Visa Taps Onchain Lending to Finance Stablecoin Card Programs
Global payment processing giant Visa has announced a significant development in its efforts to integrate blockchain technology into its operations. The company is combining payment network data with blockchain lending tools to help stablecoin-linked card programs and fintechs borrow working capital. This move is aimed at unlocking new forms of liquidity and providing businesses with access to capital in a more transparent, programmable, and efficient manner.
Unlocking New Forms of Liquidity
According to Rubail Birwadker, Visa's global head of growth products and partnerships, stablecoins are changing the way money moves and creating opportunities to redesign the infrastructure behind payments. The company believes that onchain lending protocols have the potential to bring portions of the $40 trillion global credit market onto blockchains. To support this vision, Visa has been working with onchain lending protocols, which have processed more than $694 billion in stablecoin loans since 2020, as per its analytics dashboard.
Stablecoin-Linked Card Programs See Significant Growth
Visa's announcement comes on the heels of significant growth in its stablecoin-linked card programs. Payment volume across more than 160 stablecoin-linked card programs grew nearly 200% year over year, while stablecoin settlement volume rose more than 15-fold to an annualized rate above $20 billion. This growth is a testament to the increasing adoption of stablecoins and the potential for blockchain-based lending infrastructure to address the challenges faced by traditional financing structures.
Visa's Blockchain-Based Lending Infrastructure
Visa's blockchain-based lending infrastructure is designed to address the challenges faced by traditional financing structures. These challenges include the requirement for significant scale, operating history, or manual underwriting processes before credit becomes available. Visa believes that its blockchain-based lending infrastructure, supported by trusted payment data, can help address these challenges while introducing greater transparency and efficiency.
Early Success with Credit Coop
Visa has cited its work with Credit Coop as an early example of the financing model. Credit Coop provides working capital and settlement financing, using smart contracts to automate funding, collateral management, and repayment. With customer authorization, it combines Visa settlement data with blockchain records to assess credit performance. The loans draw on settlement receivables—the money a payment business is due to receive—with repayments collected from those incoming funds. Visa said the model has financed more than $2.5 billion in cumulative settlement volume since 2023, with zero defaults across participating facilities.
What's Next for Visa and Stablecoin-Based Lending?
Visa's announcement is a significant development in the world of stablecoin-based lending. As the company continues to expand its stablecoin payment services, it will be interesting to see how this new financing model is adopted by other businesses and lenders. With the potential to bring portions of the $40 trillion global credit market onto blockchains, the implications of this development are significant. As the market continues to evolve, it will be essential to monitor Visa's progress and the impact of its blockchain-based lending infrastructure on the traditional financing landscape.
Visa's expansion of its stablecoin payment services is also worth noting. In April, it added five blockchains – Arc, Base, Canton, Polygon, and Tempo – to its settlement program, bringing the total to nine and disclosing a $7 billion annualized settlement rate at the time. This expansion demonstrates Visa's commitment to the growth and development of the stablecoin market and its potential to unlock new forms of liquidity for businesses.
As the world of stablecoin-based lending continues to evolve, it will be essential to monitor Visa's progress and the impact of its blockchain-based lending infrastructure on the traditional financing landscape. With the potential to bring portions of the $40 trillion global credit market onto blockchains, the implications of this development are significant and warrant close attention.