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Payments Companies Are Playing Hide-the-Crypto

The Wall Street Journal

Bitcoin and other digital currencies’ best bet to become major actors in the world of payments might be to stay behind the scenes.

To the extent there is demand to use cryptocurrency holdings to make everyday payments, so far only a niche of merchants are willing to directly take crypto as a payment option. Accepting bitcoin or other tokens could introduce a level of risk and complexity that all but a handful of dedicated retailers might consider a big headache.

But now the payments industry is showing a path forward. Visa and PayPal Holdings this week made moves that can subtly make blockchain and crypto a part of what otherwise seem to be everyday transactions—without putting any onus on merchants to have to think about accepting newfangled moneys.

PayPal said Tuesday it would begin allowing its users who have bought cryptocurrency to use it whenever they pay with their PayPal wallets. In the same way users can select their PayPal balances or credit or debit cards to fund a payment, they will also be able to choose crypto. Crucially, the merchant receives the same payment in regular, fiat currency regardless of which funding method the payer chooses.

Similarly, Visa on Monday said it has started piloting settlement of transactions on its own network with digital currency. Already some digital-wallet providers, such as, offer debit cards linked to users’ crypto holdings such as bitcoin. Again, the merchant receives fiat currency and doesn’t know that the debit card swiped is funded by crypto. This previously meant that the wallet provider has to swap cryptocurrency for fiat to settle up with the card network. Now, Visa will let settle its Visa debit-card obligations through the ethereum blockchain with U.S.-dollar-denominated stablecoin.