Visa Dips Its Toes in Blockchain-Powered International Payments
Blockchain has become popular for some startups selling low-friction cross-border transactions, and Visa is looking for banks to participate in a pilot program to assess potential opportunity in the technology.
The card network's innovation unit, Visa Europe Collab, will run the project along with BTL, a Vancouver-based blockchain company.
Visa will use BTL's interbank settlement platform to see how blockchain can reduce cost, settlement time and credit risk. It will also apply smart contracts to automate some compliance. The banks that participate in the test will use Visa Europe's network to execute transactions in different currencies.
Blockchain is a type of distributed ledger that's best known as the technology that powers bitcoin. Some startups are using blockchain to offer international payments such as remittances at lower costs and in less time. Ripple and Align are among the companies that are using blockchain to offer blockchain-driven international payments, with Ripple recently entering a collaboration with Santander.
But there are still disagreements in the payments and financial services industries on the risk, particularly regarding the security of blockchain. There are also disagreements over the smart contracts that drive some blockchain deployments.
Smart contracts automate the execution of some parts of broader contractual agreements. Some experts such as the Counterparty Foundation's Chris DeRose say smart contracts can boost blockchain's potential, while Software AG's Nigel Farmer says the automated provisions are hard to verify.