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Visa to open crypto consulting service for banks as sector draws in investors

·Senior Reporter
·3 min read
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Visa (V) is launching a consulting service that caters to banks weighing their own plans for cryptocurrencies, the company announced on Wednesday, leveraging its own crypto experience as the sector increasingly goes mainstream.

The budding advisory practice is planning to offer financial institutions a range of consulting services on digital tokens and non-fungible tokens (NFTs) — a booming subsector of the crypto market based on blockchain technology

The world’s largest payments provider has been involved in crypto-related products since 2019, with the majority of that business related to "on-ramps" for buying crypto and "off-ramps" for converting it back to fiat currency. 

But in the past year, they’ve seen several key volume indicators signaling why their partners should also get involved. Wall Street banks and individual investors alike are starting to dabble in the sector, with big firms starting to offer crypto-based services to their clients — and a few prominent public figures asking to be paid partly in Bitcoin (BTC-USD).

In 2021, the number of people working on cryptocurrency-related projects at the payments giant has jumped “well into the hundreds” according to Visa’s head of crypto, Cuy Sheffield.

In support of why traditional financial institutions might be interested in its new service, Visa released data illustrating crypto attitudes and usage for consumers across the world.

Of the 6,000 consumers surveyed in July, the results found that 94% were aware of crypto, with one in three of them claiming they own or use the asset class. Meanwhile, 62% of that number said their use has increased in the last year.

In addition, 40% of those owners who took the survey said within the next 12 months they would likely change their primary bank to one that issues crypto-related products.

“We think there’s deep consumer demand for the space and that every financial institution should have a crypto strategy, that’s why we’ve set up this advisory services team,” Sheffield said.

The study also found crypto interest from consumers is 8% percent higher in emerging markets. Among those who said they owned or used crypto, the biggest motivations cited include taking part in the “financial way of the future” and building wealth.

Crypto cards

Amid the sector's boom, Visa’s partnership with crypto platforms working to issue crypto-linked cards has doubled, to 60. Those partnerships include helping outlets like Crypto.com, FTX, Coinbase (COIN) and BlockFi issue their own crypto cards, which are popular with crypto native customers. Essentially, they are debit or credit cards that lets holders spend crypto or fiat currencies in return for crypto rewards.

The consumer spending volume coming from these new cardholders now amounts to $3.5 billion, a figure still marginal to the bottom line of a multinational payments network yet significant enough for a business line “that barely existed” a year ago, Sheffield explained.

In the volatile crypto market, these programs sometimes yield better than expected rewards. They've become popular with crypto-enthusiasts during a past year of rising inflation and the pandemic, which have made cash back rewards and frequent flier miles less appealing. And for crypto trading platforms, the cards provide a much needed alternative revenue stream. 

According to Visa, the company has seen “skyrocketing” volume in the number of inbound calls they’re getting from existing partners who are crypto-curious.

“That includes our top banks on the issuing and borrowing side, merchants, fintechs, neobanks and infrastructure providers,” Sheffield added.

David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.

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