The internationsl provider of financial services – Visa – is inviting lenders for testing the interbank transfer system, sending money over a blockchain as well.
According to the statement of Hendrik Kleinsmiede, co-founder of Visa’s innovation hub, Visa Europe Collab, this project is designed to “reduce the friction of domestic and cross-border transfers between banks.” With its objective to provide security realted to credit risk, while reducing the costs, accelerate settlement times and even more, Visa’s blockchain program is being created to send money between banks, both domestically and internationally.
He also added that the goal for Visa’s “proof of concept” is to be finished within 100 days, as Financial Times reported. By that time, Visa will be active in communicating with banks for the purpose of finding some willing to send money between each other using the blockchain technology.
For this purpose, Visa has started to work with digital payments startup BTL Group. The partnership already started 18 months ago to adapt blockchain technology for Visa’s interbank payments.
Kleinsmiede added:
“We’re now inviting a small number of European banks to participate in the project alongside us and BTL. Participating banks will be able to connect to the network and send funds to other banks in the network across multiple currencies.”
BTL’s major product – Interbit – is a platform with compliance built-in that was designed to make smart contracts and other benefits of blockchains accessible to financial institutions. Kleinsmiede confirmed that the interbank settlement platform Interbit is being used in the Visa collaboration.
This project uses smart contracts to handle much of the regulatory and compliance requirements of interbank transfers. Using the new technology, they plan to make cross-border transfers simultaneous, reduce the counterparty risk.
The arrangement ensures fairness and security previously unavailable in interbank transfers. BTL founder Guy Halford-Thomson said of the technology, “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.”
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