Visa has taken a step toward integrating DeFi with traditional payments. The payment giant announced it will use onchain lending to finance stablecoin card programs. In simple terms, Visa will combine transaction data with blockchain lending tools to help fintech companies and issuers of stablecoin-linked cards access working capital.
Why It Matters
Previously, fintechs issuing USDT or USDC-backed cards often faced liquidity issues: they had to reserve funds in advance to settle with payment systems. Traditional loans are slow, expensive, and require collateral. Visa offers an alternative: using payment data as a basis for onchain lending. Essentially, Visa acts as a bridge between real transactions and DeFi liquidity.
How It Works
Visa uses its settlement data to assess the creditworthiness of a borrower—a fintech or card issuer. Based on this data, a blockchain platform issues a loan in stablecoins (e.g., USDC or USDT). These funds are used to back the issued cards. For users, this means that services working with stablecoin cards can scale faster and not depend on bank credit lines.
Practical Value for Cardholders
- More services available: Fintechs can launch cards in more countries and currencies as entry barriers lower.
- Stability: Lower risk of a service suddenly shutting down due to lack of liquidity.
- Potential fee reduction: If issuers save on lending costs, they might offer better terms—though not guaranteed.
What About Networks and Fees?
Here it's important to remember: Visa works with blockchain lending, but stablecoin cards themselves usually use networks like TRC-20 (Tron) or ERC-20 (Ethereum). For users, this means:
- TRC-20: low fees, fast USDT transfers—ideal for everyday payments.
- ERC-20: more expensive transactions but wider support in DeFi protocols.
When Visa talks about onchain lending, it doesn't change network mechanics, but it may increase the volume of stablecoin usage, potentially affecting liquidity and settlement speed.
Conclusion
Visa officially recognizes blockchain lending as a working tool for the payment industry. This is a step toward making stablecoin cards mainstream rather than exotic. For us, users of virtual cards, this means more choice and potentially more stable services. Let's watch how this develops—we might soon see cards fully backed by onchain liquidity.
This is not financial advice. Cryptocurrencies and stablecoins carry risks, including volatility and regulatory changes. Always do your own research.
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