In my experience, it’s not unusual for CEOs to let loose a little (i.e. tell us how they really feel) when they’ve got one foot out the door, and that’s exactly what Visa’s outgoing CEO, Al Kelly did in a CNBC interview a few days before Thanksgiving, as he publicly passed the baton to current President, and incoming CEO, Ryan McInerney, on a live hit with Jim Cramer and David Faber. Though Kelly shared many opinions on the current state of affairs – of Visa, of the strength of the consumer, and worldwide payments activity and trends – he also addressed a timely question from Jim Cramer regarding his views on cryptocurrencies, and their role in payments within the context of Visa’s ecosystem. The question needed to be asked, as the interview was conducted amidst the continuing fallout from the FTX implosion. And, answer the question Kelly did. Not holding back. At all.
Before I get to Kelly’s response, a little background is in order to provide context around just how successful Al Kelly’s run at Visa has been, and how it’s contributed to his ascendancy to the pantheon of payments professionals in the S&P 100. Since his stewardship began in 2016, Visa has seen its revenue increase 90%, market capitalization increase 130%, and its employee headcount explode from 14,000 to roughly 26,000. He’s also seen Visa card usership grow to almost 4 billion issues – for population scientists out there, you know that translates into well over half the planet’s population owning some form of credentialed Visa card. Thus, when Al Kelly has a take on payments, including crypto’s role in the same, all of us in the fintech community ought to listen.
So, perhaps shockingly to some, here’s Kelly’s take on crypto’s future as a form of payment on his network.
Or, at least none for the cryptocurrencies most of us are familiar with.
Short of some new cryptographic technology coming to the fore – likely one that hasn’t been invented yet – the high profile, non-fiat pegged cryptocurrencies that run on decentralized blockchain protocols – what Al calls the “digital gold” asset class of crypto tokens – have no future as payments methods on Visa’s network, nor the tens of thousands of financial institutions that comprise it. The harsh reality is that Bitcoin, and its peers, cohorts, wannabees and emulators, are a futureless asset class in their collective use case as a store of value for payments in Visa’s ecosystem – this presumably goes for Mastercard as well.
So what is in play regarding cryptographic currencies running on the giant the card brands’
Fiat-pegged stablecoins and central bank digital currencies. These are the only “cryptos” that Visa envisions having a future as mainstream payments. And, these are the only cryptographic form factors that Visa has been contemplating as it continues to build out crypto-friendly infrastructure – Al Kelly’s “on ramps and off ramps” – that permits digital wallets to hold and send these digital currencies – almost exclusively by converting them to fiat first. For the record, Kelly does see a future where these same cryptographic currencies will be used to settle directly between consumers and businesses, thus obviating the fiat conversion. But, not yet.
If this comes as a shock to crypto bulls, especially those of the crypto investor class, it shouldn’t. There’s nothing new in what Kelly said if you’ve been paying attention to what Visa has been doing regarding crypto in the past few years. What is new, though, is that Kelly came right out and said it.
The future of crypto in global payments, especially commercial payments, is a future that ensures the continued intermediation of the card networks, and the financial institution members that serve as settlement vehicles and issuers. The currency will be “crypto” in name because of its tokenization – as in CBDCs – or blockchain provenance, but only in the case of stablecoins which will likely still need to be converted to fiat to run on Visa’s rails.