Legacy payment processors were pretty late to the crypto party, adopting digital assets long after their rivals stepped into the industry. But their adoption has been rampant, and now they're fiercely competing to establish their presence.
Recently, crypto enthusiasts have noted a big shift coming from VISA and Mastercard. Both companies are doing everything possible to familiarize individuals and companies with crypto, and they're using different approaches.
VISA Welcomes Everyone
Last week, VISA announced new consulting and advisory services for clients looking to increase their exposure to cryptocurrencies. The company explained that its new advisory service will offer counsel to everyone - institutional investors, retailers, and more.
Explaining why it's making the move, VISA said banks want to embrace cryptocurrencies to remain competitive. The company cited an in-house study showing 40 percent of all crypto owners were willing to switch to banks offering crypto services in the next 12 months.
VISA has already started offering consulting services to big firms. Reuters reported that UMB - a Missouri-based financial services company - has used the payment processor's crypto advisory service to learn more about the impact of stablecoins and traditional cryptocurrencies on its commercial and retail business lines.
Today, any company wanting to get more involved with cryptocurrencies has access to this valuable resource. More institutions are expected to embrace cryptocurrencies in the coming months. Big firms that don't want to make uninformed investment and business decisions could benefit from VISA's service.
The consulting service is just the latest move for VISA, which has expanded its cryptocurrency offering significantly this year.
In September, the company announced it plans to build a Universal Payment Channel - a hub for making blockchain payments. The tool will act as a channel that connects multiple blockchains and enables money transfer between different tools and wallets.
"Imagine splitting the check with your friends, when everyone at the table is using a different type of money — some using a central bank digital currency [...] like Sweden's eKrona, and others preferring a private stablecoin like USDC," VISA explained.
Earlier this year, the company filed with the Patent and Trademark Office to launch a custom digital currency. VISA's patent application showed the firm is looking to launch its digital currency on the Ethereum blockchain. However, the company hasn't revealed many details about its goals for the currency.
Mastercard's Focus on CBDCs
While VISA lays the groundwork for successful private cryptocurrency growth, Mastercard is hot on its trails. In contrast to VISA, Mastercard is focusing on central bank digital currencies (CBDCs), ensuring that countries have a platform to launch and collaborate on CBDC projects.
While speaking to investors and shareholders at an earnings call in October, Mastercard chief executive Michael Meibach confirmed the company is currently working to make its infrastructure more CBDC-compliant.
"We said that on a couple of calls before, and we said that we will make our network ready to do that as and when a government is ready to put out a CBDC that will exist alongside the dollar or the euro as a settlement currency in our network."
Meibach asserted that Mastercard wants to create a safe space for banks and governments to deploy CBDCs and collaborate with counterparts in other countries.
Cross-country CBDC collaboration has been a major point of focus for several agencies. While many countries are now launching digitized versions of their currencies, Mastercard ensures that CBDCs can also be transacted for each other.
As a whole, the company plans to build a digital market for currencies - just as we have payment networks like SWIFT that facilitate traditional cross-border currency conversions.
This isn't to say that Mastercard isn't focusing on private cryptocurrencies too. In October, it partnered with Bakkt to allow customers to buy, sell, and hold cryptocurrencies through custodial wallets. Thanks to the partnership, cardholders will be able to earn and spend their rewards in crypto instead of converting to cash or using loyalty points.
Payment processing is an integral component to the crypto space. With companies like VISA and Mastercard embracing the industry, the future definitely looks bright.