Visa unveils solution for CBDC interoperability in the payments system

Visa has developed a concept for a solution that enables interaction between central bank digital currencies issued on different blockchains and stablecoins in payments.

According to a post in the blog, the Universal Payments Channel (UPS, universal payments channels) platform acts as a hub, uniting several networks and ensuring secure transfer of digital currencies.

“Think of this as a ‘universal adapter’ for blockchains that enables central banks, businesses and consumers to exchange value seamlessly, regardless of the currency’s form factor,” said Catherine Gu, head of Visa’s global CBDC product division.

Researchers at the company say that in the coming years many central banks will issue digital currencies. Because of their unique structural features, it is unlikely that these assets can be operated seamlessly within a single network.

“For CBDCs to be successful, they must have two key ingredients: strong user adoption and broad merchant acceptance. This means the ability to make and receive payments regardless of currency, channel or form factor,” added Gu.

The UPS hub will connect different blockchains—whether cross-border CBDC networks or private stablecoin protocols.

Visa experts noted that UPS also addresses throughput challenges, as most DLT-networks significantly lag behind traditional solutions in this regard. To ensure speed, UPS’s dedicated payment channels will operate off-chain and use smart contracts to interface with the blockchain.

Researchers have already deployed the base contract in the Ethereum Ropsten testnet.

They have been working on UPS since 2018.

Earlier, in Visa proposed an offline payments method in CBDC.

Representatives of the company joined the expert group, which will help UK authorities study the central bank’s digital currency.

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