- Visa is pushing into the crypto space, but its focus sits in areas outside just buying and selling Bitcoin.
- It’s seeing demand from clients for stable coin-based cross-border payments.
- It’s helping fintechs offer crypto rewards, but hasn’t seen much demand for spending with Bitcoin.
- Visit the Business section of Insider for more stories.
Bitcoin is soaring to all-time highs in 2021, and players like PayPal and Cash App are seeing massive demand for crypto trading on their apps.
But payments giant Visa sees opportunity far beyond consumers buying and selling Bitcoin.
As a payments network, Visa is in the business of facilitating the movement of money digitally. So when it comes to digital assets like cryptocurrencies and stable coins — digital assets pegged to another source of value like the US dollar — Visa wants to handle as many of those transactions as possible, similar to its bread-and-butter card business.
“What we’ve been doing over the past 18 months is really looking at how we upgrade our treasury infrastructure to be able to support digital currencies as just another form factor for fiat,” Cuy Sheffield, head of crypto at Visa, told Insider.
“We support many different currencies on our network today. A stable coin isn’t even a new currency, really. It’s just another way to represent an existing currency,” Sheffield added.
For Visa, near-term crypto opportunities lie in B2B payments
While there’s plenty of buzz around consumers buying and selling cryptocurrencies like Bitcoin, Sheffield says that business-to-business payments, albeit less buzzy, are a big opportunity for Visa’s crypto strategy.
“We expect that the growth in usage of stable coins is going to happen from corporate treasuries in B2B before a consumer is buying their coffee directly with a stable coin over a blockchain network,” Sheffield said.
Stable coins are often pegged to fiat currencies like the US Dollar, making them less volatile than digital assets like Bitcoin, Ethereum, and Litecoin.
Moving money via stable coins offers more flexibility and efficiency for businesses. Across its merchant network, Visa has seen more demand for crypto in businesses looking to pay their vendors and employees via stable coins as opposed to accepting cryptocurrencies at the point-of-sale, Sheffield said.
A global business, for example, with an international workforce and network of vendors to pay, stands to benefit from more streamlined payments facilitated by a stable coin via a blockchain network.
“We think there’s significant potential for stable coins in cross-border payments because they flow over these new public blockchains that are globally-available, 24/7 payment rails,” Sheffield said.
Without the limitations of other payment networks like Fedwire or ACH, businesses can send cross-border payments outside of market hours.
“There’s $120 trillion of B2B payment flows, and many are still bank wire and check. These are becoming digitized,” Sheffield said. “What we’re seeing is across the world, businesses are looking at how they can leverage stable coins to have more efficient B2B payments and more efficient treasury infrastructure.”
While payments systems like Fedwire are set up to process millions of payments daily, they’re not flawless. On Wednesday, the Federal Reserve reported disruption to its Fedwire payments services.
“There are a lot more problems to be solved and areas of improvement globally that will increase GDP if we could have more efficient B2B payments, than there are giving people ways to buy their coffee,” Sheffield said.
Retail use cases will crop up as consumers start accruing crypto assets
To be sure, Visa isn’t ignoring consumers’ growing affinity for cryptocurrencies. Sheffield said the payments giant has seen “significant and growing interest” when it comes to holding assets like Bitcoin as a store of value.
To that end, many fintechs are rolling out ways for consumers to earn bitcoin, often through rewards.
“We don’t see a lot of consumers that say, ‘I want to use Bitcoin to buy my coffee,'” Sheffield said. “We see consumers that want to, when they buy coffee, automatically be earning some Bitcoin that can then appreciate.”
Visa has partnered with fintechs like BlockFi and Fold, which rewards customers with Bitcoin.
Through its crypto API, Visa is helping its fintech and bank partners offer Bitcoin to their customers. The API is currently in a pilot program with neobank First Boulevard. But more banks are lining up to use Visa’s crypto API to add Bitcoin, too.
“Since the announcement, we’re seeing really significant demand from banks all across the world that are coming to Visa looking for us to help them develop their strategy,” Sheffield said.
And its crypto API is geared not just toward fintechs, but traditional banks, too.
“You can expect a number of products and services that Visa can provide to be focused on traditional banks to make it easier for them to come into the ecosystem and interact with Bitcoin and with stable coins,” Sheffield said.
Currently, Visa only supports Bitcoin through its API, but it will consider adding more use cases and cryptocurrencies based on consumer demand, Sheffield said.
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