Visa Europe Collab is partnering with Blockchain Tech LTD. They are working on a Proof of Concept program enabling Cross-Border Settlement between banks using blockchain technologies. Blockchain Tech LTD is better known as the BTL Group.
Both VISA and BTL Group are looking for banking partners for the program. It will enable banks to “connect to the network and send funds to other banks in the network across multiple currencies” said Hendrik Kleinsmiede the co-founder and Innovation Partner at Visa Europe Collab.
The program will use BTL’s Interbit technology. It utilizes its own proprietary software, Ethereum and smart contracts. Its focus is to enable Cross-Border Settlements. Individual banks act similar to nodes in the system. Regulators and operators have read-only access to track fraud, according to BTL’s website.
While Interbit’s most obvious use is as remittance that is not its only focus. It also enables banks to work together without counterparty risk. Interbank settlement and interbank forex settlement also look to play a large role, along with data storage and auditing applications.
But the VISA Europe Collab seems focused on the interbank settlement aspects of Interbit, if the press release is anything to go by.
“For me the opportunity is a fascinating and potentially very beneficial one. 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.” Said Kleinsmiede.
In its own press release BTL explained where they see the focus of the experiment.
“The project will use BTL’s cross-border settlement platform Interbit to explore the ways in which a 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. A small number of European banks have been invited to participate in the project.”
BTL completed Interbit in January. At the time, BTL CEO Guy Halford-Thompson indicated that the system could cut remittance costs by 80%. A month after Interbit’s launch, BTL purchased XapCash. At the time, XapCash was pegged to be the front end of an international remittance platform. While Interbit would act as the backbone technology.
In a talk with CoinJournal, Halford-Thompson indicated that XapCash is not a part of the VISA Collab program. He also feels it is too early to speculate on possible uses, but sees “many”.
What Do They Mean by ‘Cross-Border Settlement’?
“Cross-Border Settlement” could mean a lot of things. If implemented on a large scale, it will undoubtedly encroach on some of the ground currently held by SWIFT. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. Its network was built in 1973 and currently enables payments between most banks in the world. SWIFT has been dealing with malware enabled thefts all year. Unsurprisingly, both China and Russia have announced or openly discussed using SWIFT alternatives recently. Banks may find a system based on a cryptocurrency to be more secure and less expensive.
The VISA Europe Collab has worked with on few different blockchain projects in the past. According to CoinDesk, they previously worked on Proof-of-Concepts dealing with microtransactions and remittance. The project will last 100 days, according to multiple reports.
We will monitor developments as they happen.