Payment giant Visa has unveiled plans to build a network that facilitates interoperability between several digital currencies including Central Bank Digital Currencies (CBDCs) and Stablecoins, according to an announcement made on Thursday.
As part of the plan, which is dubbed as ‘Universal Payment Channels’, Visa has deployed smart contracts on the Ethereum test net ‘Ropsten’ that will be compatible with both, CBDCs and stablecoins.
Visa has been strengthening its game in the cryptocurrency sector, including announcing its policy to start accepting USDC payments in March this year. This month, the company’s vice president of new business, Eduardo Abreu, reportedly mentioned plans to integrate cryptocurrencies such as Bitcoin with the traditional banking platforms in Brazil.
Explaining the role of UPC, Visa explained:
“…it acts like a hub, interconnecting multiple blockchain networks and allowing for secure transfer of digital currencies. Think of it as a “universal adapter” among blockchains, allowing central banks, businesses, and consumers to seamlessly exchange value, no matter the form factor of the currency.”
Visa has also been strengthening its expertise and skills, learned about Ethereum’s programming language ‘Solidity’, and writing smart contract code on Ethereum. In the future, it will explore the possibility of utilizing other blockchains as well.
“Where today’s modern payment networks can handle tens of thousands of transactions per second, some of the largest existing blockchain networks can currently handle only a fraction of those volumes.
UPC’s specialized payment channels would be established off the blockchain and leverage smart contracts to communicate back with the various blockchain networks, delivering high transaction throughput securely and reliably and improving speeds overall.”
Currently, the white paper by Visa has cited the use of UPC mainly for CBDCs and stablecoins, but the company indicated in the blog post that it will allow for a “secure transfer of digital currencies”.
At the heart of it, Visa is planning to build a network that allows payments in “real-time, across multiple networks, and compatible with multiple digital wallets”.