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FollowingVisa launches a new on-chain credit model to help stableco-linked card projects and financial technology companies obtain working capital.
Visa recently announced a new on-chain credit method, aiming to help stableco-linked bank card projects and financial technology companies use on-chain lending infrastructure and Visa data to obtain working capital. This move bridges the gap between traditional payment infrastructure and decentralized finance, which few traditional networks have attempted on such a scale before.
Analysis of operating models
Visa combines VisaNet's settlement data with on-chain lending infrastructure to help stablecoin-linked card projects and financial technology companies obtain working capital support. The system allows authorized settlement data and blockchain data to be used for credit evaluations and automating the financing process, addressing obstacles emerging payment companies face when facing traditional lenders.
With the rapid expansion of stablecin card projects, some card issuers are facing working capital challenges. Generally, even if customer payments may arrive later, card providers still need to ensure that they have available capital to meet daily settlement payment needs. Visa points out that this timing mismatch is particularly difficult for young projects that require frequent access to relatively small amounts of financing.
One of the early examples of this model was the collaboration between Visa and Credit Coop. Credit Coop uses smart contracts to provide working capital and settlement financing for stableco-linked card projects, automating capital, collateral management and repayment. Since 2023, the model has supported more than US$2.5 billion in cumulative financing settlements, zero default in participating facilities, and programmed more than 3,000 borrowing events and 9,000 repayment events on the chain.
Chris Walker, founder and CEO of Credit Coop, said: "Payment companies have always had high-quality mortgage assets-that is, they settle accounts receivable, but lack a way to show the performance of these assets to lenders in real time. By combining Visa settlement data with on-chain infrastructure, we can assess real-time performance, enforce repayments from the settlement flow, and expand on-chain capital from participating lenders as the project evolves."
The fast-growing stablecoin network
The company said that there are currently more than 160 stablecoin-related card projects operating on its network, and the transaction volume of these projects has increased by nearly 200% year-on-year. Visa's annualized operating rate of stablecoin settlement volume has exceeded US$20 billion, a year-on-year increase of more than 15 times.
The launch of this lending program follows the launch of the "Visa stablecoin Platform" in July. The platform, currently in a testing phase for selected customers, provides financial institutions, fintech companies and cryptocurrency companies with a single management environment for minting, redemption, holding and transferring stablecoins.
On-chain lending has become one of the fastest growing areas of digital finance. According to data from Visa's on-chain analytics dashboard, since 2020, the total amount of stableco-denominated loans issued through on-chain lending agreements has exceeded US$694 billion, forming a global credit market that operates around the clock.
