Visa opens door to crypto payments | Fortune

The transaction involved a Visa partner,, a Hong Kong-based issuer of cryptocurrency-backed prepaid cards, which sent Visa to the US. uu. dollar pegged virtual currency called usd or usdc currency. Visa said it worked with Anchorage, a Visa-backed cryptocurrency startup that is one of the newest federally chartered banks in the US. uu., to accept the payment.

visa said the move is part of a pilot program to make life easier for crypto businesses. visa wants to remove the hassle of requiring customers to convert their cryptocurrency holdings into fiat currency, like u.s. uu. dollars, before settling their accounts in the visa network. The company said it plans to expand the feature to other members of its payment networks, and potentially other virtual currencies, later this year.

Reading: Visa wants bitcoin to work exchanges

This is the latest in a series of announcements related to cryptocurrencies for visa. Earlier this month, Visa CEO Al Kelly told Fortune CEO Alan Murray that Visa is working to allow people to buy bitcoin and make payments using bitcoin through the Visa network, Following the example of financial technology or fintech companies, such as PayPal and Square. In February, Visa introduced a product to help banks integrate bitcoin into their mobile apps.

visa is one of several payment giants looking to cash in on the latest cryptocurrency craze. ajay banga, the chairman and former chief executive of visa’s perennial rival mastercard, recently told fortune he’s less interested in bitcoin, but very interested in the potential of central bank digital currencies, a variety backed by the government. meanwhile, younger companies like paypal and square are looking to be at the forefront of the bitcoin bull run.

fortune spoke with guinea pig sheffield, the cryptocurrency leader visa, about the historic transaction on ethereum and what it means for the future. he says the visa is “open for business” for cryptocurrency companies, and that the firm aims to become the industry’s “preferred network” for cryptocurrency payments.

Here is an abridged and edited transcript of that conversation.

fortune: let’s step away for a second. give me an overview of why cryptocurrencies are interesting. why does visa care at all about this wacky nascent part of the economy?

sheffield: the entire foundation of visa, from [visa founder] dee hock, was based on the electronic movement of money. digital currency represents an evolution of money itself. traditional fiat currencies and digital currencies will coexist for a long time. it is important to have a bridge between them.

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How does the latest visa announcement change what you were doing before?

The distinction has to do with infrastructure. On the consumer side, there is the daily activity of tapping a visa card and authorizing payments. but most people have no idea what is really going on behind the scenes. funds have to move between customer banks and, for example, coffee shop banks. before, crypto wallets had to convert their holdings into fiat currency in order to transfer them to visa at the end of the day. that has been a challenge for some crypto partners, such as it’s an extra step and it’s added complexity.

what was wrong with that configuration?

The challenge was that companies had to predict what their payment volume would be. they had to make sure they had enough traditional fiat money on hand to send a transfer to the banks to pay off their card program obligations. we are now creating this new capability for a crypto wallet to settle your visa obligations directly in usdc.

How does this benefit ordinary people?

The consumer’s cardholder experience does not change. they have a cryptocurrency balance that they can spend at a merchant. what changes is the process behind the scenes. now these companies do not have to maintain balances in a traditional bank account. this will make it easier for more crypto wallets to offer visa card programs to consumers and will ultimately benefit consumers as they will have more options to pay with crypto.

Of all the so-called stablecoins [virtual currencies designed to maintain a stable price], why did you choose usdc?

we worked very closely with our risk team to do an analysis of how usdc works. where are the underlying fiduciary reserves? what are the governance rules and processes? USDC was the first visa-compliant fiat-backed stablecoin, which we feel comfortable supporting on our settlement platform. we plan to support other digital currencies in the future, including [central bank digital currencies, or] cbdcs. we want to be currency and protocol agnostic. but we are starting where most of our trading clients are focused, which is stablecoins like usdc.

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Where does the pilot program go from here?

we are now starting to work with so that a portion of their settlement obligations will start arriving in usdc. the key area we’re looking at is, how much does this improve the way they operate their treasury? can this make it more efficient for them to manage their treasury on a more programmatic basis and not have to worry about transfer cut-off times [which could cause payment delays]? what else can they build? we plan to continue this pilot program in the coming months and then look to expand to other partners later this year.

People expect the Fed to release the results of its initial research into central bank digital currencies in the coming weeks. what should we expect? watch?

We have been engaging with central banks around the world on the subject of cbdcs. First, we believe it is very important that any CBDC be accessible within the digital wallets of existing commercial banks and fintechs. second, it must be accepted at any merchant. you have to have a way to spend it. It’s going to be a long time, and very difficult, for all the small businesses and merchants around the world to upgrade their POS terminals to accept a new CBDC. our new capability is a great example of how cbdcs can be used to settle obligations with a visa card attached to it, allowing a consumer to easily spend it.

I have to ask about non-fungible tokens, or nfts, blockchain-based digital collectibles. I know you are a collector of digital art and recently wrote a wonderful blog post on the subject.

visa is absolutely interested in new ways of trading cryptocurrencies. we are actively following and exploring opportunities. we’d love to follow up with you in the near future on this.

what else should people know about visa crypto plans?

the most important thing is that the visa is open for crypto wallet businesses. We are committed to being the network of choice for crypto platforms and making it easy for them to integrate and use visa. we are building new infrastructure and we are improving the way the visa works so that we can be a leader.

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