Visa’s Blockchain Innovation Set to Enhance Access to Global Markets


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Visa (NYSE: V), along with partners Agrotoken, Microsoft, and Sinqia, is venturing into new technological territory with a blockchain-based programmable finance platform for Small and Medium Enterprises (SMEs). The primary beneficiaries of this innovation will be farmers who will be able to securely fund and sell their crop harvests, revolutionizing how small businesses engage with global capital markets.

This technology was developed as a part of the most recent LIFT Challenge, which aimed to explore innovative use cases for Brazil’s central bank-issued digital currency (CBDC), the Real Digital. Visa was among the nine finalists charged with this task.

The platform, designed to facilitate interoperability between currencies, improve operational processes, and unlock new growth opportunities, empowers SMEs to access global capital markets more efficiently. It is geared towards easing the existing financial pain points for farmers, who often find themselves at a disadvantage due to localized market structures.

Historically, farmers have been dependent on financing methods like factoring, where future receivables are sold at a discount to finance immediate needs like purchasing supplies and paying wages. Such methods often lead to a substantial loss for the farmer. Visa’s prototype, however, offers local farmers more timely and increased access to a global pool of investors, ensuring better price discovery for their goods and adding more options for financing their businesses.

Catherine Gu, Global Head of CBDC for Visa, emphasized the central role small businesses play in local economies. She stated, “Small businesses are essential contributors to our local economies, such as in Brazil where they employ over half the population and contribute to nearly a third of the country’s GDP. At Visa, we are committed to help them grow, exploring new technologies that will empower them to more easily maintain and expand their business operations.”

The programmable aspects of digital currencies provide opportunities for more efficient capital usage and reduced counterparty risks. They ensure the delivery and payment of assets and currencies only when certain conditions are met. The prototype platform by Visa enables farmers to tokenize traditional financing contracts, essentially turning existing Brazilian legal documents into a tradeable on-chain Non-Fungible Token (NFT).

Anderson Nacaxe, Director of Agrotoken in Brazil, commented on the collaboration, “Agrotoken has a mission to democratize agribusiness by making transactions with soy and corn more accessible. To achieve this, we have chosen solid partners, such as Visa, to join us in our journey towards this goal.”

In addition to tokenization, Visa implemented a new onchain sealed-bid auction mechanism through smart contracts, allowing a global pool of blockchain investors to participate in the financing process. This resulted in competitive price discovery. Furthermore, Visa’s Universal Payments Channel (UPC) ensured future interoperability between digital currencies across different markets and networks.

The leap into blockchain-based programmable finance by Visa and partners is an indication of the immense potential that blockchain technology has for SMEs. By increasing access to global capital markets and simplifying processes, this innovation could be a game-changer, bringing enhanced growth and sustainability to small businesses, especially in the agricultural sector.

Image: visa

1 Comment ▼
One Reaction
  1. Denys Moskalenko

    How could it influence global banking technology?

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