On March 29, credit card provider Visa Inc. revealed that it had accepted the first settlement payment in U.S. Dollar Coin (USDC), a dollar-pegged stablecoin developed by Circle Internet Financial.
The settlement was made by Visa’s global crypto wallet partner Crypto.com, which will now settle a portion of its obligations with the credit card provider in USDC. The funds were sent from Crypto.com to Visa over the ethereum blockchain.
Anchorage, which recently became the first “digital asset bank” after receiving approval by the U.S. Office of the Comptroller of the Currency (OCC), acted as custodian for the settlement. The bank which acts as Visa’s digital currency settlement partner, facilitated the pilot transaction to be sent from Crypto.com to Visa’s ETH address at the bank.
Cuy Sheffield, head of crypto at Visa, described the move to let crypto partners settle transactions in USDC as a natural fit:
“We’ve found that many of our crypto partners are building on top of and are using USDC, with many of them paying their employees and vendors with the stablecoin. It was a natural fit.”
USDC currently boasts $11 bln in total circulation supply and has a wide range of use cases in cross-border B2B payments, trade settlement, and payments.
Visa to Extend USDC Support to More Partners
According to Visa officials, today’s pilot will be rolled out to additional business partners later this year. The service would allow Visa’s partners to settle their obligations with the credit card provider directly in USDC.
This functionality is an upgrade from the current settlement process that requires Visa’s partners to settle transactions in fiat currency. Under the existing process, a partner’s crypto treasury reserves have to be first converted to fiat at an extra cost of a conversion rate.
Today’s development marks an important step for Visa as it continues to integrate bitcoin and cryptocurrencies into its platform. The credit card giant currently has strategic partnerships with 35 digital currency companies, including BlockFi, Bitpanda, Coinbase, Crypto.com. These platforms collectively have over 50 million active users.
Today’s development follows earlier plans by the payments platform to link its network of 70 million merchants to USDC. Forbes broke the news late last year, announcing that Visa was targeting a 2021 launch of its corporate card connected to the stablecoin.
Per the report, the credit card provider would work with Circle to support the issuance of a credit card that facilitates Circle business account holders to send USDC payments directly to vendors who accept Visa cards.
Visa Eyes Opportunities to Tap Into CBDCs
Today’s USDC pilot is strategically important for the Visa as it aims to tap into opportunities in the emerging Central Bank Digital Currencies (CBDCs) space. Unlike stablecons, these CBDCs will be directly issued and managed by central banks and serve as digital versions of fiat currency.
Visa is positioning itself to handle the task of integrating CBDCs into the existing payments ecosystem. The payments platform is researching how it can work with central banks worldwide to enable digital wallets to issue Visa credentials.
This functionality would allow CBDC users to access and move funds across Visa’s vast payment network with 70 million merchants.