Digital currencies valuable to Visa's vision
During a recent Q1 Earnings Call, Visa's Chairman and CEO Alfred Kelly took the opportunity to clarify Visa's approach to digital currencies, saying that Visa recognises the value that Visa's payment knowledge can add to the digital currency space.
Kelly described digital currencies as falling into two types:
Digital currencies representing new assets e.g., Bitcoin which Kelly likened to "Digital Gold"; and
Digital currencies that are backed by existing fiat currencies such as stable coins.
First up, Kelly sees opportunities for Visa in both kinds of currencies, with Visa's payment platforms assisting with "new assets" like Bitcoin to increase the ease of payments given they "are not used as a form of payment in a significant way." This seems code for Visa following Paypal in permitting users to purchase Bitcoin and use it to fund purchases via Visa products.
Second, Kelly likened the opportunities for fiat backed digital currencies simply to those of regular fiat backed currencies, saying:
We think of digital currencies running on public blockchains as additional networks just like RTP or ACH networks, so we see them as part of our network of networks strategy.
Noting the increase in partnerships with digital currency platforms, Kelly added that:
to the extent a specific digital currency becomes a recognized means of exchange, there's no reason why we cannot add it to our network, which already supports over 160 currencies today.
Visa's belief in the opportunities of blockchain technology and digital payments is not new. Visa was a large player in the Libra Association (now Diem) back in 2019 but backed out when US Senators sent a threatening letter promising scrutiny on "all payment activities" if they remained part of the Association . Despite backing out, Forbes reported a Visa spokesperson's said:
Visa’s continued interest in Libra stems from our belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets.
Visa's positive move into the digital currency space, particularly for currencies representing 'new assets' and fiat backed currencies is an exciting shift by the payment giant which has the power to bring a level of use and fiat to digital onramp which has been more challenging for projects to secure.
As Kelly foreshadows, it will be interesting to see whether integration with Visa's abundant existing payment networks will change the way that digital currencies, treated as 'digital gold', will be used and whether it will see greater volume and use of these technologies for payments.
Additionally, as such a large payment provider operating in a highly regulated area Visa's nod of approval for digital currencies may help suspicious regulators and members of parliament who continue to cite years old and out of date statistics on money laundering and the use of digital currency for illicit activities to understand the power of increasing efficiency and automation in payments via digital currencies.