Visa said it will allow the use of a cryptocurrency called USD coin to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry.
The company said on Monday that it had launched the pilot programme with payment and crypto platform Crypto.com and plans to offer the option to more partners later this year.
Bitcoin, the most popular crypto coin, jumped to a one-week high on the news, rising as much as 4.5% to US$58 300 and heading back towards a record high above $61 000 hit earlier this month.
USD coin (USDC) is a stablecoin cryptocurrency whose value is pegged directly to the US dollar.
Visa’s move comes as finance firms including BNY Mellon, BlackRock and Mastercard take steps to make more use of cryptocurrencies for investment and payment purposes.
Tesla boss Elon Musk, a major proponent of cryptocurrencies, said last week that customers can buy its electric vehicles with bitcoin, hoping to encourage more day-to- day use of the digital currency.
“We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we’re seeing demand from our clients to be able to build products that provide that access for consumers,” said Cuy Sheffield, head of crypto at Visa.
Traditionally, if a customer chooses to use a Crypto.com Visa card to pay for a coffee, the digital currency held in a cryptocurrency wallet needs to be converted into traditional money.
The cryptocurrency wallet will deposit traditional fiat currency in a bank account, to be wired to Visa at the end of the day to settle any transactions, adding cost and complexity for businesses.
Visa’s latest step, which will use the Ethereum blockchain, strips out the need to convert digital coin into traditional money in order for the transaction to be settled.
Visa said it has partnered with digital asset bank Anchorage and completed the first transaction this month — with Crypto.com sending USDC to Visa’s Ethereum address at Anchorage. — Reported by Noor Zainab Hussain, (c) 2021 Reuters