Visa Inc., which has been working with blockchain-based currencies at least since the start of the decade, on Monday said it is starting to expand its cryptocurrency services into merchant acquiring, largely for cross-border transactions. The move, which Visa calls a “pilot project,” involves the major merchant processors Worldpay and Nuvei for settlement to sellers in fiat currencies. It has already entailed processing “millions” of transactions across the Ethereum and Solana blockchains, Visa said.
As with most blockchain projects mainstream processors and networks have embarked on so far, Visa’s latest venture involves a form of cryptocurrency pegged to the U.S. dollar—Circle Internet Financial’s USD coin. Such coins are seen as safer than tokens such as Bitcoin, which can be subject to wild swings in value.
Such stability is critical for the improvements the network hopes to make in cross-border commerce, Visa says. “We’re helping to improve the speed of cross-border settlement and providing a modern option for our clients to easily send or receive funds from Visa’s treasury,” said Visa’s head of crypto, Cuy Sheffield, in a statement. “Leveraging these new technologies [will] help improve the way we move money.”
Stability of value is critical for merchant settlement, a point the two cooperating processors stressed Monday. This stands in stark contrast to the often wild swings in value cryptocurrencies like Bitcoin can undergo in very short spans of time. “Stablecoins like USDC are cutting edge payments technology that can enable online businesses around the world to accelerate their growth,” said Philip Fayer, Nuvei’s chairman and chief executive, in a statement. Under the terms of the arrangement announced Tuesday, both Worldpay and Nuvei will receive settlement in USDC and in turn route those funds, in USDC, to client merchants.
“This does seem very significant, involving some very major players in the card space.” says Aaron McPherson, principal at AFM Consulting, in an email message to Digital Transactions News. “The cross-border element is crucial, especially when dealing with countries like Australia that don’t have their own reserve currency and therefore must use foreign exchange when handling cross-border payments.”
Visa, as well as its big rival Mastercard Inc., have been working to accommodate cryptocurrencies since at least 2021. Visa began with moves to manage crypto for card issuers but has had its eye on direct settlement for some time.
In March 2021, Visa announced it had completed the first transaction involving direct settlement with USDC. The transaction allowed Crypto.com, a platform for the trading of digital currencies, to send transactions valued in USDC directly to Visa for settlement without having to first convert the assets to fiat currency. The transaction settled on the Ethereum blockchain and came after a year of development.
Tuesday’s news, while a key advance for the deployment of digital currencies, doesn’t surprise some experts who argue that traditional networks can’t avoid recognizing the increasing role the currencies are playing in global payments. “No question Visa saw the writing some time ago, and know they have to play, or they’ll lose the business,” says Cliff Gray, a senior associate at TSG (formerly The Strawhecker Group), a payments researcher and consultancy, in an email message.
Overall, though, observers like Gray see Tuesday’s development as a positive for merchant acquirers, while its attraction may be limited for other parts of the transaction chain. “For many acquirers, it’s good news for expanding their product capabilities,” he says. “To many others, there’s still little or no appetite for (what they consider) bleeding-edge technology.”