VISA expands its multi-chain territory as payment giants engage in a heated competition for "on-chain infrastructure".

Jessy, Golden Finance

Recently, Visa announced the expansion of its stablecoin settlement capabilities, adding support for the Global Dollar (USDG) issued by Paxos, PayPal USD (PYUSD) launched by PayPal, and the Euro Coin (EURC) stablecoin launched by Circle. At the same time, Visa will also expand the blockchain networks supported for settlement from the original Ethereum and Solana to Stellar and Avalanche, further strengthening the "multi-chain compatibility" of its on-chain infrastructure.

Visa's move is undoubtedly aimed at consolidating its dominant position in the global payment infrastructure while accelerating the transition to an "on-chain settlement layer." Not only Visa, but also major payment giants are speeding up their own specialized paths and actively promoting "on-chain transformation."

Expand the clearing network of the traditional financial world to the on-chain world

For a long time, Visa has been a typical "centralized settlement network" in the traditional financial world, functionally similar to the "decentralized settlement layer" emphasized by blockchain. In the traditional financial world, it is responsible for completing clearing and settlement between issuing banks, acquiring institutions, merchants, and consumers.

In terms of scale, Visa and Mastercard nearly dominate the global payment landscape: as of 2024, Visa accounts for 39% of the global payment market, while Mastercard holds 24%. Their operating profit margins are astonishingly high, reaching 67% and 57%, respectively.

As a foundational infrastructure in the traditional financial sector, Visa has no choice but to embrace the revolutionary wave of blockchain sweeping through the payment and settlement layers. After all, blockchain offers advantages of faster, disintermediated, real-time settlement, coupled with the advancement of U.S. stablecoin-related legislation and the gradual expansion of the blockchain world. Payment networks are being rebuilt on-chain. If Visa does not embrace this revolution, its future will be marginalized in the on-chain world.

Currently, Visa is expanding its support for various stablecoins and chains, essentially transforming itself from a traditional financial "centralized settlement network" into a multi-chain and multi-method compatible settlement layer. At present, the blockchain world is highly fragmented, with users distributed across different chains such as Ethereum, Solana, Stellar, Avalanche, etc., while mainstream stablecoins each have their own ecological niches: USDC is the leader among compliant stablecoins, PYUSD is more aligned with the PayPal platform, and EURC is the first compliant euro stablecoin. If Visa wants to become the highway for on-chain payments, it must have the capability to support multiple chains and currencies to cover more transaction scenarios and serve more users and partners.

So what we see now is just the beginning of the gradual expansion of supported chains and stablecoins; in the future, Visa will also integrate more stablecoins and chains.

The collective crypto transformation of payment giants is not limited to issuing stablecoins

Visa is not the only traditional payment giant venturing into the on-chain world. Payment giants like Mastercard, Stripe, and PayPal are all positioning themselves in the "on-chain role" in their own ways and at their own pace. They either choose to become connectors of blockchain or directly launch their own stablecoin solutions.

Mastercard is one of the earliest traditional financial institutions to explore cryptocurrency infrastructure, even more aggressive than Visa at one point. As early as 2021, Mastercard announced plans to support direct settlements of "certain cryptocurrencies" and initiated collaboration projects with multiple wallets and exchanges.

In the past two years, Mastercard first launched the "Crypto Credential" system for on-chain identity, providing on-chain identity verification services for wallet addresses, aiming to address fraud and erroneous transfers in on-chain transactions.

At the same time, it is also building a multi-chain prototype platform to test the interoperability of various CBDCs, stablecoins, and commercial bank digital currencies, preparing for large-scale commercial deployment in the future.

In addition, Mastercard is also continuing to expand its crypto ecosystem network, and has already partnered with Fireblocks, Paxos, Circle, and others to provide infrastructure services in areas such as custody, settlement, and cross-border transfers. It is trying to become the "infrastructure platform provider" for on-chain settlement and identity verification.

The payment platform Stripe, similar to providing APIs in the traditional financial world, offers a comprehensive suite of on-chain payment and settlement services for merchants and developers in the blockchain space. Stripe announced its support for USDC payments for the first time in November 2023. Developers can directly receive, convert, and withdraw USDC through Stripe's API, lowering the entry barrier for Web3 enterprises. At the same time, Stripe provides a custodial wallet solution, helping project teams achieve on-chain payments and fund management without the need to build their own on-chain infrastructure.

On the other hand, Stripe further strengthens its conversion capabilities between stablecoins and fiat currencies, trying to become the "crypto payment Stripe" among developers and merchants.

One could say that Stripe is more like the "merchant backend" of the Web3 world, providing a one-stop solution for on-chain payment integration, KYC, settlement and withdrawal services, and belongs to the "developer-friendly" on-chain middleware.

Unlike Visa and Mastercard, PayPal has chosen to issue its own stablecoin. In August 2023, PayPal announced the launch of PYUSD, a dollar stablecoin based on Ethereum, which is one of the first compliant stablecoins launched by a mainstream payment company in the United States, aimed at facilitating digital payments, transfers, and settlements within the PayPal network. PYUSD can circulate in PayPal and Venmo wallets, and Visa's announcement to support PYUSD settlement may also signify that this currency is transitioning from an "internal currency" to "widespread on-chain use."

Currently, payment giants are entering the cryptocurrency space leveraging their own advantages. Some focus on extending settlement networks, others concentrate on providing payment access tools for Web3 merchants, while some choose to issue stablecoins themselves. Although the paths are different, the goal is the same: to seize a dominant position in the infrastructure of the on-chain world.