The project, a collaboration between the Visa research and product teams, has been in development since 2018, when the underlying concept first came about
Visa announced on Thursday that it had developed a conceptual protocol for the interoperability of digital assets. The latest advances confirm that the company is charting a path towards creating an interoperable network of blockchain transactions. The Visa research team that studied blockchain interoperability comprised engineers and scientists fixated on emerging tech and has been in the works since 2018.
"Imagine splitting the check with your friends, when everyone at the table is using a different type of money […] How about sending $500 in USDC to a friend in London, and having those funds automatically converted to digital British pounds before they arrive in her CBDC wallet," Visa said, describing the interoperability that users will see in the new setup, dubbed Universal Payment Channels (UPC).
Visa explained via a blog post the necessity of interoperability, given that most users are currently using conventional payment methods. The global payments giant noted that digital currencies would take much more vital financial role in the near future. Specifically, on CBDCs, Visa was of the opinion that many central banks are likely to establish some kind of digital ledger as part of digital currency integration.
The payments giant was also keen to point out that for CBDCs to work, they must offer an excellent experience to customers, and there has to be wide-scale merchant uptake. In the published white paper, Visa explained that the UPC would securely interconnect various blockchain networks to allow real-time transactions across different digital wallets. The functionality would be such that dedicated payment channels would be established between multiple blockchain networks.
Further, Visa revealed it had also deployed its first smart contract on Ethereum's Ropsten testnet during the development of the UPC, with the channel accepting ETH and the USDC stablecoin. As such, on the route towards achieving interoperability, Visa sees that transactions would have improved speeds with the specialised payment channels.
"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."
Visa continues to grow in the blockchain and cryptocurrency spaces following its July disclosure that it had partnered with more than 50 crypto platforms and exchanges in implementing crypto-linked cards for customers. Earlier in the year, the payments company collaborated with Circle to develop a corporate card that businesses could use to send and receive payments in USDC.