As its offering expands, the global payments processor Visa has rolled out support for its stablecoin settlement capability to include USD Coin payments in the Solana blockchain.
On September 5th, 2023, Visa announced that it would begin moving millions of USDC, the second largest stablecoin by market capitalization, between partners across the Ethereum and Solana blockchains to settle fiat-based payments. The global processor revealed that it carried out live and completed pillows with issuers and acquirers. Visa has announced its adoption of USDC from pilots involving Crypto.com with merchant processors Nuvei and Worldpay to simplify cross-border stablecoin transactions.
The firm has already conducted several live tests with pilots and issuers before officially announcing to the masses. Per the statement, Visa has “Already moved millions of USDC between its partners over the Solana and Ethereum blockchain to settle fiat-dominated payments authorized by VisaNet.” Speaking about Visa’s newest stablecoin endeavor, the head of crypto at Visa, Cuy Sheffield, shared how the firm is committed to serving its users by leveraging digital currency mechanisms to process cross-border payments quickly.
Sheffield, a representative of Visa, highlighted their commitment to advancing digital currency and blockchain innovation. They mentioned that Visa is utilizing stablecoins like USDC and global blockchain networks such as Solana and Ethereum to enhance the efficiency of cross-border settlements. This approach offers a modern option for clients to easily send or receive funds from Visa’s treasury. Sheffield emphasized Visa’s dedication to leveraging these new technologies to improve money movement.
Visa, despite enabling cardholders to make purchases with a simple tap or swipe, actually engages in a complex payment process in the background. Each transaction involves the cardholder’s bank transferring money to Visa’s treasury, followed by Visa forwarding the funds to the merchant’s bank. Jeremy Allaire, the Co-founder and CEO of Circle, expanded on this by stating that the expansion of the pilot program demonstrates how combining USDC with Visa’s innovation paves the way for the future of payments, commerce, and financial applications.
Although stablecoins promise to speed up bank transfers, the processing time to transfer money into or out of its treasury will remain the same. During an interview with experts at Bitai Method Official, Sheffield said, “In this early stage, we’re just giving the option to send or receive USDC instead of a bank wire, but we’re not sending money out fast or receiving money in faster necessarily.” He added, “Overtime, I think there’s potential to start doing that.”
Timeline in the Crypto Sphere
In 2021, Visa began experimenting with USDC by collaborating with Crypto.com to test stablecoin settlement on the issuance side. The pilot leveraged Ethereum-based USDC to receive payments for cross-border volume from Crypto.com on its Australian card program. Previously, settlement for cross-border purchases on Crypto.com Visa card required multi-way currency conversion processes and accrued wire transfer fees.
They resulted in the crypto exchange using USDC for settlement obligations for Australian Visa cards. To reduce the length and complexity of international wire transfers, Crypto.com uses a Visa treasury-managed account with USDC issuer Circle to send USDC across borders on the Ethereum blockchain. Circle’s CEO mentioned that the collaboration marks a fundamental blockchain innovation that could alter payments and commerce. He said, “Circle built USDC to provide a functional digital dollar that could move at the speed of the internet to facilitate secure, reliable payments.”
The integration of USDC by Visa to send funds to USDC is expected to decrease settlement times for merchants using their services. The payment processors are expected to be able to route USDC payments to merchants they serve, Visa’s traditional fiat ecosystem connecting to stablecoin, and the more expansive crypto space that they do. Merchant solution President at Worldpay, Jim Johnson, emphasized that Visa’s USDC settlement capability would offer merchants more choices for receiving funds and better manage its treasury operations. In June 2023, during Money20/20 in Amsterdam, the head of crypto and Web3 at Worldpay, Nabil Manji, mentioned that the firm collaborated with Coinbase in 2013 to enable the exchange to become the first to accept fiat-based card payments worldwide.
Regarding the recent developments, Manji highlighted that the new Visa USDC settlement service was the first step in allowing Worldpay’s users to access faster, more cost-efficient settlement of consumer payments. Manji said, “It opens the door to exploring future enhancements such as 24/7/365 settlement availability and real-time or multiple daily settlements, all of which can help to accelerate cross-border commerce”. On August 11, 2023, Visa announced that it was testing an innovative solution enabling on-chain gas fees.
Product Manager at Visa, Mustafa Bedawala, highlighted an observed challenge with crypto wallets and balances covering Ethereum gas fees. The expansion of Visa’s USDC settlement process is another crypto product or pilot to come out of a legacy payments company, despite the federal government’s ongoing, expansive regulatory action against the crypto industry. The SEC issued A Wells Notice in February; the legal document said that the agency intended to sue a company. PayPal, which had partnered with Paxos, a stablecoin issuer, to develop its stablecoin, said it was halting development amid regulatory scrutiny. In February, PayPal launched its stablecoin. MasterCard unveiled a new suite of crypto offerings called Multi Token Network (MTN). A month later, MasterCard confirmed that it was severing its partnership with Binance on prepaid crypto debit cards after the SEC sued the exchange.
Visa stopped issuing Binance cards in Europe; however, the company has yet to mention if it plans to cut the partnership with the exchange entirely. This latest Visa pilot shows that the firm has not decided whether to cut itself from the crypto space anytime soon.
Byline: Hannah Parker