Visa to test blockchain technology in Europe

Rage Comment : Visa is a typical traditional payment company, but it has been constantly innovating in the exploration of blockchain, a highly disruptive technology. It has conducted large-scale research and development in the fields of blockchain micropayments and cross-border settlements. Recently, Visa announced a partnership with BTL Group to test blockchain projects on several European banks. Once the project is successful, it will greatly enhance the status of blockchain technology in the global financial field.

Translation: Annie_Xu

If successful, Visa’s blockchain pilot could potentially transform the entire financial industry.

After solving its long-term challenges, Paypal and Visa, the world's largest payment network, began to explore blockchain technology together. This technology will change the financial industry and is the underlying technology of digital currency. Visa is now working with BTL Group to test blockchain projects on several banks in Europe.

In a blog post this week, Visa announced it is seeking partners for the pilot program.

“We are now inviting a small number of European banks to participate in the project, working with us and BTL. Participating banks will be able to join the network and transfer money between them in multiple currencies. We will work closely together to develop and implement the proof of concept, ensuring that all participants gain new knowledge and the role that blockchain will play in interbank settlements in the future.”

Visa has always been efficient in inter-bank payments within a single country, but cross-border settlements have always taken a long time. In many cases, funds have to go through many middlemen before they reach the remittance account. Blockchain can simplify this process, save time, improve efficiency, and reduce costs.

The concept of blockchain

Blockchain is actually accounting software, a shared resource that can record transaction history. Because all parties to a transaction share this ledger, settlement time can be greatly reduced; and with permission, the flow of funds can be monitored. It can also reduce the time required to resolve disputes.

The huge success of Bitcoin has demonstrated the potential of blockchain, and now large companies such as IBM, Visa, and JPMorgan have gradually begun to explore this game-changing technology.

Why Visa chose this time

Visa has chosen to join the blockchain because it lacks large-scale testing. If it implements the project as planned, it will greatly change the way the world's financial system operates. However, because blockchain is still in its infancy, it is still impossible to predict how it will affect Visa's business.

The Linux Foundation's Hyperledger Project is a consortium that promotes blockchain technology and is founded by well-known companies such as IBM, JP Morgan, Deutsche Börse and Intel. Visa is an early blockchain adopter and hopes to test blockchain in a real banking environment, which is also its interest.

Independent projects such as Hyperledger and IBM have demonstrated the great potential and promise of blockchain. In fact, IBM has been able to reduce the time it takes to resolve dealer disputes from several days to less than 24 hours using blockchain's transaction monitoring capabilities. If applied to cross-border transactions worth hundreds of billions of dollars, it will save a lot of time, money and manpower. The security of blockchain management of large financial transactions is subject to different levels of control, the most important of which is to determine how the service acquisition license is compatible with the system. In addition, the inherent indelibility of data can provide greater reliability for all parties to the transaction.

Impact of Visa Transactions

The ultimate goal of blockchain is to reduce settlement time, whether it is between banks, stock exchanges, or any financial transactions that require seamless connection. The application potential of blockchain is huge, and Visa firmly believes that blockchain can save billions of dollars in costs each year, including funds lost in resolving disputes, tracking payments, and transfer processes.

The results of this pilot project will determine whether Visa will apply the technology to its traditional global banking clients, but the technology itself has already gone beyond Visa's business. If successful, this project will verify the potential of blockchain, which has quickly become a revolutionary transaction monitoring system coveted by every global financial institution.