One of the world’s leading card payment solution providers, Visa, recently inked a strategic partnership with the Solana blockchain network as part of its stablecoin settlement pilot phase. According to the global payment behemoth, the move is part of its ongoing efforts to scale its cross-border money transfer platform into utilizing blockchain technology.
Visa’s Choice of Solana
According to an article titled “Visa Exploration,” co-authored by Mustafa Bedawala and Arjuna Wijeyekoon, Solana’s impressive throughput was why the Visa product team opted for the blockchain network. The authors noted that while Solana fails to meet Visa’s remarkable 65,000 transactions per second requirement, the blockchain still handles 400 user-initiated transactions every second.
They added that this number can jump to over 2,000 during peak times, demonstrating its adaptability. Compared to Ethereum, another popular blockchain network, which can only process 12 transactions per second, the choice of Solana is plausible, they added.
Solana’s ability to handle transactions concurrently is at the heart of its impressive transaction speed. Thus, all transactions involving different accounts can be carried out simultaneously, distinguishing it from blockchains like Ethereum, which process transactions sequentially.
The authors added that this allows Solana to effectively handle payment and settlement demands by simultaneously executing transactions involving separate accounts. They said this multi-threaded strategy is critical for reducing network congestion and preventing the network’s throughput from being hampered by a glitch in one area.
Another appealing feature of the Solana blockchain is its meager and consistent transaction costs. Transactions involving the native token, SOL, typically incur fees of less than $0.001, making it an attractive choice for payment operations seeking both cost-effectiveness and efficiency.
Moreover, this differs from Bitcoin’s and Ethereum’s fluctuating fee structures, which are influenced by network demand. The blockchain’s unique fee system also ensures that congestion in one account does not affect others.
For example, if demand for a specific asset, say, an NFT, increases, only the fees associated with that particular account will increase. This localized fee market is linked with the parallel processing capabilities of the Solana blockchain.
Building On Previous Accomplishments
Besides high transaction speed and low cost, Visa’s move to incorporate Solana stems from the blockchain’s exceptional technological features, notably its extensive node network. The payment giant’s move builds on its previous adoption of the Ethereum blockchain for USDC transfers during its Australia pilot initiative in 2021.
Visa is poised to cement its position as a pioneer in blockchain-based payment solutions by expanding its payment capabilities with the stablecoin USDC to Solana. The firm’s Head of Crypto, Cuy Sheffield, confirmed this development, adding that by leveraging stablecoins like USDC and global blockchain networks, Visa hopes to speed up cross-border settlements.