The system based on smart contracts goes online today for a 100-day testing period. The company sees it as a serious competitor to SWIFT.
Visa plans to reform the market for interbank payments as it is inviting lenders to try the new system sending money via blockchain, Financial Times reports.
Before taking this step, Visa has been studying the blockchain technology for a year and a half. Then the company together with the electronic payments startup BTL Group began adapting the blockchain for interbank money transfers. Hendrik Kleinsmiede, one of the founders of the company’s innovation hub Visa Europe Collab, noted that the project aims to “reduce the difficulties of domestic and cross-border interbank transfers.”
“We are 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,” he explained.
The new system can become a serious competitor to Swift —currently, the main operator of interbank transactions. Visa believes that it will be possible to reduce the cost of such transfers and associated credit risk, at the same time increasing the speed of operations.
Hendrik Kleinsmiede told FT that he expects to complete the proof-of-concept for the new system within 100 days. The essence of the new project is in using smart contracts that enable the system to automate the processing of requests for money transfers between different structures.
“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,” he said.