US-based payments company, Visa, has announced that users can now settle transactions with USDC, an Ethereum based stablecoin backed by the US dollar. Visa is partnering with Crypto.com, one of the world’s largest crypto platforms, to pilot this feature, and will extend it to other partners later in the year.
Visa’s plan has been in the works for the past year, and the payments giant is working with Anchorage, the first US-chartered digital asset bank to perform crypto settlements. What’s happening exactly? Crypto platforms would normally need fiat currencies to settle payments. For example, crypto is first converted to fiat, deposited in a bank account, and then wired to Visa before a payment settlement is made. This move removes the need for such complexity, and the crypto platform may no longer need to keep fiat to settle payments on the visa network. Stablecoins backed by fiat currencies like the US dollar are less volatile than other digital currencies like Bitcoin or Ethereum. What this means: Visa has joined the ranks of several other traditional financial institutions like Mastercard, and PayPal, which are warming up to crypto. This move also paves the way for the seamless introduction of a Central Bank-issued digital currency, should it come in the future. Where Africa fits in: While Visa has payment networks across the globe, it’s not clear how soon this feature will get to its African partners.
Even when the service is available globally, there’s little indication that Africa will latch on to this trend. Its major economic powerhouses, Kenya, Nigeria, Egypt, and South Africa, all have shaky histories with crypto, and Nigeria is currently reeling from the effects of the CBN’s crypto ban. Before the CBN’s order, Chimezie Chuta, Chairman of Blockchain Nigeria User Group (BNUG) told me that “Crypto is hitting a new curve with traditional finance institutions across the globe, but Africa is far behind in this.” At the Techpoint Digital Currency Summit, he went on to state that a Central Bank-issued digital currency is inevitable in Nigeria.