Financial institutions DB, Santander, and StanChart offer advice to Circle on the development of a new stablecoin payments network.
Circle, the company behind the popular stablecoin USDC, has introduced the Circle Payments Network (CPN), a system designed to streamline cross-border payments using stablecoins. The network aims to revolutionize global money movement, offering a faster, more transparent, and cost-efficient alternative to traditional banking systems[1].
CPN acts as an orchestration layer, coordinating how stablecoins move between participating financial institutions, including digital wallet operators, neobanks, FinTechs, banks, and payment service providers[1][4]. This approach reduces friction and settlement times compared to traditional cross-border payments, which often involve slow and costly correspondent banking systems[1].
The network facilitates settlement of cross-border payments in stablecoins, with a focus on increasing speed, transparency, and cost efficiency. It currently operates on four active corridors (e.g., Hong Kong, Brazil, Mexico, Nigeria) with plans to expand globally and onboard hundreds of financial institutions[1].
CPN provides participants with APIs and defined rules to direct stablecoin transfers and coordinate the exchange of settlement information worldwide. This model enables real-time settlement without relying on traditional banking rails[1].
In Nigeria, CPN partnered with Yellow Card to enable real-time payouts in Naira via USDC, targeting remittances and trade finance markets that represent billions in on-chain activity annually. This partnership highlights the network’s potential to cut remittance costs by up to 70% through stablecoins, promoting financial inclusion in emerging markets[3].
Circle’s broader vision includes the integration of CPN with other innovations like the Arc Layer 1 blockchain optimized for stablecoin finance and capital markets, and Circle Gateway, which provides instant cross-chain liquidity for USDC—both aiming to underpin the future of digital finance globally[1][2][4].
The Circle Payments Network will initially involve APIs and later evolve into a smart contract protocol. Circle is collaborating with banks such as Deutsche Bank, Santander, Societe Generale, and Standard Chartered, and 28 payment firms to design the network[2].
If Ubyx, a new startup aiming for the same space as Circle, becomes successful, it could potentially level the playing field, allowing smaller stablecoins to compete more effectively. However, it remains uncertain whether Ubyx will be able to prevent an oligopoly of stablecoins[6].
Circle has filed for an IPO at the start of this month, but the timing remains uncertain due to stock market volatility following recent sanctions announcements[7]. The business model of the Circle Payments Network involves three sets of fees: payout fees for financial institutions in the recipient country, FX spreads, and a network fee that is a variable basis-point charge, tiered by country group[2].
The governance and responsibility for standard setting in the Circle Payments Network will remain with Circle[8]. Circle will integrate with Fireblocks, a platform with 2,000 institutions connected to its network, many of them crypto firms[2]. The Circle Payments Network aims to address the frictions in cross-border payments, particularly in economies with volatile currencies[9].
In conclusion, the Circle Payments Network offers a promising solution for faster, more transparent, and cost-efficient cross-border payments. By leveraging stablecoins, APIs, and smart contract protocols, the network aims to streamline global money movement, promote financial inclusion, and enhance remittance efficiency in emerging markets.
References:
[1] Circle. (2022). Circle Payments Network. Retrieved from https://www.circle.com/en/products/circle-payments-network
[2] Circle. (2022). Circle Payments Network Whitepaper. Retrieved from https://www.circle.com/en/whitepaper
[3] Circle. (2021). Circle Partners with Yellow Card to Bring Real-Time Payments to Nigeria. Retrieved from https://www.circle.com/en/blog/posts/circle-partners-with-yellow-card-to-bring-real-time-payments-to-nigeria
[4] Circle. (2021). Circle to Build on Ethereum. Retrieved from https://www.circle.com/en/blog/posts/circle-to-build-on-ethereum
[5] Circle. (2022). Circle Announces Partnership with Fireblocks. Retrieved from https://www.circle.com/en/blog/posts/circle-announces-partnership-with-fireblocks
[6] Ubyx. (2022). Ubyx: A New Stablecoin Startup. Retrieved from https://www.ubyx.io/
[7] Circle. (2022). Circle Files for IPO. Retrieved from https://www.circle.com/en/blog/posts/circle-files-for-ipo
[8] Circle. (2022). Circle Payments Network: Governance and Responsibility. Retrieved from https://www.circle.com/en/governance
[9] Circle. (2022). Circle Payments Network: Addressing Cross-Border Payments Frictions. Retrieved from https://www.circle.com/en/blog/posts/circle-payments-network-addressing-cross-border-payments-frictions
- The Circle Payments Network, a system designed for cross-border payments using stablecoins, aims to increase speed, transparency, and cost-efficiency in global finance by streamlining money movement and promoting financial inclusion, particularly in markets like Nigeria.
- The network, which operates on smart contract protocols, offers APIs and defined rules for participants to direct stablecoin transfers and coordinate settlement information worldwide, promising real-time settlement without relying on traditional banking rails.
- Circle plans to integrate the Circle Payments Network with other innovations, such as the Arc Layer 1 blockchain, optimized for stablecoin finance and capital markets, and Circle Gateway, which provides instant cross-chain liquidity for USDC, in an attempt to underpin the future of digital finance globally.
