to offer bitcoin services, the payments giant announced Wednesday.

The Visa Crypto APIs pilot program will let clients “easily connect into the infrastructure provided by Visa’s partner, Anchorage, a federally chartered digital asset bank, to allow their customers to buy and sell digital assets such as bitcoin as an investment within their existing consumer experiences,” Visa said in a press statement.

Visa envisions a product set that extends to other cryptocurrencies and stablecoins as well as other crypto services such as trading, Visa crypto lead Cuy Sheffield told CoinDesk in an interview. Digital bank First Boulevard is the first bank involved in the pilot; Visa has issued a wait list for other banks.

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Previously, Visa had been focused on helping crypto companies issue bank cards and has partnered with 35 crypto firms to date, but this is the first time the company has offered crypto services to banks.

Last week, Visa CEO Al Kelly said during an earnings call that stablecoins could be used for “global commerce,” adding that “to the extent a specific digital currency becomes a recognized means of exchange, there’s no reason why we cannot add it to our network.”

‘Next phase’

“This is shifting to the next phase of Visa’s strategy where we’re looking at how Visa can also be a bridge between the thousands of financial institutions … and help them tap into the growing world of crypto assets and blockchain networks,” Sheffield told CoinDesk in an interview. “We’re excited to see what early tests and consumer engagement look like for things like dollar-cost averaging to buy bitcoin or for things like earning bitcoin back as rewards.”

Similarly, digital asset manager NYDIG tapped banking technology provider Moven to offer NYDIG’s APIs for buying, selling and holding crypto to Moven’s bank customers. Both products come in the wake of several letters from the U.S. Office of the Comptroller of the Currency giving banks the green light to custody crypto and the ability to conduct payments and other activities with stablecoins.

Visa’s news also comes after Anchorage became the first OCC-approved national crypto bank, although Sheffield said that Visa had been working on this product with Anchorage and regulators long before the custodian’s charter was granted.

Creating a Black crypto bank

The news also coincided with an announcement from Visa that it would be partnering with five Black banks and fintechs to offer financial and business services that cater to the Black community.

First Boulevard, the first firm to join the Visa pilot, is a digital bank that is building tools to help African Americans passively build wealth and will launch sometime in early 2021. The bank plans on using the bitcoin services and its partnership with Visa to educate its customers about bitcoin as a way to close the general wealth disparities faced by Black communities, said Donald Hawkins, president and CEO of First Boulevard.

In the future, Hawkins said he hopes his customers come to the bank rather than YouTube for information about investing in crypto.

Currently, First Boulevard offers customers 15% cash back for spending at Black-owned businesses. In the future, Hawkins plans to allow bank customers to put those rewards into crypto investments or high-yield crypto savings accounts.

First Boulevard plans to partner with Visa on financial education in addition to using the crypto services plugins.

“Crypto is a gateway to financial literacy,” Sheffield said. “It’s much easier to get people excited about money and important concepts around investing by just explaining what bitcoin is.”

The bank also plans to offer resources for investing in real estate as well as micro-investing.

Normally, banks in traditional finance have to get buy-in from the board and management before making a play in the crypto space. At First Boulevard, jumping into crypto was “serendipitous,” Hawkins said.

Visa prepares for crypto future

Visa CEO Alfred Kelly says the card scheme is preparing its payments network to handle a full range of cryptocurrency assets.

In an earnings call with analysts, Kelly says the company will treat the crytocurrency market as two distinct segments: traditional cryptocurrencies, such as bitcoin and Ether; and fiat-backed digital currencies including stablecoins and central bank digital currencies.

“In this space, we see ways that we can add differentiated value to the ecosystem. And we believe that we are uniquely positioned to help make cryptocurrencies more safe, useful, and applicable for payments through our global presence, our partnership approach, and our trusted brand,” Kelly told analysts.

For the first segment, Visa will work with “wallets and exchanges to enable users to purchase these currencies using their Visa credentials or to cash out onto a Visa credential to make a fiat purchase at any of the 70 million merchants where Visa’s accepted globally”.

This is similar to card scheme’s to connect with closed loop wallets such as Line Pay and Paytm

Visa has already struck card deals with some 35 organisations in the crypto-markets, such as BitPanda and BlockFi. According to Kelly, these wallet relationships “represent the potential for more than 50 million Visa credentials.”

Looking to the future, Visa will also train its focus on upcoming stablecoins that can be handled as a traditional and globally accepted mean of exchange, including bank-issued coins and central bank digital currencies.

“We think of digital currencies running on public blockchains as additional networks, just like RTP or ACH networks,” says Kelly. “But we see them as part of our network of network strategy.”

In December, Visa published a technical paper that outlines a novel approach for offline point-to-point payments between two devices, touting it as a means for central banks to replicate the physical exchange of cash using digital currencies.

Card rival Mastercard has also dipped its toe in the water, building a virtual testing platform to help central banks assess and explore national digital currencies.

Visa May Add Cryptocurrencies to Its Payments Network, Says CEO

“Today, 35 of the leading digital currency platforms and wallets have already chosen to issue Visa, including coin-based Crypto.com, BlockFi, Fold and BitPanda. These wallet relationships represent the potential for more than 50 million Visa credentials. The next leading network has a fraction of that. And it goes without saying, to the extent a specific digital currency becomes a recognized means of exchange, there’s no reason why we cannot add it to our network, which already supports over 160 currencies today.”