Visa has been exploring the potential of blockchain for almost 18 months. The credit card company underlined the importance of innovative technology in its last year’s summary “Why 2015 was the year for payments”. According to the report, 2015 was a year of fintech sector. UK cardholders have spent £929 million in transactions, up 213.1% on the previous year, with the value of the average transaction at £7.72
Visa separately mentioned the blockchain and its increasing role in the fintech. This year has turned blockchain into the most promising technology of 2015. The development way is not easy but the progress is evident.
This time, Visa has teamed up with BTL Group, a digital payments start-up, to adapt blockchain for processing interbank payments. The move shows how the distrust in bitcoin has got replaced by the strong belief in the power of the cryptocurrency’s underlying technology.
Hendrik Kleinsmiede, co-founder of Visa Europe Collab — the company’s innovation hub — reveals that Visa’s latest project is intended to “reduce the friction of domestic and cross-border transfers between banks”.
“We’re now inviting a small number of European banks to participate in the project alongside us and BTL,” he says. “Participating banks will be able to connect to the network and send funds to other banks in the network across multiple currencies.”
Visa and BTL Group have developed the project to reduce costs, speed up settlement time and minimize credit risk in the market for moving money between banks both domestically and across borders.
“The project will use BTL’s cross-border settlement platform Interbit to explore the ways in which blockchain-based settlements can reduce the friction of domestic and cross border transfers between banks – reducing cost, settlement time, credit risk, and by leveraging smart contracts to automate many of the regulation and compliance requirements of domestic and international transfers”, says Mr Kleinsmiede.
Visa is planning to complete the “proof of concept” within 100 days, by which time he expects to see that banks use blockchain technology to send money between each other.
“Through the use of smart contracts and blockchains I believe we can create a fast, compliant and low-cost interbank payment and settlement service, with embedded regional compliance,” he said.
BTL Group was founded last year by the brothers Guy and Hugh Halford-Thomson. Before they started the blockchain solutions provider, the brothers had run a bitcoin brokerage and operated the UK’s first bitcoin ATM. The main focus of BTL is blockchain that is intended to disrupt and transform existing industries. BTL’s first technology platform is a remittance business that employs blockchain technology to create rapid and cost effective “cash-in cash-out” settlement solutions from Canada and the U.K. to target countries.