One of the world’s largest card companies has renewed its effort to capture the cryptocurrency market. Visa Consulting and Analytics, the company’s advisory division, announced today that it has started a cryptocurrency consulting practice for its clients and partners.
Visa’s head of crypto, Cuy Sheffield, last month said the asset class has become “cool” at a fintech conference. In August, it made news by buying a CryptoPunk NFT. Now, it’s opening a crypto consultancy, demonstrating that its efforts to take share in a competitive market extend far beyond marketing stunts.
The number of Visa’s partnerships with cryptocurrency platforms has doubled in the past 15 months, Sheffield reported during an interview. In July, consumers spent about $1 million on Visa’s crypto-linked cards. But now, consumers have spent close to $3.5 billion.
A global survey the company conducted on consumer attitudes towards crypto found that 40% of its 6,000+ respondents said they would switch to a bank that offers crypto products.
Visa has received “a large volume of incoming calls from hundreds of customers and partners, as well as traditional financial institutions,” who are interested in integrating crypto into their offering, Sheffield said. It is not known how many Visa’s crypto practice would have, as the company does not share the number.
“Visa is a reputable global brand, which has extensive expertise in cryptography, which can help banks incorporate these new technologies into their core products and abstract away some of the complexities,” Sheffield said.
Visa has participated in the $60 million Series B funding of blockchain compliance firm TRM Analytics. The investment was also backed by American Express and CitiGroup. As one of a number of card incumbents attempting to make inroads into crypto, Visa is concerned that the new underlying infrastructure for payments will render their fee-dependent business model moot.
Card companies have launched cryptocurrency rewards programs this year, with MasterCard using Bakkt as the custodian. It is also not directly holding any crypto in its custody, but it partners with Anchorage Digital to do so. The company made its first investment in Anchorage Digital in 2019. According to Sheffield, Visa intends to build out its crypto API platform on Anchorage so that other banks can access the custodial services it offers.
In recent years, new financial upstarts have increased competition among major payment networks. Open banking, which will allow rival fintechs to access information on consumer bank accounts and payment options, threatens to disrupt their business model.
Sheffield anticipates that growth in Visa’s blockchain-enabled debit cards as well as use cases such as central bank digital currencies (CBDCs). According to The Atlantic Council, 87 more countries are considering CBDCs despite just seven countries having launched them to date.
Using Visa’s ability to help banks develop CBDC-related products, Sheffield says, the bank hopes to capitalize on this interest.
Researchers have spent a lot of time researching what kind of infrastructure CBDCs would rely on to serve consumers, and how consumers would interact with them. As we think this is going to be a route that many countries take, we are taking our expertise and engaging with central banks to help banks prepare, Sheffield explained.
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