In October 2018, Visa Inc. CEO Aflred Kelly told CNBC’s Jim Cramer that cryptocurrencies are not a big threat but “if we have to go there, we will go there.”
At the time, Visa was a $300B+ company and the combined market cap of all cryptocurrencies was $200B+. Today, things are looking different:
- Visa = $450B+
- Crypto (primarily Bitcoin/Ethereum) = $1.8T+
Well, earlier this week… Visa went there. Per Reuters, the payments giant will roll out a pilot program with crypto platform Crypto.com.
How it works
Crypto.com already offers its users a Visa card. However, any payments used by the cryptocurrency card have to be converted to fiat, which adds costs and complexities for merchants.
Here’s the new process:
- A Crypto.com Visa card purchase is made
- Instead of converting to fiat, Visa will settle the transaction using Crypto.com’s USDC stablecoin, which is pegged to the US dollar (to limit volatility)
- It will all be done on the Ethereum blockchain
This should reduce the friction in using crypto for payments
Ethereum has its own fee — called gas costs — to operate on the blockchain.
According to Protocol, a single transaction could rack up a fee of $10 to $20. Visa’s solution: to bundle payments as it does on its existing network to reduce costs and increase speed.
Such an improved process will go a long way to mainstreaming crypto for everyday payments.
The cryptocurrency momentum is undeniable
As Bitcoin continues to rise, other big finance names are jumping aboard the crypto train. Among the moves:
- PayPal will offer a checkout service that turns crypto assets into fiat to pay for goods across 29m merchants on its network
- Fidelity plans to launch a bitcoin exchange-traded fund (ETF)
- Goldman Sachs is on the verge of offering bitcoin and crypto services to its wealth management clients
JPMorgan Chase, BNY Mellon, BlackRock, and Mastercard are all making their own moves in tandem.
It’s safe to expect more finance players to “go there” in the very near future.