In November 2023, at the Cardano Summit, we announced Tangem Pay—a technological innovation built on a microchip with a Visa applet—offering a unique self-custody solution for everyone. Tangem Pay is a brand-new product that is separate from our existing wallet ecosystem—it doesn't impact the way you use your Tangem Wallet products. Today, we discuss Tangem Pay with Maike Hornung, Head of Crypto Europe at Visa, and Michael Batuev, VP of Global Products at Tangem.
What is Tangem Pay?
Tangem Pay is an upcoming self-custodial payment solution developed by Tangem that integrates directly with Visa's global payment network. It will allow users to make crypto payments at millions of Visa-supported terminals worldwide.
This innovative solution is part of Tangem's broader strategy to enable seamless crypto payments by bridging the gap between traditional banking and digital assets. Tangem Pay will initially support popular cryptocurrencies like Tether (USDT) on the Polygon network and is expected to be available for use with other self-custodial wallets.
The service is set to launch in 2024, expanding Tangem’s ecosystem by offering both individuals and businesses new tools for crypto payments, further driving mass adoption of digital currencies.
Watch this Tangem Pay AMA here
Introduction to guests
Anna (Moderator) Our esteemed guests today for this special AMA episode are Michaek Batuev from Tangem and Maike Hornung from VISA.
Michael Batuev from Tangem: Hi, everyone! Thanks for having me. I'm Michael Batuev, leading the payment division at Tangem, with a special focus on the product we're discussing today."
Maike Hornung from VISA: Hi Anna, hi Michael, and hello everyone. I'm Maike Hornung, VISA's Regional Crypto Lead for Europe. I'm responsible for operationalizing and delivering our crypto strategy in the region. Previously, I led VISA's commercialization strategy globally, and my background is in government relations."
Tangem Pay: story & idea
Michael, what's the story behind Tangem Pay, its core idea, and how it came to be?
Michael: Tangem's cold wallet gained popularity due to several factors. First, its convenient plastic card form factor makes it easy to carry and use. It uses a strong security mechanism to protect your private keys, generated and stored on a proven secure chip, which has been thoroughly tested and used worldwide.
The user experience is simple, from activation to transaction signing, using our mobile app and NFC technology to access the chip. We realized that combining two crucial aspects of payments—the wallet itself and the payment card—could be a brilliant idea. So, we integrated our best technology into one chip and the Visa applet. This allows payment terminals to use data from the Tangem Wallet for every user transaction.
This approach combines the security of a cold wallet with the convenience of a traditional payment card, potentially bridging the gap between cryptocurrency and everyday transactions. It's an exciting development that could make crypto more accessible and usable daily.
Tangem Pay is designed for everyone, not just existing Tangem users. Whether you're using a Ledger, Trezor, MetaMask, or any other crypto wallet, you can join the Tangem Pay ecosystem.
VISA's strategy with Web3 projects
Anna: Let's turn our attention to VISA's approach to the evolving world of Web3. Maike, could you outline VISA's strategy for engaging with Web3 projects?
Maike: At VISA, we try to add value to all forms of money movement, whether within the VISA network or beyond. We're committed to supporting various payment methods and studying new technologies like blockchain that may shape the future of payments.
Our strategy in the digital asset space is to serve as a trusted bridge, connecting platforms and new technologies in the crypto ecosystem with our global network. This network includes 130 million VISA-accepting merchant locations and 14,500 financial institutions worldwide.
We partner with diverse companies across the payment ecosystem, including those focused on crypto and digital assets. Tangem is an excellent example of a hardware wallet provider offering cards that allow users to spend from a balance of crypto assets or stablecoins, transacting in fiat at VISA-accepting merchant locations using a VISA credential."
This approach demonstrates VISA's commitment to innovation while leveraging its extensive global network. It's fascinating to see how traditional financial institutions adapt to and embrace new technologies.
Tangem Pay's features
Anna: What distinguishes it from other crypto payment solutions on the market today?
