With the spurring growth of digital payment settlement technologies, the global financial space has undergone a dramatic overhauling experience. Today, payment service providers are curating products to suit the needs of the tech-savvy generation that prefers everything in a digitized format. As the volume of payment transactions, cross-border transfers, and digital settlements has increased, Visa, the global pioneer in payment services, has shared its concerns on cross-chain interoperability standards in its latest report.
The research and product teams at Visa have released a research paper where they introduce the world with a new term called ‘Universal Payment Channel’ or the UPC. The product will be a potent solution to the approaching problem of interoperability between multiple channels. It will work as a diverse cluster, linking various blockchain networks while allowing safe digital currency transfers between them. Precisely called a universal adapter for blockchain channels, UPC will allow central banks and customers to exchange value irrespective of currency form.
How Cross-chain Interoperability caters to CBDC
The research report was published by the Visa Economic Empowerment Institute and highlighted the policy measures for central banking institutes and regulators concerning the impact of the research. Observing the current prospects, the research team has projected that the virtual currency industry is likely to witness multifold growth patterns in the future.
In the past two years, central banks of different countries have shown a keen interest in launching CBDC projects to facilitate financial inclusion. It is likely that central banks would soon infuse digital ledger technology for providing services to users. This will allow more and more people to choose some form of decentralized network from the cluster available to them. The rise in digital currency channels will reduce the probability of the majority using the same type of network. It is essential to have expanded merchant experience irrespective of currency, channel, or money form for CBDCs to be popular. This is why CBDCs require Visa’s UPC.
Details of Visa’s UPC
Visa’s research team began exploring the fast-developing, new-age technologies for payment settlement in 2018. The experts started creating a devoted protocol that facilitates cross-chain interoperability across blockchain fields. UPC strives to develop payment links between multiple channels, connecting CBDC networks across nations or CBDCs with other private stablecoin projects.
Blockchain networks can connect to the UPC network of networks by curating new payment solutions within the hub. The solution aims to solve the issue of low-speed transactions existing in the present decentralized systems. With UPC, payment channels will be created off the blockchain using smart contracts for communication purposes across chains. This will offer high transaction speeds to customers. The Visa team views UPC as a valuable solution for money transfers conducted on Visa or any other financial vertex.