Payment services companies like Visa, Mastercard, and PayPal do not consider the rapid growth of digital assets a threat. Instead, the financial services giants consider this growth an opportunity to tap into the future of finance. New York-based research firm MoffettNathanson revealed this news through a client note on December 15.
According to Visa’s SVP and Global FinTech Head, Terry Angelos, the company believes crypto’s relevance will exceed being a means of payment. To this end, it is positioning itself to be a Layer 2 solution that runs on the blockchain, just like it does on fiat-based systems.
Angelos added that Visa also expects its presence in the crypto space to expand over the next few years due to inking multiple partnerships with crypto wallets.
On the other hand, Mastercard is keen on providing a cross-border on and off-ramp for digital assets. Per Raj Dhamodharan, Mastercard’s EVP of Blockchain and Digital Asset Products, the firm views crypto as an opportunity to develop new products.
Dhamodharan added that Mastercard is looking to become an on and off-ramp for the booming non-fungible token (NFT) market. He further disclosed that plans are underway to add digital assets to its multi-rail network as native currencies for settlement.
After embracing crypto in the past year, PayPal has been injecting funds into education-related initiatives to reach a larger audience. The firm is also working on introducing functionalities that allow interaction with the decentralized finance (DeFi) sector.
According to PayPal’s CTO of Blockchain, Crypto, and Digital Currencies, Edwin Aoki, the company is also looking to introduce a feature that lets users transfer digital assets in and out of its digital wallet seamlessly and safely.
Cryptos are still not suitable for payments
While financial players are rushing into the crypto-verse to stay relevant when web3 takes over, it is worth noting that this might take a while. According to Deutsche Bank, cryptocurrencies like Bitcoin (BTC/USD) need to get rid of extreme volatility, high gas fees, and massive carbon footprints before they can edge out the traditional finance sector.
Comparing BTC to Visa, Marion Laboure, an analyst at Deutsche Bank, said the BTC network could only process around 600,000 transactions per day. On the other hand, Visa processes approximately two billion transactions in 24 hours.
Apart from technical limitations, Laboure believes cryptocurrencies have regulatory challenges. She pointed out that cryptos need significant regulatory involvement before becoming global payment options. To this end, the bank believes that traditional payment networks will remain at the top of the food chain for a while.
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