Michael: For end users, the key differentiator is that Tangem Pay offers a true self-custodial card. There's no need to hand over access to your crypto assets—you're the sole owner of your assets. This design meets the highest security requirements we set for ourselves.
With its embedded technology, the card is essentially like having a bank in your pocket. You can use it everywhere while relying on its security. This approach minimizes the risk of blocking or losing access to funds, which can sometimes happen with other systems. Users can access their money without depending on third parties.
At the same time, we've incorporated the widely-used EMV Core industry standard, allowing users to make payments wherever VISA cards are accepted."
I wanted to clarify an important point, so I asked, "Am I correct in understanding that this can be used by anybody in the industry, not just existing Tangem users?"
Michael confirmed, "Correct. The original idea is to give all people who store funds in the crypto world the ability to connect the card — which has a Tangem wallet inside along with the VISA app — and make their crypto available for payments worldwide."
This universal accessibility could be a game-changer, potentially bridging the gap between crypto holders and traditional payment systems.
VISA's criteria for collaboration with projects
Anna: How does VISA choose its partners in the web3 space, what is your criteria for selecting projects for collaboration?
Maike: It's important to mention that we don't pick winners and losers. Our job is to understand new technologies that impact our space and develop expertise to help our clients comprehend how consumers and businesses use new payment products.
We're exploring and supporting novel approaches, like Tangem's, where VISA credentials are used for new payment experiences or help consumers spend their digital currencies more easily. We see these new products as opportunities for growth and innovation.
However, our priority is and will always be maintaining the integrity of the VISA payment system and protecting the interests of our consumers, merchants, and clients. When partnering with Web3 projects, each must meet our criteria for secure and reliable payments. This includes having appropriate safeguards and standards in place.
This balanced approach shows how VISA is navigating the complex landscape of traditional finance and emerging technologies, prioritizing security and reliability while fostering innovation.
Tangem Pay user experience with transactions
Anna: Michael, explain the steps taken to ensure smooth user transactions.
Michael: We aim to replicate users' familiar experience of paying with regular cards. This means no waiting and no need to top up in advance. Tangem Pay enables real-time transactions, leveraging Polygon technologies to process payments instantly without sacrificing security or efficiency."
He highlighted three key factors:
- Multi-currency support: Tangem Pay is designed to handle various fiat currencies, stablecoins, and cryptocurrencies, facilitating smooth cross-currency transactions.
- Global acceptance: The card is accepted wherever VISA is accepted, which means over 200 countries and millions of stores worldwide.
- Proven track record: Tangem has issued more than 1.5 million wallet cards globally, demonstrating the technology's reliability and market acceptance.
How is a transaction confirmed quickly?
You're ready to go after activating the card and connecting your existing crypto wallet. Tapping your card at a coffee shop, for example, interacts with the terminal. In milliseconds, data needed to sign the blockchain transaction is added directly to the point-of-sale terminal. This data is used to validate your transaction.
Within a second, the issuer responds based on the data received from the terminal and the card, confirming you have enough funds in your crypto account and that the correct card with the correct key is being used. If everything checks out, your transaction is approved, and you get your coffee within seconds, just like with regular cards.
The magic lies in the ability to sign the blockchain transaction during the authorization process, something unique to Tangem Pay due to its cold wallet solution.
VISA's vision of the future of finance
Anna: What is VISA's perspective on how finance might evolve by introducing self-custody solutions in payment systems?
Maike: The advances in crypto wallet tech in the past year has been remarkable. They've transitioned from basic storage utilities to advanced platforms generating crucial information for using crypto.
There's a growing interest in self-custody solutions among consumers. These solutions position the consumer at the center of all economic activity, empowering them with greater control over their funds. This aligns well with the foundational principles of blockchain technologies.
While crypto-native users were familiar with these solutions, we're now seeing more mainstream users entering the space. They'll need a more seamless integration of self-custody solutions into everyday transactions to drive wider adoption.
