As Visa aimed to expand its potential to more clients, there was an urgent need to utilize newer, high-performance blockchains that could send and receive stablecoins at a faster rate and at a lower cost. For these reasons, Visa supported Solana as a high-performance blockchain that its partners can use to transmit or receive stablecoin USDC settlement payments.
This makes Visa one of the first large-scale payment companies to utilize Solana directly for live settlement payments between its clients. The Solana blockchain has block times of 400 milliseconds, averages 400 transactions per second (TPS), and typically exceeds 2,000 TPS1 during peak demand for diverse use cases.
Visa’s Move Toward Stablecoin USDC Adoption
A recent announcement by Visa highlighted the company’s plans to launch a pilot program. This Pilot Program will deliver USDC, the second-largest stablecoin in market capitalization, to selected merchants via the Solana blockchain.
While consumers can effortlessly make purchases with a swipe or tap of their credit cards, Visa undertakes a complex payment process behind the scenes. After a transaction, the cardholder’s bank transfers funds to Visa’s treasury, which then pays out the money to the merchant’s bank, typically in fiat currency.
Visa’s Previous Acceptance of Stablecoin USDC
Visa had previously allowed certain companies, primarily crypto-native firms like Crypto.com, to send payments to its treasury using USDC, the dollar-backed stablecoin issued by Circle.
With its dedicated Circle account, Visa plans to send stablecoin USDC from its treasury to two major payment firms, Worldpay and Nuvei. These firms will facilitate direct payments for merchants. They have chosen Solana for these transactions due to its ability to process them more rapidly than Ethereum.
Jeremy Allaire, CEO of Circle, remarked, “Expanding the pilot exemplifies how pairing USDC with Visa’s innovation opens up the future of payments, commerce, and financial applications.”
Visa’s Optimism About the Future of Faster Transactions
According to Cuy Sheffield, Visa’s head of crypto, Despite the potential for stablecoins to speed up bank transfers, Visa’s processing time for moving money in and out of its treasury will remain unchanged. He explained that, at this early stage, they are merely providing the option to use USDC instead of a traditional bank wire. He expressed optimism about the potential for faster transactions in the future. Visa is establishing its grounds in the field of blockchain networks and believes financial institutions should consider this modern trend of finance.
Despite increased regulatory scrutiny by the federal government, This development represents another instance of a traditional payments company entering the crypto sphere this year.
In February, the SEC issued a Wells Notice to Paxos, a stablecoin issuer, indicating its intention to sue the company. PayPal, which had partnered with Paxos for its stablecoin, temporarily halted development due to regulatory concerns but eventually launched its stablecoin in August. Mastercard also introduced a suite of crypto offerings, including the Multi Token Network (MTN), before severing its partnership with Binance following legal action against the crypto exchange by the SEC.
Visa’s Ongoing Commitment to the Crypto Space and Stablecoins
While Visa did confirm the discontinuation of Binance cards in Europe and remained non-committal about the future of its partnership with Binance, this latest pilot underscores Visa’s ongoing interest, such as sending stablecoin USDC over Solana shows their high hopes in the crypto space, particularly in stablecoins. According to Sheffield, there is a growing recognition that stablecoins can address fundamental challenges in the world of payments, reinforcing Visa’s commitment to this emerging technology.
