Visa has announced the development of a pilot program that would allow its users to settle transactions with cryptocurrencies by utilizing the Ethereum blockchain.
An unlikely pairing? Not quite. As anticipated, this would be the next step toward the integration between blockchain technology and long-existing payment methods. We could not expect the titans of the financial service industry to disappear as the use of cryptocurrency becomes exceedingly popular. Fortunately, they have started to adapt to the demand for the use of these currencies.
The adoption of blockchain technology by these payment processing companies would see the evolution of the financial service industry taking its natural course.
In partnership with Crypto.com, Visa aims to minimize the cost of transactions in fiat currencies by allowing its partners to send cryptocurrency to Visa’s Ethereum blockchain addresses.
Partners will now be able to use the U.S. Dollar Coin (USDC) through Visa’s payment network to ease the tension created by fiat-only currency transfers.
The USDC is a stablecoin that was launched in 2018 which is based on the Ethereum blockchain. This specific coin represents fiat currency on blockchain and is redeemable at a 1:1 value ratio with the U.S. Dollar.
The idea behind the stablecoin concept was to create digital assets that are stable and more predictable than regular cryptocurrencies. Therefore, these coins are bound to less volatile assets such as fiat currencies or even gold and silver commodities.
How does this simplify crypto transactions?
The Crypto.com Visa card can be used to pay for goods and services online and in-store. This card is accepted by any establishment that already accepts Visa payments. Currently, if a customer uses cryptocurrency to pay for goods and services with this card, the digital currency will need to be converted into traditional currency.
The customer’s crypto wallet will then transfer fiat currency into a bank account. The amount will be transferred to Visa to settle the transaction. It does not seem to be an attractive option. This process is costly and very complicated for businesses.
This new step from Visa will eliminate the need for the digital currency to be converted to fiat before the transaction is settled. Therefore, the complexity of the transaction will be minimized resulting in lower costs.
Visa has also announced that they are planning to offer this option to more of their partners later this year, so we can expect this new integration of crypto and fiat to grow rapidly among financial service providers and payment processing companies. Especially when we consider the fact that prominent corporations such as Visa are accepting these changes.
“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,” in a statement from the head of Crypto at Visa, Cuy Sheffield.
The future of cryptos in commerce
Finance firms such as Blackrock inc, Mastercard, and BNY Mellon have already made room to accommodate digital coins. This move toward crypto-related digital payment validates the prediction that cryptos will play an important role within the construct of investment portfolios going forward.
As large corporations start exploring the many uses and benefits of cryptos within their industries, we could see blockchain technology playing a regular part in everyday life in terms of trade and commerce. Even instant cash can be obtained through crypto ATMs throughout certain parts of the world.
Tesla has recently announced that customers will now be able to purchase their vehicles by using crypto assets. This can be seen as considerable progress toward the use of cryptocurrency in the international marketplace.
As exciting as this news may be, we still have a long way to go before the global acceptance of cryptocurrency is achieved. While financial institutions slowly adopt the ideals and benefits of digital assets and the technology behind them, we eagerly await the future of finance and commerce in a new and transparent world.