Visa and Credit Coop Launch Successful Onchain Lending Model with Zero Defaults

Visa has quietly established a highly successful onchain lending operation in collaboration with Credit Coop, achieving a remarkable milestone of over $2.5 billion in cumulative settlement volume since 2023. This innovative model has facilitated more than 3,000 borrowing events and 9,000 repayment events, all while maintaining a record of zero defaults.

The operation leverages VisaNet’s settlement data integrated with blockchain-based smart contracts to create revolving credit facilities tailored for fintechs and stablecoin-linked card programs. At the core of this system is Credit Coop’s “Spigot” smart contract, which acts as a programmable lockbox. It automatically manages repayments and secures collateral directly from settlement receivables, streamlining the funding process.

When a fintech card issuer requires funding to meet Visa settlements, the Spigot smart contract efficiently handles the disbursement of funds, collateral tracking, and repayment collection without the need for human intervention at each stage. This automation results in faster settlement cycles and has led to a significant reduction in borrowing costs, dropping by as much as 30% for participating programs.

Rain, a Visa Principal Member, has emerged as the largest user of this facility, accounting for approximately $2 billion of the total volume since the launch of Credit Coop in August 2023. This partnership signifies a new category of financial infrastructure within the crypto space.

Visa currently operates over 160 stablecoin-linked card programs globally, with stablecoin settlement volumes on its network reaching an annualized run rate of $20 billion—an increase of more than 15 times compared to the previous year. Payment volumes for these programs have surged nearly 200% year-over-year.

The significance of the zero-default record cannot be overstated. The Spigot smart contract ensures repayment at the source by intercepting settlement receivables before they reach the borrower, guaranteeing automatic repayment from incoming cash flows. This just-in-time funding model not only enhances efficiency but also reduces idle capital in the system, potentially leading to further cost reductions.