International payments giant Visa is working on a platform that will allow for interoperability between central bank digital currencies and stablecoins. Dubbed the Universal Payments Channel, the platform would enable CBDCs to be transferred from one blockchain to another and allow stablecoins to operate on different blockchains. This move has the potential to revolutionize how digital currencies are perceived.
The platform would have an important function at the interface of CBDCs and stablecoins.
In a whitepaper published by the payment company, Visa said the platform would have an important function at the interface of CBDCs and stablecoins. “With the innovation of distributed ledger technology (DLT), often known as blockchain technology, there has been significant growth of digital tokens in the form of cryptocurrencies, stablecoins, and central bank digital currencies. The likelihood that transacting parties is on the same network decreases as the number of DLT networks increases, each with varying design characteristics. Thus, it is crucial to facilitate payments that are universal across networks, scalable to massive loads, and highly available,” according to Visa.
Visa shares future directions of the UPC technology.
Visa aims to build a payment network on top of DLT networks without being subject to their limitations on interoperability, scalability, and availability faced by DLT payment solutions today. The company proposed a hub-and-spoke payment route, referred to here as Universal Payment Channels (UPC), that can be used to support digital token transfers of funds across different networks through payment channels. The system comes as a proposed solution from Visa to the issue of interoperability of central bank-backed digital currencies in a world where several major central banks are already exploring the development of their own CBDCs right this moment.