Visa is considering rolling out a Layer 2 payment channel being developed for CBDCs and stablecoins as the credit card company works on cross-chain interoperability for digital asset transfers as we read more about its latest electronics in Money News.
Catherine Gu, Visa’s Global CBDC Product Lead, wrote that the company’s product and research team is working on a new blockchain initiative called the Common Payments Channel. The cross-chain interoperability center will connect different DLT networks to facilitate the transfer of digital assets. Gu used the example of splitting bills between friends with a different currency like a central bank digital currency and a stablecoin like Tether. She describes it as a kind of universal adapter for money:
“Think of it as a ‘universal adapter’ between blockchains that enables central banks, corporations and consumers to seamlessly exchange values regardless of currency form.”
Visa is considering adopting a Layer 2 payment channel and believes that digital currencies will be part of everyday financial life in the near future.
The payments giant is confident that more CBDCs will be rolled out if the US gets ahead. Visa’s UPC aims to combine all of these newly issued CBDCs and stablecoins into one cross-chain platform to enable seamless transfers. The new hub will connect dedicated payment channels between blockchains such as CBDC networks for different countries or tested private stablecoin networks.
Gu pointed out that Visa may have certain advantages over the much slower existing public blockchains in terms of transaction speed, but did not name them. The new platform will act as Layer 2 and process transactions outside the main chain:
“UPC-specialized payment channels are set up outside the blockchain and use smart contracts to communicate with various blockchain networks, deliver high transaction throughput in a secure and reliable manner, and improve overall speed.”
There is no mention of the ability to transfer cryptocurrencies like Bitcoin or Ethereum, but the existing infrastructure will most likely allow it. Visa named BTC “digital gold” earlier this year and is keen to be part of that space. The digital fintech platform COTI has also announced new products that will offer VISA debit cards and bank accounts to users.
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