Visa, the largest U.S. credit card company, is tapping the crypto craze to build its business on multiple fronts, with recent financial results showing gains from integrating the nascent digital assets.
As cryptocurrencies increase in value alongside the rise of Bitcoin, and digital assets gain traction with a crowd of mainly young users, payments companies such as Visa seek to capitalize on the trend.
The company's executives mentioned crypto 11 times during a conference call on Tuesday to discuss Visa's fiscal second-quarter results. That word wasn't uttered at all during a call for second-quarter results last year, according to transcripts of the Visa calls.
Visa CEO Alfred Kelly said he views digital assets in two different segments, one being cryptocurrencies like Bitcoin, that are mainly held by users as an investor might hold gold. The second segment is central bank digital currencies and stablecoins that are more directly based in fiat currencies that "are emerging as a payment option."
Across the spectrum, Kelly spelled out five different ways Visa plans to capitalize on those uses, and already is benefiting from the uses.
"This is a space that we are leaning into in a very, very big way, and I think are extremely well positioned" in the sphere, Kelly said on the call with analysts.
The company is partnering with digital companies, including Crypto.com, Coinbase and Bitpanda, to enable cash-payouts from cryptocurrencies into fiat currencies. That makes those funds available for shopping on Visa's cards.
Visa also benefits from customers using their cards to buy cryptocurrencies. Specifically, online or mobile purchases increased during the second-quarter partly due to users buying cryptocurrencies, Visa Chief Financial Officer Vasant Prabhu said.
Kelly noted the San Francisco-based company's new partnership with Crypto.com, a company that lets its customers buy and sell cryptocurrencies and now offers a branded Visa prepaid card (it's like a debit card, but money must be added to it from a source). That recently expanded arrangement pitches Visa cards to 10 million Crypto.com customers in 39 countries.
The card offers five different levels, with benefits like the ability to accumulate rewards and potential free subscriptions to mega merchant Amazon Prime, movie site Netflix and the streaming music app Spotify.
The executives also said they expect Visa to gain from banks, fintechs and other financial institutions increasingly creating more customer interfaces that allow transactions in cryptocurrencies. On this front, it partners with Anchorage Bank, the first federally chartered digital asset bank, and with neobank First Boulevard.
Also with respect to financial institutions, Visa upgraded its infrastructure to allow settlement in a digital currency using stablecoins, starting with a major one, USDC. Finally, in a related area, the company is also working with central banks on their efforts to create central bank digital currencies.
The company's executives expect the digitization of money and cross-border transaction trends to continue to scale. "We're stepping up our investment to drive accelerated growth in a post-covid world," Prabhu said.
That new world is likely to be tapping crypto more and more frequently as cross-border and e-commerce transactions increase.