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Forbes reported on Dec. 2 that Visa would partner with Circle to integrate USDC into its payments network. This is a move of considerable importance in the crypto space. Visa is a predominant player, and its entry could have significant ramifications.
Many conceive of cryptocurrencies as a direct competitor to Visa, which suggests the payments giant is preparing for the future. This is also a boost for the digital asset space and, potentially, for Visa as well.
What does this mean for both crypto and existing payments networks?
A Major Win for Crypto Adoption
Visa is a household name and has roughly 60 million merchants on its payments network. The payment processor’s support for cryptocurrencies is a major step forward in terms of adoption of the asset class. Sixty million is no small figure, especially when one considers that this is a dominant network like Visa.
Circle, which is behind USDC, is a member of Visa’s Fast Track program, a fintech accelerator. One particularly noteworthy point of this initiative is the support for corporate customers. Visa will introduce corporate credit cards supporting USDC sometime in the first quarter of 2021.
This has tremendous potential for Visa, because corporate clients can use USDC to make near-instant transfers. Business cheques and wire transfers can rack up immense costs because of expenses associated with legacy payment systems. But the implementation of USDC will result in large resource savings—and convince more companies to join in.
The partnership is also quite extensive, involving multiple major wallet providers like Fold, Cred, and BlockFi. It is already launching a Bitcoin rewards debit card with Fold.
Visa’s focus has been on investing in startups and building a payment ecosystem. With the sheer number of solutions at its disposal, merchants could significantly benefit from a blockchain-based system.
Cuy Sheffield, Visa’s head of crypto, also discussed CBDC implementation, saying,
“We are actively working with commercial banks to help them understand and navigate transitions to digital currency based products.”
CBDC implementation would be an additional incentive for companies to conveniently conduct international transactions with stablecoin and national currencies. All of this would come at a much lower cost and transaction time, spurring both retail and enterprise economic activity.
The range of uses that have been listed and the heavy enterprise potential suggest tremendous growth in a short time. With 60 million or so merchants and many companies suddenly introduced to crypto, it’s hard not to be optimistic.
A Boost to Visa’s Competitiveness
Perhaps this was a decision that was made in the wake of PayPal’s integration of cryptocurrencies. With global support and Venmo integration on the agenda, the firm could be setting itself up well for 2021. It seems to be that many incumbent payments companies are rushing to join in, not wanting to miss out.
Regulation also appears to be more accommodating of crypto, though the US itself is lagging behind other nations. All of these developments, whether the arrival of incumbents or regulation, point to an increasing legitimacy for the technology.
It’s difficult not to see this move as a bid to stay competitive with market competitors. Visa is still the go-to option for payments, but with scaling solutions quickly forming, the lead cannot last for long. Knowing this, the company began research and development into fintech solutions, including cryptocurrencies.
Visa built a crypto unit dedicated solely for that purpose. At one point, rumors swirled that it would be introducing a digital currency built on Ethereum. There has been no update on this, but it’s an indication of Visa’s enthusiasm for the technology.
This is one of the biggest headlines for cryptocurrencies and a major win for adoption of the asset class. While not as significant as PayPal, it is still another boost to an already burgeoning space. Cryptocurrencies are experiencing adoption on both the retail and institutional level with these developments.
This development may be limited to USDC and Visa’s growth, but it’s good nonetheless for the space. 2021 is shaping up to be a very important year for cryptocurrencies, with developments such as this. The year 2020 has been good for Bitcoin, but 2021 seems like it could be when adoption hits the mainstream.
What do you think of Visa’s decision to integrate USDC? Will it lead to much greater adoption? Let us know what you think in the comments below.