Visa Europe Working With BTL For Cross-Border Settlement

The system uses BTL's Interbit platform, which combines Ethereum, smart contracts, and proprietary software. Regulators and network operators can monitor transactions for fraud without accessing the underlying data. Individual banks function as nodes in the network.

"For me the opportunity is a fascinating and potentially very beneficial one," Kleinsmiede said. "Through the use of smart contracts and blockchains I believe we can create a fast, compliant and low-cost interbank payment and settlement service, with embedded regional compliance."

The technology could handle multiple banking functions: interbank settlement, currency exchanges, counterparty risk reduction, and compliance automation. BTL outlined its vision for the project: "The project will use BTL's cross-border settlement platform Interbit to explore the ways in which a blockchain-based settlements can reduce the friction of domestic and cross border transfers between banks – reducing cost, settlement time, credit risk, and by leveraging smart contracts to automate many of the regulation and compliance requirements of domestic and international transfers. A small number of European banks have been invited to participate in the project."

Interbit launched in January, with BTL CEO Guy Halford-Thompson predicting the system could cut remittance costs by 80%. A month later, BTL acquired XapCash, a remittance platform. Halford-Thompson told MiningPool that XapCash operates separately from the Visa collaboration, though he sees "many" potential applications for both technologies.

The Visa-BTL initiative addresses a gap in global banking infrastructure. SWIFT, the Society for Worldwide Interbank Financial Telecommunication, has managed cross-border payments since 1973, but the system faces ongoing scrutiny over security vulnerabilities. Banks across the SWIFT network have suffered from malware-enabled thefts this year. China and Russia have both discussed developing alternatives, suggesting that banks may shift to newer, cheaper systems.

A blockchain-based settlement layer could offer those advantages. According to CoinDesk, Visa Europe Collab has worked on proof-of-concepts for microtransactions and remittances. According to multiple reports, the project will last 100 days.