In the past few months, payment giants Visa, Mastercard and PayPal have radically changed their attitude towards cryptocurrencies and ...
In the past few months, payment giants Visa, Mastercard and PayPal have radically changed their attitude towards cryptocurrencies and blockchain technology, announcing their intention to integrate crypto payments into their systems. It is about the process of global adoption of crypto innovation in the world of traditional finance. How exactly payment giants enter the crypto market - we understand the material.
Visa experience
On March 16, 2018, Visa CFO Vasant Prabhu criticized cryptocurrencies, including bitcoin, stressing that these assets are a bubble. Then Bitcoin was worth $ 8,300.
On July 22 of this year, when the first cryptocurrency rose to $ 9,360, a message appeared on the official Visa blog with a completely different message entitled " Developing our approach to digital currency ." In this post, the company revealed that its partnership with two regulated crypto platforms, Coinbase and Fold, is part of a corporate strategy to integrate digital currencies into its payment system, reaching 61 million retailers. In its message, the company highlighted the importance of stablecoins, which “have stepped outside the fintech sphere, ” and now include a number of financial institutions and central banks in their ecosystem.
From the message of the payment giant it became known that " more than 25 digital wallets have linked their services to Visa ." Visa also noted that these 25 crypto service providers will be able to leverage the payment giant's full range of capabilities, including the Visa Direct option and the FastTrack platform. It is worth noting that the corporation also supported financially the company Anchorage, which is studying cybersecurity issues of cryptocurrency ecosystems. Visa says the company's main goal is "to continue to do what we do best: develop our system, supporting new forms of commerce ."
On July 28, at a meeting with investors, in which Vasant Prabhu took part, it was said in detail that Visa sees great potential for its own development in the growing popularity of e-commerce and digital payments. It was also mentioned about the corporate payment system Visa B2B Connect, which is designed to make international financial transfers without the help of the usually slow correspondent banking network.
Mastercard experience
A similar evolution is taking place before our eyes with Visa's competitor - the Mastercard payment system.
So, on July 26, 2018, the CEO of Mastercard, Ajay Banga, compared cryptocurrencies to things that are thrown into the trash. However, two years later, the payment corporation has largely changed its approach to cryptocurrencies. On July 20, it became known that Mastercard has signed an agreement with the Wirex cryptocurrency company. This financial startup allows you to buy and sell cryptocurrencies for fiat money. Since last month, Wirex has become a member of the Mastercard ecosystem with the right to independently issue cards from this payment giant. We will remind that earlier, in February this year, a similar decision was made by the Visa corporation in relation to the Coinbase crypto exchange.
Moreover, Mastercard intends to launch a special program to support other crypto companies. As Raj Damodaran, Executive Vice President of Digital Assets, Blockchain Products and Partnerships, Mastercard explained , "The crypto market continues to evolve, and the corporation is helping to advance it by providing reliable and secure services for individuals and companies in the modern digital economy ."
PayPal experience
Another payment giant, PayPal, has long been silent about any intention to integrate cryptocurrencies into its structure. However, on July 14, the media published a letter from the corporation to the officials of the European Commission, where PayPal admitted that it is actively developing applications using cryptocurrencies.
The number of PayPal users worldwide exceeds 300 million people, and the company operates in Europe thanks to a banking and payment services license obtained in Luxembourg. In total, the PayPal payment service is represented in 31 European countries, where the company serves 95 million merchants and retail consumers. It is worth noting that PayPal, along with Visa and Mastercard, was previously part of the Swiss Libra Association, which is implementing Facebook's crypto project to launch the Libra stablecoin.
The fact that PayPal is developing a roadmap for integrating its own payment crypto services is also clearly shown by the announcement of the recruitment of members of the blockchain technology research team, which requires a senior research engineer. This specialist will be responsible for " development, creation and maintenance of key crypto products / services, which will be focused on increasing the efficiency and scale of services provided by PayPal ." Information about the open vacancy appeared at the end of June.
PayPal does not deny its interest in the cryptosphere, but has not yet confirmed information about the development of certain crypto applications or services, for example, based on the Venmo mobile application, which is affiliated with the payment giant.
Who will be the leader in this race?
Nevertheless, crypto market players themselves are actively looking for ways to integrate with PayPal. This is illustrated by the example of blockchain company Pundi X, which integrated PayPal support for its Xpos merchant device on July 1.
Another player in the crypto industry, the fintech company Ripple, has not only supported the classic payment operator MoneyGram by buying 10% of its share capital and investing a total of $ 50 million, but continues to invest in the integration of cryptocurrencies into this service. According to the results of the second quarter, Ripple transferred $ 15.1 million to MoneyGram. It is curious that in June another payment operator, Western Union, became interested in the innovative successes of MoneyGram, which is considering buying a competitor. It is worth noting that back in January of this year, Credit Suisse Bank experts published a report in which they noted Western Union's interest in blockchain technology and Ripple's payment innovations.
The competition for the integration of cryptocurrencies into the services of payment operators is becoming more and more intense. And one of the main participants in this race was the People's Bank of China with a digital yuan project. At the same time, in January, even before the aggravation of relations between the United States and China, the American PayPal became the first foreign payment operator to officially enter the Chinese market after acquiring a local player GoPay.
The next development step is neobanks
Meanwhile, a number of fintech startups are engaged in the integration of cryptocurrencies into financial services, which could potentially challenge all of the above organizations, including the People's Bank of China with its digital yuan.
Jack Dorsey's Square company was able to receive revenue from operations with bitcoins in the amount of $ 306 million in the first quarter of this year.This cryptocurrency service was launched back in 2018, but only in 2020 saw a significant increase in financial indicators. At the same time, since March, through the Square Financial Services division, Jack Dorsey's company has been able to provide services as a digital bank.
Another fintech giant, Revolut US, with the support of crypto company Paxos, began offering cryptocurrency trading services on July 15 in all US states except Tennessee. Curiously, traditional financial service providers are also interested in a new partnership with the cryptocurrency "unicorn". So, on June 20, the international company Revolut announced that it would integrate American Express services for its customers.
In the case of Square, Robinhood and Revolut, this is not just about trading services, which are provided by various crypto exchanges. After all, all these companies are de facto neobanks - digital financial organizations that have every opportunity to integrate cryptocurrencies into their services, thanks to various partnerships. And the range of possibilities of such neobanks is much higher than that of traditional payment giants.
That is why in the near future we will witness how Visa, Mastercard and PayPal will actively explore the possibilities of buying or investing in a ready-made cryptocurrency infrastructure. These corporations are entering the crypto world, as it increasingly becomes a matter of their survival in the rapidly changing global financial system.
