Visa and Yellow Card team up to facilitate the transmission and receipt of digital currency for businesses
### Visa Embraces Stablecoins for Global Payment Efficiency
In a significant shift, Visa, the global leader in digital payments, has outlined a strategic focus on stablecoins as a means to modernize payment systems, particularly in the Central and Eastern Europe, Middle East, and Africa (CEMEA) region. This move is aimed at reducing costs and improving the efficiency of cross-border payments.
#### Key Partnerships and Developments
A strategic partnership with Yellow Card, an African fintech company, is a cornerstone of Visa's stablecoin strategy. This collaboration will explore the application of stablecoin technology for treasury operations and liquidity management in cross-border transactions within Africa.
Visa is also expanding its settlement capabilities in the CEMEA region to enable USD cross-border transactions through blockchain technology, facilitating continuous settlements even on weekends and holidays.
In 2023, Visa piloted enabling clients to settle transactions in USDC, marking one of the first major payments networks to do so, with over $225 million in stablecoin volume settled to date.
#### Potential Impact
The potential impact of Visa's stablecoin strategy could be substantial, particularly in emerging markets:
1. **Cross-Border Payments Efficiency**: Stablecoins can reduce settlement costs and enhance liquidity management, making cross-border transactions more efficient. 2. **Emerging Markets Opportunities**: Stablecoins offer significant opportunities in emerging markets, such as Sub-Saharan Africa, where users may not have easy access to USD or face highly volatile local currencies. 3. **Regulatory Clarity**: The GENIUS Act, expected to bring regulatory clarity to stablecoins, could potentially increase adoption and further integrate stablecoin technology into Visa's systems. 4. **Competitive Advantage**: By embracing stablecoins, Visa can enhance its competitive position in regions where traditional payment options are less prevalent or less efficient.
Visa's partnership with Yellow Card will roll out in countries where Yellow Card operates, and Godfrey Sullivan, Visa's senior vice president and head of product for CEMEA, believes that every institution that moves money will need a stablecoin strategy by 2025.
Other notable players in the stablecoin space include Stripe, Shopify, Walmart, and Amazon, all of whom are exploring the use of stablecoins for their respective platforms. In Nigeria, stablecoins like USDT are among the most traded currencies on crypto exchanges, and businesses in countries like Ethiopia have adopted stablecoins for cross-border payments, leading to a 180% year-over-year increase in low-value transfers.
As the global focus shifts towards making money transfers faster, cheaper, and available every day of the year, Visa sees an opportunity to expand its role in institutional payments through strategic bets on stablecoins.
- Visa's strategic focus on stablecoins involves exploring their use in treasury operations and liquidity management, as demonstrated by their partnership with African fintech company Yellow Card.
- The application of stablecoin technology, including through blockchain settlement capabilities, could potentially enhance the efficiency of cross-border payments, a significant advantage, especially in regions like Central and Eastern Europe, Middle East, and Africa (CEMEA).
- In 2023, Visa piloted settling transactions in USDC, marking one of the first major payments networks to do so, indicating a growing trend towards embracing crypto and blockchain technology within the payments industry.
- As more institutions move towards adopting stablecoin strategies, companies like Stripe, Shopify, Walmart, Amazon, and local businesses in emerging markets such as Nigeria and Ethiopia, could also benefit from improved cross-border payment systems, leading to greater competitive advantage and overall innovation in the technology sector.
