With a new cooperation focusing on central bank digital currencies, payments giant Visa has expanded its presence in the digital currency industry (CBDC). The company has collaborated with blockchain technology pioneer Consensys to provide bridge solutions for traditional financial institutions.
Customers will eventually be able to use their CBDC-linked Visa card or digital wallet anyplace Visa is accepted.
The ‘CBDC Sandbox’
As an on-ramp for CBDCs to current payment networks, the payment provider created the Visa CBDC Payment Module. According to Catherine Gu, Visa’s head of CBDC, in a blog post, banks and issuers would be able to plug into the module and integrate it with their existing infrastructure. She continued,
“If CBDC is successful, it has the potential to increase access to financial services while also making government payments more efficient, targeted, and secure — an appealing prospect for policymakers.”
In the spring, a “CBDC Sandbox” will be published, allowing central banks to experiment on pilot and prototype cases.
According to the post, the cooperation will use a “two-tier” distribution structure. Banks would be needed to first create and mint their currencies using Consensys’ Quorum protocol, and then use Visa’s infrastructure to distribute the currency through financial intermediaries such as commercial banks.
Visa is taking cryptocurrency seriously.
Visa recently created a global crypto advising service for banks and financial institutions to assist them in expanding into the cryptocurrency market. While this CBDC business could be viewed as Visa’s newest attempt to integrate into the rapidly developing digital currency market, Mastercard was the first to think of it.
In September 2020, the other payment giant introduced its own platform for central banks and financial institutions to test their CBDCs. Last year, Mastercard collaborated with Consensys to develop “Consensys Rollups,” which offer scalability for both Ethereum and private blockchains.
Consensys entered the CBDC market considerably earlier and is also assisting Australia, France, Hong Kong, and Thailand in the development of their digital currencies.