Visa's involvement with cryptocurrency questioned; Polygon executive, Bjelic, shares his views
In the ever-evolving world of cryptocurrency, Visa has made significant strides, recently collaborating with Tangem on a hardware wallet and credit card integration. However, this move has sparked debate about the company's merchant fees and its impact on the crypto sector.
Critics argue that Visa's merchant fees in the crypto sector are high and less competitive compared to alternatives like stablecoins, which offer much lower fees and enhanced efficiency. Traditional credit card fees charged by Visa, between 2-3%, have long been criticized as a duopoly with Mastercard, imposing high costs on merchants and consumers alike.
In contrast, stablecoins—digital assets pegged to fiat currencies—can enable payments with significantly lower fees, potentially disrupting Visa's dominance and prompting lower swipe fees if widely adopted. Visa is adapting to this shift by enabling stablecoin-linked cards and investing in stablecoin payment infrastructure to capture new opportunities while maintaining its fee-generating ecosystem.
However, the existing Visa merchant fee structure in the broader payment system remains relatively oppressive for merchants, especially compared to emerging crypto payment methods designed to reduce costs and improve transaction speed. Stablecoin payments are cheaper in theory but still require value-added services like fraud prevention and compliance, which factor into their costs.
Vitalik Buterin of Ethereum has highlighted Visa's practice in the financial space, pointing out that Visa extracts multiple percentage points from point-of-sale transactions through merchant fees. Mihailo Bjelic, co-founder of Polygon, has expressed confusion over the labeling of Visa as oppressive in its business approach. Bjelic maintains that it would be unethical to expect Visa or any crypto wallet to support payments for games that promote rape and incest.
Bjelic argues that Visa's practice only suggests it is leveraging its competitive market power, and it might be inaccurate to consider the practice as oppressive or bad for the crypto sector. Two gaming platforms decided to remove adult games from their offerings as a "self-censoring move" to reduce business risk, according to Bjelic.
The collaboration between Visa and Tangem aims to blur the line between crypto and fiat payments, making transactions a seamless experience. Bjelic views such developments as lawful compliance or brand protection. Some might consider Visa's moves as attempts to control the crypto space due to its thriving decentralization.
The debate over Visa's practices in the crypto sector might have been triggered by concerns about centralization. Bjelic maintains that it could be seen as extractive, but it is a normal business move. As Visa continues to navigate the crypto landscape, it will be interesting to see how the company adapts to the competitive, lower-cost alternatives and the ongoing centralization concerns.
- The integration of Visa with Tangem's hardware wallet could potentially disrupt the cryptocurrency sector, as critics argue that Visa's merchant fees are high and less competitive compared to stablecoins, which offer lower fees and enhanced efficiency.
- Vitalik Buterin of Ethereum has pointed out that Visa extracts multiple percentage points from point-of-sale transactions through merchant fees, a practice that some critics label as oppressive in the crypto sector.
- Mihailo Bjelic, co-founder of Polygon, has challenged this view, arguing that Visa is merely leveraging its competitive market power and that it would be unethical to expect Visa or any crypto wallet to support payments for games that promote rape and incest.
- As Visa continues to navigate the crypto landscape, it will be intriguing to observe how the company adapts to competitive, lower-cost alternatives and the ongoing centralization concerns, which some believe are key challenges in the decentralized crypto space.
