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Visa (V) to Gain from Higher Crypto Demand Amid Digitalization

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Zacks Equity Research
·3 min read
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Visa Inc. V remains well-poised to benefit from growing presence in the cryptocurrency space, courtesy of constant partnerships and technological upgradations.

It’s worthy of mentioning that cryptocurrency, often referred to as digital currency, has emerged as one of the most popular means of alternative investment amid the COVID-19 pandemic, which has been spreading volatility across the globe and equity markets. Amid stringent lockdowns imposed by the governments and social distancing measures to curb the virus spread, people were left with no other option but to resort to digital transactions. The trend of a cashless society is here to stay even beyond the pandemic, as physical means like cash and checks can aggravate pandemic-related health concerns.

Moreover, cryptocurrencies have started gaining momentum as an investment asset amid the interest rate cuts by governments in a bid to inject liquidity into the economy. Lower returns from government bonds have led to rise in demand for cryptocurrencies by institutional investors, who were previously skeptical about its usage.

Also, the cryptocurrency space is well-poised for growth as a medium of exchange, courtesy of growing digital era and blockchain technology that is being utilized by most companies to facilitate hassle-free and cost-effective transactions without the need for a financial intermediary. Case in point, per Fortune Business Insights, the global cryptocurrency market is anticipated to witness a CAGR of 11.2% over the 2020-2027 period.

Constant Tie-ups

Visa has been actively forming alliances with cryptocurrency firms for not only enabling increased usage of digital currencies in day-to-day life by customers in its existing global network but also paving the way for hassle-free conversion of crypto into fiat currency. Case in point, Simplex has been made the principal member of Visa recently. Per the partnership, Simplex, which boasts of a partner network comprising leading crypto exchanges and wallets, is allowed to offer Visa debit cards across Europe.

Other notable partnerships undertaken by Visa, in a bid to strengthen presence in the cryptocurrency space, include those with Coinbase, BlockFi, Wirex, Fold and many others. The presence of a trusted payment facilitator like Visa, which has more than 25 digital currency wallets linked to its systems, further reinforces the belief of individuals in increased usage of crypto and digital currencies.

Technological Advancements

Visa has left no stone unturned in integrating the blockchain technology with its payments platform. For doing so, the global payments company has teamed up with several companies for exploring uses of the blockchain technology, which facilitates speedier transaction times and reduced fees. With a blockchain-based system, Visa holds immense potential to foray further into the digital currency space.

Shares of this Zacks Rank #3 (Hold) company have gained 14.1% in a year compared with the industry’s growth of 8.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Similar Moves Undertaken by Peers

Mastercard Incorporated MA has been partnering with several crypto firms in a bid to delve deeper into the cryptocurrency market.

PayPal Holdings, Inc. PYPL has enabled its U.S. accountholders to buy, hold and sell cryptocurrency directly from their PayPal account.

Square, Inc. SQ has made substantial investments in the cryptocurrency space given the growing adoption of digital currencies.

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