In an interview recorded at the National Retail Federation conference on January 16, 2018, the Chief Executive Officer (CEO) of Visa, Alfred Kelly, publicly confirmed that the company had been actively distancing itself from supporting cryptocurrencies. Speaking in New York City, Kelly said that “I don’t view it as payment system player.” His words make it quite apparent that Visa simply does not hold bitcoin or any other digital currency in direct competition with government-backed fiat, such as the United States dollar.
In fact, Alfred Kelly directly colluded to the fact that Visa would not be accepting payments in bitcoin. Further, in the interview, he said, “We at Visa won’t process transactions that are cryptocurrency-based. We will only process fiat currency-based transactions.”
Explaining his inhibitions, Kelly also stated:
“My take is that bitcoin is much more today a commodity that somebody could invest in; and honestly, somewhat of a speculative commodity.”
It is important to note that Visa’s CEO does have a valid point when it comes to the record levels of volatility and speculation in the cryptocurrency market. Since December 2017, bitcoin lost approximately 40 percent of its value after peaking at a price close to $20,000. Despite that, bitcoin appreciated by a factor of ten in 2017 alone. Swings of up to 50 percent are almost considered normal in the cryptocurrency market and may be an alarming indicator for companies based on financial security and analysis.
When Bitcoin was first introduced to the world in 2009, it sought out to replace the conventional notion of money and eventually, even be used instead of cash. However, it has struggled to gain mass traction due to a multitude of different problems surrounding the ecosystem, including low merchant adoption rates. The reluctance of Visa to add support for cryptocurrency-based payments, for instance, is yet another spanner in the works for those looking to spend their bitcoin easily.
That said, Visa and other players in the banking industry are the least likely organizations to support Bitcoin’s disruptive ideology given that these businesses have almost entirely laid their foundations on the existence of government-backed fiat.
Since bitcoin’s price has been rather unpredictable for quite some time now, its use as a currency has significantly declined. In November 2017, Steam announced that it would no longer offer it as a payment method citing high transaction fees. With increased investor interest in cryptocurrencies of late, most popular digital currencies are now facing similar problems. Both Bitcoin and Ethereum, for example, have been experiencing transaction fees well in the double digits. The scalability debate in cryptocurrency often references Visa quite ironically, as the payment system regularly handles 4,000 transactions per second, a humongous amount when compared to the number most digital currencies can process.
Interestingly enough, even though Visa is refusing any association with digital currencies of any kind, it was quick to adopt the underlying technology that powers most cryptocurrencies, including bitcoin. The company’s B2B Connect platform relies heavily on blockchain architecture and there are hopes to use the technology to ease the process of cross-border transactions in the near future.