Visa and USDC: Reinventing Payments That Already Work

When I read the news that Visa is offering banks the ability to settle payments in USDC, a simple question comes to mind: do banks actually have that much USDC?

Payment volumes flowing through Visa are enormous. If interbank settlements were really to be carried out in USDC, banks would need to hold a substantial amount of these tokens on their balance sheets. And which banks actually have them? My guess is: almost no one.

Which suggests that the scheme will probably look something like this:

• Alice pays Bob with a Visa card.
• Alice's bank uses her money to buy USDC somewhere. It is unlikely this will happen on the secondary market. More likely, the bank sends Alice's money directly to Circle, and Circle mints fresh, clean USDC in return.
• Alice's bank then transfers these tokens to Bob's bank.
• But since Bob does not need stablecoins and wants regular money accepted in any store, Bob's bank sells the stablecoins - or, more likely, redeems them - and credits Bob with dollars.

This setup looks perfectly viable. But it raises another question: do we really need Visa in this process? And do we need banks at all?

Alice can buy stablecoins herself and send them directly to Bob. Visa makes payments convenient, but blockchains already offer a very similar level of convenience. You can copy Bob's address and paste it into your wallet, or simply scan a QR code. On rabbit.io, users do this all the time when sending us assets for swaps - and it really is simple and convenient.

It feels like Visa is trying to carve out a role for itself in a place where it may not actually be needed. It will be interesting to see how this plays out.