Visa said on Sept. 8 it launched an on-chain lending program designed to cover a recurring timing gap in credit card settlement. In this setup, card programs often have to pay Visa on a daily settlement schedule before cardholder repayments arrive, creating a short but repeated funding shortfall.
The program uses stablecoin revolving credit lines from Credit Coop. Participating institutions draw from those lines to front settlement payments, and cardholder repayments later flow back automatically to repay the credit.
Receivables finance moves on-chain
The structure brings a version of traditional receivables finance onto blockchain rails. Smart contracts handle draws, fund routing and repayment, while authorized Visa settlement files remain central to the question of how much can be borrowed and on what basis.
That leaves a hybrid credit market in place. Execution becomes more transparent on-chain, but the decisive commercial data and risk terms still sit with authorized parties and are not publicly disclosed.
The settlement gap becomes the basis for funding
Stablecoin-linked card programs must meet Visa’s settlement timetable no matter when cardholders repay. For newer programs, that mismatch can be difficult to manage. Transaction volume may grow quickly, while bank credit lines or financing backed by receivables may not expand at the same pace.
Visa said the need for this type of funding is rising alongside stablecoin activity. The company reported that in fiscal Q2 2026, the number of stablecoin-linked card programs exceeded 160, payment volume rose nearly 200% year over year, and annualized stablecoin settlement volume recently moved past $20 billion, more than 15 times the level a year earlier.
Each metric captures a different part of the business. Program count points to network reach. Payment volume growth shows transaction activity on the cards. Settlement run rate annualizes recent fund flows. Credit Coop’s outstanding loan principal is a separate measure. Taken together, the figures point to a larger pool of programs that may need short-term financing against settlement receivables.
How the cash moves
According to Visa, participating institutions draw from a stablecoin revolving facility to meet same-day settlement obligations, and the funds go directly to a Visa settlement address. After that, cardholder repayments first pass through Credit Coop’s Spigot contract.
Visa describes Spigot as a programmable lockbox. Once funds arrive, the contract first pays interest and replenishes the credit line. Only the remainder goes to the borrower’s operating account.
Visa framed the arrangement as one secured only by settlement receivables. That is the sharpest difference from standard decentralized finance, or DeFi, structures, where borrowers usually post crypto collateral worth more than the loan. Here, the support for lending comes from future payment flows from cardholders.
Each draw and repayment is recorded on-chain, with timestamps, token movements and contract execution history. Visa said Credit Coop has handled more than 3,000 borrowing events and 9,000 repayment events across participating credit arrangements.
Visa’s records still anchor the credit case
Visa said there is a second layer of evidence beyond on-chain activity. Credit Coop receives each program’s daily authorized settlement files through a secure channel and combines those records with on-chain history to size funding and verify disbursements and repayments.
Public blockchain data can show where tokens moved. Visa’s data stream is what links those transfers to specific settlement obligations and to a program’s operating performance. In practical terms, the public chain supplies execution evidence, while Visa’s internal records determine how useful that evidence is for judging credit quality.
That gives Visa a broader role than that of a payment network alone. Its infrastructure bridges the timing gap, and its records help lenders decide how much capital is needed to cover it.
The limits behind the $2.5 billion claim
Visa said the Credit Coop model has financed more than $2.5 billion in settlement volume since 2023 and has recorded zero defaults. It also said higher lender participation lowered borrowing costs for participating programs by as much as 30%.
Both claims come with clear limits. Cumulative financed settlement volume measures turnover in a revolving facility. The same capital can be borrowed, repaid and deployed again, so the $2.5 billion figure does not show outstanding principal at any single point in time. It should not be read as Credit Coop revenue, total card spending, or market share.
The source of the data matters as well. Visa’s supporting material said the figures were provided by Credit Coop, on-chain event counts ran through Aug. 19, 2026, and the zero-default status should be reconfirmed before publication. On the borrowing-cost claim, Visa did not provide the financing rates, sample size, or calculation method.
Rain and Karta are the named examples
Payment company Rain accounts for most of the disclosed activity. Visa said Rain has used a Credit Coop revolving line since August 2023 and, as of Aug. 19, had processed about $2 billion in settlement amounts through more than 2,000 borrowings and 7,000 repayments.
Repeated draws and repayments over three years suggest an operating system that has seen real use. Even so, the available data says little about the actual shape of the credit risk. Initial facility sizes, current exposure, lender concentration and performance through a loss cycle were not disclosed.
Visa also pointed to Karta to show how far the model could go. Visa said Karta used Credit Coop funding during its launch and expansion phase before shifting to a larger institutional credit facility.
Karta’s own June announcement confirmed that later financing round: $140 million led by Galaxy Ventures and Community Investment Management, or CIM. That announcement did not mention Credit Coop, so the claim that Karta’s early growth depended on on-chain financing currently rests on Visa’s account alone.
The sequence points to one possible role for this type of credit. Smaller programs may use on-chain capital first, borrow and repay repeatedly, build an operating record, and then move into traditional institutional financing as they scale. In that reading, blockchain credit acts more like a bridge to private credit than a replacement for it.
Programmable priority does not remove loss risk
Credit Coop’s documentation says a single facility can include multiple lenders, with repayment priority assigned through cash flows controlled by the Spigot contract. The contract enforces a preset routing path for funds.
Its technical materials also describe the human and software dependencies around that promise. The protocol gives important powers to arbitrators and Spigot owners. In extreme-case documentation, it outlines possible revenue-contract changes, diverted cash flows, malicious control and difficult enforcement after default. There is no indication in the article that those scenarios have occurred in Visa-related facilities, but they remain design-level risks.
Legal protections tied to each facility are also largely out of view. Public disclosures do not list every lender behind the Visa-linked program, do not provide the full loss waterfall, and do not answer whether borrowers post first-loss equity or reserves, whether guarantees or insurance exist, or how far lender claims extend if controlled receivables fall short.
A programmable lockbox can improve lender control over incoming value. It cannot create value when customers do not pay or when receivables are disputed, and it cannot route funds that never enter the controlled path. Any resulting losses would depend on protections and contractual rights that Visa and Credit Coop have not described in detail.
On-chain execution, off-chain credit judgment
The sharpest description of the experiment is not simply "on-chain lending." The useful product here is priority access to payment flows, serviced at blockchain speed and grounded in Visa’s records. The public chain supplies evidence of execution, while Visa’s data and the credit contracts determine how much that evidence says about credit quality.
For on-chain credit markets, the appeal is clear in Visa’s framing: the structure addresses a recurring financing need created by card settlement. It also strengthens Visa’s position in the process. The network provides the channel, the key underwriting data, and the contextual information needed to turn token transfers into usable credit signals.