SoFi dives deeper into payments as it moves its entire card program to blockchain-based settlement using its SoFiUSD stablecoin, with more than $25 billion in expected annualized volume.
Stablecoins are increasingly being used to settle payments behind existing card networks, allowing money to move around the clock without changing how consumers pay.
But rather than cutting Visa, Mastercard or banks out of the process, the technology is beginning to replace a narrower piece of the payments stack: the traditional banking rails used to settle obligations between participants.
That shift was in focus this week when SoFi began settling debit and credit card transactions with Mastercard using its SoFiUSD stablecoin. The bank said it is migrating its entire card program, which it expects to process more than $25 billion in annualized volume, to the system.
The shift does not remove intermediaries from the card settlement process, a SoFi spokesperson told Cointelegraph, but provides an alternative blockchain-based settlement rail.
For customers, the change largely happens behind the scenes. SoFi cardholders will continue using their debit and credit cards as normal, while moving the process onchain allows the bank to settle transactions faster, according to the spokesperson.
Visa is also moving settlement onchain. In April, the company said its stablecoin settlement pilot had reached a $7 billion annualized run rate as it expanded support to nine blockchains, describing blockchain settlement as a “viable complement to traditional settlement rails.”
Related: US weighs overseas push for dollar-backed stablecoins: Bloomberg
Federal Reserve researchers wrote in a March note that stablecoins could change the economics of payments without necessarily eliminating banks.
Cointelegraph spoke with payments and investment experts to better understand what moving card settlement onchain actually changes, and what remains largely the same.
“I wouldn’t call it disintermediation at this stage,” Martins Benkitis, co-founder and CEO of emerging-markets liquidity provider Gravity Team, told Cointelegraph.
“Visa and Mastercard are still there. The banks are still there. The network is still calculating the obligations, managing the transaction and deciding how participants interact with it,” he said.
Source
This article is syndicated for educational reading. For the latest updates, visit the original publisher.
Read on cointelegraph.com
