Visa Launches Onchain Lending Model with Credit Coop, Achieves $2.5 Billion in Settlements

Visa has introduced an innovative onchain lending model in collaboration with Credit Coop, successfully facilitating over $2.5 billion in cumulative settlement volume since its inception in 2023. This model has processed more than 3,000 borrowing events and 9,000 repayment events, achieving an impressive record of zero defaults throughout its operation.

The lending model utilizes blockchain smart contracts to automate stablecoin-denominated lending for fintech card programs. By integrating VisaNet’s settlement data with these smart contracts, the system creates revolving credit facilities that streamline funding for fintech card issuers. Credit Coop’s 'Spigot' smart contract plays a crucial role by automatically managing repayments and securing collateral directly from settlement receivables, eliminating the need for human intervention in the process.

The implementation of this model has resulted in faster settlement cycles and a significant reduction in borrowing costs, with some programs experiencing decreases of up to 30%. This efficiency is attributed to increased lender participation driven by the transparency of onchain data and the removal of intermediaries from the lending process. Rain, a Visa Principal Member, has emerged as the largest user of this facility, accounting for approximately $2 billion of the total volume.

Visa's expansion into stablecoin-linked card programs is notable, with over 160 programs currently operating on its network globally. The annualized settlement volumes for stablecoins on Visa's network have surged to $20 billion, marking a more than 15-fold increase compared to the previous year. This growth reflects a nearly 200% year-over-year rise in payment volumes across these programs, underscoring Visa's commitment to advancing its stablecoin infrastructure.

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Source: KLEA News