Since the summer of 2020, PayPal has led the way into digital assets for payment service providers. By offering its customers to buy bitcoin (BTC) with their balance, the company became the first multinational to offer such a service. Prior to this, VISA had only made tentative moves towards the cryptosphere. However, ahead of its rival, which has been ramping up crypto initiatives ever since, VISA has just proudly announced that the bank cards offered by its crypto partners processed over $1 billion in transactions in 2021.
VISA takes stock after one year
In the summer of 2020, Visa released its “Digital Currency Roadmap.” And on July 7, the company gave a progress update on its roadmap. In its initial roadmap, VISA noted its collaboration with Coinbase “to provide a bridge between digital currencies and our existing global network of 61 million merchants.” By the summer of 2020, the company had already partnered with 25 digital currency wallets looking to offer bank cards to their users.
1 billion in crypto transactions in a single quarter
Over the first half of 2021, VISA cards linked to digital asset wallets reportedly spent over $1 billion. VISA offers both cards that allow consumers to easily convert cryptocurrencies to currency and spend it, and cards that allow them to spend currency and earn cryptocurrencies as rewards (cashback).
“We believe the first step is to build a bridge between cryptocurrency wallets and our existing merchant network. Then, the next step will be to make it easier for our customers to issue cards and interact with them, with features, such as the ability to support USDCs. After that, we’ll start spending more time on how VISA could become a bridge between our network of financial institutions and the crypto ecosystem.”
Cuy Sheffield, Head of Crypto at VISA
To date, Visa has partnered with 50 major players in the cryptosphere. Its crypto cards enable the conversion and use of digital assets at more than 70 million locations worldwide. The latest partnership is with lender BlockFi. Launched on July 6, the card allows users to receive a bitcoin reward equal to 1.5 percent of the amount spent with the card.
VISA identifies 3 underlying trends in the cryptosphere
In the July 7 status update, VISA reveals the trends in the crypto industry that it believes are key:
- An expanding and evolving ecosystem: so far nothing new. The crypto ecosystem didn’t wait for VISA to evolve and build. Nevertheless, VISA’s crypto ecosystem is expanding rapidly. The bank card issuer has already entered into major agreements with the biggest players in the cryptosphere, including FTX, Coinbase and Crypto.com ;
- Rewards reimagined: given the success of Visa cards, customer loyalty programs through rewards paid out in bitcoin and other crypto when making purchases seem pretty formidable. The forerunner of this sector was Crypto.com, which is now the leading issuer of crypto cards;
- Stablecoins are coming to the forefront: with $109 billion in stablecoins in circulation and hundreds of billions in monthly trading volumes, there is no denying that stablecoins have become a fundamental part of the ecosystem.
Obviously, VISA excludes from its scope 2 underlying trends that have advanced in 2021: non-fungible tokens (NFT) and DeFi. On the one hand, it seems logical that the company is not interested in NFTs at the moment, as they cannot be used as a means of payment. But on the other hand, Visa is a highly regulated entity and DeFi is the epitome of unregulated. So the payment service provider should wait a while before dabbling in decentralized finance.
