Visa will allow the use of a dollar-backed cryptocurrency to settle payment transactions on its network | Currency News | Financial and Business News

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  • Visa said on Monday it will allow the use of USD Coin to settle payment transactions on its network.
  • The company piloted the option with payment platform Crypto.com and digital asset bank Anchorage.
  • USD coin is a stablecoin that holds all the advantages of bitcoin, with none of its drawbacks.
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US payments firm Visa announced Monday that it will enable the use of USD Coin to settle payment transactions on its platform.

Visa piloted the payment option via payment platform Crypto.com, and plans to allow more partners the same route later this year.

"Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors," Jack Forestell, Visa's executive vice president and chief product officer, said in a statement.

Visa partnered with digital asset bank Anchorage to carry out its first USD Coin transaction this month, processing a payment via Crypto.com to its own Ethereum address at the bank.

USD Coin is a stablecoin, a type of cryptocurrency that is pegged to a stable asset such as the US dollar. Such coins have all the advantages of bitcoin, with none of its drawbacks, such as intense volatility.

Stablecoins can be held without the need for a bank account, just like bitcoin, and without costly transaction fees. Sometimes, these bitcoin fees can sometimes exceed the dollar value of a consumer's purchase.

Ordinarily, if a customer chose to use a Crypto.com Visa card to make a small purchase, the digital asset value from the crypto wallet would have to be converted into traditional currency, Reuters reported. The conversion process carries risk and complexity for businesses. But Visa's system eliminates the conversion process, permitting the transaction to be settled directly.

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