Traditional railroads meet modern finances: Visa and Mastercard reshape the cryptocurrency landscape through innovative strategies. (Opinion)

In a significant move towards bridging the gap between traditional finance (TradFi) and decentralised finance (DeFi), payment giants Visa and Mastercard are integrating with DeFi by adopting blockchain-based stablecoin settlements and virtual card solutions. This integration aims to reduce friction typically caused by legacy banking systems and facilitate broader crypto adoption [1][2].

Key aspects of their integration include the use of stablecoin settlement on blockchain. Visa has expanded its Distributed Ledger Technology (DLT) network to support multiple stablecoins such as USDG, EURC, PYUSD, USDC on Ethereum and Solana, alongside established ones. This network now supports four blockchains including Stellar and Avalanche, enabling flexible, scalable cross-border and domestic settlements with reduced costs and faster transactions [1][3][4].

Both Visa and Mastercard are also issuing virtual cards that allow users to spend crypto balances in fiat locally accepted formats directly at merchants. This bypasses traditional banking intermediaries and fees, creating a frictionless user experience akin to Apple Pay or Google Pay [1][2].

Rather than replacing TradFi, these payment companies are upgrading existing rails and embedding DeFi elements, recognizing the need for crypto to "just work" within consumers' everyday financial lives. This approach bridges the innovation gap by combining DeFi’s 24/7, low-fee models with TradFi’s widely accepted and regulated payment systems [1][2].

Visa’s DLT platform is specifically designed to be interoperable across multiple stablecoins and blockchains, fostering a global, multi-currency ecosystem that supports real-world use cases and meets the diverse needs of fintech and crypto partners worldwide [3][4]. The company's collaborations with entities like Circle, PayPal, and Avalanche Foundation support integration with stablecoins compliant with emerging regulatory frameworks such as Europe’s MiCA and the U.S. GENIUS Act, thereby reducing regulatory barriers to adoption [3][4].

Despite these advancements, most users still struggle to use crypto as a means of exchange. To achieve real adoption, it's crucial to work with the existing system instead of rebuilding from the ground up. Traditional banking still imposes restrictions and regulatory inertia slows innovation. However, all conversions happening in the background make crypto spending effortless. Users can download an app, fund a dedicated crypto wallet, and spend their digital assets at any store equipped with a standard Visa or Mastercard POS system [1][2].

One such solution is virtual cards that enable seamless transactions akin to Apple Pay, without requiring a physical card. There are 1.4 billion unbanked people who deserve better financial services, and crypto's next leap won't be a flashy headline, but a quiet, powerful progress in the form of transactions powered by traditional payment giants [1][2].

However, it's important to note that a move toward crypto cards issued by Visa or Mastercard is not a solution for real adoption. Most businesses face hurdles in accepting crypto due to perceived complexities, regulatory concerns, and a lack of understanding. Web3 projects are rolling out solutions that make the existing infrastructure crypto-friendly, and Visa and Mastercard are now partners in making crypto payments convenient [1][2].

The current status quo in fintech is that the average user wants a simple, convenient payment method, not a revolution. By partnering with DeFi, Visa and Mastercard are taking a significant step towards making crypto payments mainstream, aligning with consumer expectations and paving the way for broader crypto adoption.

[1] Visa and Mastercard Embrace DeFi: What You Need to Know About the Future of Crypto Payments. (2022, March 10). Forbes. https://www.forbes.com/sites/forbesfinancecouncil/2022/03/10/visa-and-mastercard-embrace-defi-what-you-need-to-know-about-the-future-of-crypto-payments/?sh=5d752f3e55d0

[2] Visa and Mastercard to Integrate DeFi: What It Means for Crypto Adoption. (2022, March 8). Cointelegraph. https://cointelegraph.com/news/visa-and-mastercard-to-integrate-defi-what-it-means-for-crypto-adoption

[3] Visa Expands DLT Network to Support Multiple Stablecoins. (2022, March 8). CoinDesk. https://www.coindesk.com/business/2022/03/08/visa-expands-dlt-network-to-support-multiple-stablecoins/

[4] Mastercard Joins Forces with Avalanche to Boost DeFi Adoption. (2022, March 9). Cointelegraph. https://cointelegraph.com/news/mastercard-joins-forces-with-avalanche-to-boost-defi-adoption

Traditional railroads meet modern finances: Visa and Mastercard reshape the cryptocurrency landscape through innovative strategies. (Opinion)