Visa Considers Launching Layer 2 Payments Channel For CBDCs

Visa considers launching layer 2 payments channel that will be designed for CBDCs and stabelcoins as the credit card company is delving into the cross-chain interoperability for the digital asset transfers as we are reading more in our latest cryptocurrency news.

Visa’s Global CBDC Product Lead, Catherine Gu wrote that the company’s research and product teams are working on the new blockchain initiative called Universal Payment Channel. The cross-chain interoperability hub will connect the different DLT networks to facilitate the transfers of the digital assets. Gu used the example of splitting the bill between friends using a different type of money like the central bank digital currency and the stablecoin like Tether. She described it as a kind of the universal adaptor for money:

“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 considers launching Layer 2 payments channel and is confident that digital currencies will be a part of daily financial life in the near future. The payments giant is confident that there will be even more CBDCs launched if the US is still going ahead. Visa’s UPC aims to connect all of these newly released CBDCs and the stablecoins in one cross-chain platform to enable seamless transfers. The new hub will connect dedicated payment channels between blockchains like CBDC networks for the different countries or the vetted private stablecoin networks.

Gu pointed out that there were certain transaction speed advantages that Visa can offer over existing public blockchains which are much slower but she didn’t name names. The new platform will act as layer 2 and will process transactions off the main chains:

“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.”

There were no mentions of the ability to transfer cryptos like Bitcoin or Ethereum but the infrastructure laid of that would most likely permit it. Visa referred to BTC as digital gold earlier this year and it is eager to be a part of the space. The digital fintech platform COTI Also announced new products that will provide VISA debit cards and bank accounts to users.