Payment processor Visa is working on developing a “Universal Payment Channel” (UPC) that will provide cross-blockchain interoperability where different tech stacks, blockchain networks and protocols will talk to each other to process payments in different digital currencies, including Central Bank Digital Currencies (CBDCs), Stablecoins and cryptocurrencies.
Research and product teams from the Visa Economic Empowerment Institute are working on something like a cross-chain interoperability hub or universal blockchain adapter for interconnecting multiple blockchain networks and allowing for secure transfer of digital currencies. This will allow central banks, businesses, and consumers to seamlessly exchange value, no matter the form factor of the currency.
Over the past two years, central banks around the world have shown an increasing interest in exploring CBDC, a new, digital form of central bank money that can be used directly by consumers, merchants, and financial institutions.
Many central banks will likely implement some form of a digital ledger by selecting the tech stacks and design protocols that make the most sense for their constituents, taking factors like governance, market requirements, technology providers, compliance standards, and nation-specific priorities into consideration.
Though digital currencies may not currently be a part of the daily financial life, it is most likely that they will play an important role in the future. The likelihood that consumers, businesses, and merchants are transacting on the same network and utilizing the same type of money is near to impossible.
As the number of digital currency networks increase, each with unique design characteristics, it is important to have something like a universal hub that will provide seamless interconnectivity. This will mean the ability to make and receive payments, regardless of currency, channel, or form factor and that is where Visa’s UPC concept comes in.
The Visa Research team began developing the framework for interoperability as early as 2018 that is expected to work across different blockchain networks and be independent of the underlying blockchain mechanisms.
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.
While UPC would exist in the background for most users, it would deliver the kind of cross-chain interoperability that makes CBDC useful and attractive for consumers and businesses globally.
The UPC hub concept that emerged would connect different blockchain networks by establishing dedicated payment channels between them, whether that means connecting CBDC networks between countries or connecting CBDC networks with vetted private stablecoin networks.
Visa said it is excited to share this concept with the global community of researchers, builders and policy makers exploring new frontiers in money movement. It is now working to translate its ideas into actual lines of code and check out a sample of its basic smart contract for UPC.
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