The pandemic has drastically, if not completely, changed the world as we know it. This macro-economic change is fuelled by a monumental digital revolution, which continues to disrupt how businesses run, people work, and industries grow today. . When it comes to ‘payments’, 2020 showed us that consumers already have strong appetite for mainstream digital payments, particularly as eCommerce witnessed a boom ever during the lockdown.
At Visa, we found ourselves aiding this growth as eCommerce volumes in Singapore and India grew by 30% in the second quarter of 2021, compared to the previous year1. This booming digital commerce has put us in a state of consistent innovation. As fresh purchasing preferences surface and digital currencies emerge, Visa stands at the helm of shaping the future of money in five broad ways:
#1 EXTENDING VISA’S API
No digital currencies? No problem. Banks and fintechs who lack a digital currency offering can leverage Visa Crypto Application Programming Interface (API) instead of building the capability by themselves. A few neo-banks in the US are already exploring how they can adopt this approach.
#2 SECURING PURCHASES
Safe and seamless payments have been our longstanding priorities. To ensure hassle-free digital currency purchasing for our customers, we are applying the same security standards that Visa applies for other transactions, managed in association with our partners. Popular ones include Know your customer (KYC) and anti-money laundering (AML) controls. In fact, as digital wallets continue to pave the way for a cashless India2, several crypto exchanges are also experiencing greater usage of their mobile-first applications3. Building on this, we will soon help consumers to purchase digital currencies on-the-go.
#3 MAKING SPENDING CONVENIENT
Today, very few merchants accept cryptocurrency directly over blockchain networks due to the many complexities in changing their current acceptance setup – a bane that crypto customers aren’t fully aware of, but resent, nevertheless. Taking cue, Visa has partnered globally with over 50 digital currency platforms, so consumers can spend their digital currency across millions of merchants worldwide. In fact, the first half of 2021 alone saw more than US$1 billion spent on crypto-linked Visa cards4.
#4 FACILITATING DIGITAL CURRENCY SETTLEMENT
Globally, we are aiming to enable digital currency settlement to make it easier for digital currency platforms to do business with Visa. This is a backend process where we aggregate the day’s transactions and facilitate a transfer of funds between issuers and acquirers, so that money moves from an individual cardholder’s account to the merchant where they made the purchase.
In March, we announced an upgrade to our infrastructure that will allow us to start settling transactions in digital currency. This can remove complexities and costs for crypto exchanges, who are plagued by the need for sufficient traditional on-hand fiat to settle obligations for their card programs.
#5 WORKING CLOSELY WITH CENTRAL BANKS
As the global interest around central bank digital currency (CBDC) grows, we view public-private partnerships as critical in bolstering acceptance and promoting adoption – something that Visa has deep experience in due to our commitment to safety and security over the last 60 years.
Visa was founded on the premise of moving money electronically, and digital currency represents an evolution in the nature of money itself. While its trajectory remains hard to predict, rising interest among Indian consumers and the central government thus far pegs digital currencies as a critical part of the future of payments.
Within India and across the world, reprioritising digital agendas has become an immediate imperative, what with the coexistence of traditional fiat and digital currencies at stake. Visa is ergo actively exploring new developments in digital currencies in consultation with regulators and industry stakeholders.
1 Visa Earnings 2Q 2021
4 Cumulative payment volume for Visa card programs linked to a digital currency platform, January 2021-June2021