Visa patches up traditional finance with blockchain by adding Polygon to its stablecoin settlement network, speeding up transactions across markets and indicating infrastructure’s growing foothold in crypto. Visa now settles stablecoin transactions across borders, including USDC, on Polygon’s fast, cheap, proof-of-stake network, slashing delays and bringing digital payments a step closer to day-to-day reality. The deal highlights backends’ growing move toward distributed ledger tech and away from speculative crypto exposure in banks worldwide.
The Mechanics of Institutional Settlement on Polygon
Visa’s decision to utilize Polygon is a strategic decision based on the need for greater scalability and reliability. Traditionally, it takes a long time to perform a cross-border settlement between banks (2-10 days) due to the complexity of the intermediary banks involved and the high cost of doing so. By using Polygon, Visa can allow for a digital asset to move from one person to another in seconds instead of days.
Polygon uses Ethereum as a Layer-2 scaling solution. It utilizes the full security of Ethereum Mainnet while providing sufficient throughput to be a global transaction processor at scale like Visa. This offers “on-chain” settlement that is secure, transparent, immutably recorded, and far less costly than traditional SWIFT payment systems.
Bridging the Gap Between Stablecoins and Global Commerce
A major component of this initiative is stablecoins, with the leading participant being Visa, who conducted trials on using stablecoins for payment settlement using Circle’s USDC, was the first to run trials on two blockchain networks, starting at the end of 2021 using the Ethereum and Solana Networks.
Polygon has now been added, reinforcing its position as a more mature network and a leading choice for supporting institutional decentralized applications. According to Circle, the rise in the desire for regulated, dollar-backed digital assets is increasing rapidly because businesses want to reduce the risk of price fluctuations that are usually associated with cryptocurrencies. By using these dollar-backed digital assets in its global program, Visa provides its partners with an option to use Polygon rails to send money instantly without being slowed down by the barriers created by the traditional financial system.
A Future Defined by Interoperability and Speed
Visa’s Next Generation program aims to build interoperability across different blockchain networks. More financial institutions will be implementing blockchain technology, resulting in an increasing need for all blockchain networks to deliver safe, secure, and compliant environments that allow for interoperability. Polygon 2.0 is a vision that unifies multiple ZK-based Layer-2 chains into one large ZK-enabled network; and this is exactly what Visa needs to solve its long-term goals of privacy and scalability.
Industry analysts believe this partnership may serve as a catalyst for additional payment processors implementing blockchain technology. CoinDesk states that Visa is seeking to create opportunities to use a variety of high-speed DLT solutions and shows its views on distributed ledger technology (DLT) as a cornerstone of the global economy going forward.
Conclusion
Polygon’s integration with Visa as an avenue for settling stablecoins is a game changer for Web3. It validates Layer-2 use cases and shows that blockchain is enterprise ready. The development of these types of cooperative relationships between digital currencies and traditional or ‘fiat’ currencies will result in improvements with respect to efficiency, inclusivity and transparency in the future. This evolution of money cannot be considered simply a crypto evolution, but rather the evolution of all forms of money.
Source: https://blockchainreporter.net/visa-integrates-polygon-rails-to-accelerate-global-stablecoin-program/
