Digital Transactions Authoritative, insightful and timely information for payments professionals
Visa Inc. announced early Tuesday it will launch a cross-border payments service that will rely on stablecoins to fund transfers. The service, meant ultimately as an improvement on existing transfers that require users to commit capital in advance, will run on the payments company’s Visa Direct real-time payments rails. It is expected to transition to “limited availability” by April, Visa says, though timing for the pilot itself was not announced.
The initiative represents the first time Visa has ventured into stablecoins for cross-border transactions, the company says. With the new service, “businesses can now prefund Visa Direct with stablecoins,” Visa says, though recipients can elect to receive funds in their local currency.
The service, Visa says, is expected to improve on existing cross-border technology while taking advantage of the immediacy of blockchain technology, which allows for programmability, or the setting of parameters for who can receive payments and in what amounts. “Cross-border rails were built decades ago and stablecoins can provide the necessary upgrade to make payments faster, cheaper, and programmable,” the network says in a release regarding the development. A spokesperson did not immediately respond to queries from Digital Transactions News.
The market potential could be substantial for the new service. Cross-border payments amounted to $190 trillion in 2023, the most recent year for which figures are available, with business-to-business flows accounting for the bulk of the volume. That potential has begun to attract payments players. MoneyGram International Inc. this month unveiled a mobile app featuring a U.S. dollar-backed stored-value account that will work with stablecoins as well as fiat currencies for cross-border transactions.
The target market for the new Visa service embraces banks, remitters, and businesses, according to Visa. These parties are seeking the “faster, more efficient liquidity management” offered by stablecoins, along with instant-transfer capability, Visa says. Stablecoins are blockchain-generated digital tokens whose value corresponds to the value of a fiat currency, such as the U.S. dollar. In this way, stablecoins avoid the significant swings in value seen with other digital currencies.
Stablecoins gained a much higher profile among U.S. payments companies and banks this summer with the passage by Congress of the GENIUS Act, legislation whose rules and clarifications are expected to remove doubt or uncertainty among players looking to exploit stablecoins for various business purposes.