We expect to see more integration of the self-custody element with traditional payments, leveraging new technologies to merge the benefits of blockchain with the convenience and security of existing payment solutions.
Tangem Pay Regulation
Anna: Regulatory compliance is crucial in the rapidly evolving crypto industry. What measures are in place to ensure Tangem Pay complies with regulatory requirements?
Michael: We believe this product should be compliant across different markets. Given that the crypto industry is relatively new to the financial sector, we must comply with existing laws and standards used by payment systems and merchants.
Here's our approach:
- At every stage—from card production to activation and usage—they're guided by industry and security standards.
- Before starting production, Tangem Pay successfully passed the VISA payment system certification, completing all required tests.
- For regulatory compliance, we use a platform connected to service providers who are leaders in monitoring and data management systems.
The Tangem Pay platform combines best practices from centralized solutions while adding the benefits of distributed solutions, particularly from a risk control and security perspective.
VISA's link to self-custody solutions
Anna: Are self-custodial wallets important to VISA's overall strategy?
Maike: We don't exactly favor self-custody over custodial models. Each solution can work well for different consumers and needs. However, there's currently a high degree of complexity in user experience and interoperability in the crypto space.
For the most part, you need to be crypto-native to use these tools effectively. To bring crypto to the mainstream and attract new consumers, technologies must be outlined for ease of use. It must be simple, convenient, and easy for consumers to use these new products and solutions.
It's logical for Visa to explore how self-custody and custodial solutions can be linked with or leverage VISA credentials to improve the payment experience for crypto users. Non-custodial solutions, as they've emerged over time, are just the next step in combining that technology with the VISA network and technologies.
The future of finance in three words
Anna: If you had to describe the future of finance in three words or concepts, what would they be?
Michael: Decentralization. The future of finance should be decentralized. Customers of financial services will enjoy an experience of freedom and true ownership of their assets. In the crypto world, 'your money, your control' is the top priority, so it's growing so fast.
The second is Smart Finance. Transferring value between people will be as efficient as possible in terms of transaction costs. Whether buying a coffee or transferring a million dollars to a charity, the transaction cost should be as low as possible.
Security. We'll see significant growth in security. Safer and improved security practices will eliminate human errors or dishonesty. For example, ATMs now count cash without mistakes, and we rely on this technology without checking the amount each time. The transition from centralized to decentralized finance models is just one example of improved security and flexibility in the system.
Maike: Digital. The future of money is digital. Whether it's stablecoins, tokenized deposits, or central bank digital currencies, the digital form of money can extend the value of payments to more people and places worldwide.
Open. At VISA, we believe the future of payments is open. Open networks that are clear and transparent and that everyone can participate in enable greater consumer choice and competition. Blockchain networks are inherently open, and we believe open networks are beneficial.
Interoperable. As we see more private and public blockchain networks emerging alongside existing traditional infrastructures, it will be important that these different parties can connect through a network, speak to each other, and facilitate payment transactions across these different networks.
Final Words: Tangem x VISA
As we concluded our AMA, our guests were invited to share some final thoughts.
Michael: We're doing something special for finance. I don't recall an example where we could find a product combining two things: a very secure mechanism for storing your assets in your pocket, and the opportunity to use these assets everywhere. It's something very special and new that we're going to launch. I'm very excited to explain how it works and see how this technology will grow shortly.
Maike: It's been a pleasure to share some insights on VISA's crypto strategy and to talk about the VISA/Tangem Pay card. The conversation doesn't have to end here, so feel free to reach out and keep the dialogue going. I'm very excited to try out and test the card once it's launched.
It's an exciting step towards bridging the gap between our worlds. The prospect of having a self-custody solution in your back pocket, ready to pay for coffee at any moment, is now closer than ever.
Thank you to all who joined us for this insightful AMA. We look forward to the launch of Tangem Pay and its impact on the wider crypto adoption in everyday transactions.
Until next time, keep an eye on this space—the future of finance is unfolding before us.