Visa and Credit Coop use accounts receivable as collateral to provide funds for the daily settlement payment obligations of stablecoin cards on-chain.

Written by: Liam Akiba Wright

Translated by: Chopper, Foresight News

Every credit card payment creates a timing mismatch problem for the companies behind it. Credit card institutions often need to pay Visa upfront before client funds are credited, leaving a temporary but recurring funding gap.

On September 8, Visa announced the launch of an on-chain lending program, aimed at filling this gap. Credit Coop is an on-chain credit protocol that provides a revolving credit line in stablecoins: the institution uses it to fund the settlement, and the cardholder's subsequent repayments automatically flow back to repay it.

This design brings traditional accounts receivable financing onto the blockchain. Smart contracts automatically handle withdrawals, fund flows, and repayments; meanwhile, authorized Visa settlement documents remain the core determinants of "how much can be borrowed and based on what." The result is a hybrid credit market: the execution process is more transparent on-chain, but decisive business data and risk terms remain in the hands of the authorized parties and are not disclosed to the public.

Settlement Gaps Become Collateral

Credit card projects associated with stablecoins must pay according to Visa’s settlement schedule, regardless of how cardholders repay. This mismatch is particularly tricky for emerging projects: transaction volumes are growing rapidly, but the bank credit they can obtain, or the financing from accounts receivable pledges, does not keep pace, causing the gap to widen.

Visa stated that this funding requirement is growing along with the stablecoin business. The company reported that in the second quarter of fiscal year 2026, stablecoin-related credit card projects exceeded 160, with transaction volumes increasing nearly 200% year-over-year; recently, stablecoin settlement amounts have also surpassed $20 billion annually, more than 15 times the figure from the same period last year.

Each metric measures a different aspect of the business. The number of projects indicates network coverage, the growth rate of payment volume reflects card transaction activity, and the settlement operational rate converts recent fund flows into annualized figures, while the outstanding principal of Credit Coop’s loans is another independent metric. However, collectively, these indicators point to the same conclusion: more projects may need to use settlement accounts receivable as collateral to secure short-term funding for operations.

According to Visa’s explanation, institutions participating in the program will withdraw from the stablecoin revolving credit line to meet that day's settlement obligations, with funds flowing directly to Visa’s settlement address. Subsequently, the repayments from cardholders will first flow through Credit Coop's Spigot contract—a programmable vault: once the funds arrive, interest is automatically paid, the credit line is replenished, and the remaining amount enters the borrower's operational account.

Visa describes this model as being "guaranteed solely by settlement accounts receivable," which is fundamentally different from common DeFi structures: in DeFi, borrowers typically need to pledge cryptocurrency with values higher than the loan itself; here, the support for lending comes from the payments generated by cardholders in the future.

On-chain records will capture every withdrawal and repayment, leaving timestamps, token flows, and contract execution histories. Visa stated that Credit Coop has processed over 3,000 borrowing events and 9,000 repayment events in its participating credit arrangements.

Visa also has a second-layer evidence mechanism. Visa states that Credit Coop receives daily authorized settlement documents for each project through a secure pipeline, and then combines these records with on-chain historical records to determine fund sizes, validate fund disbursements, and assess repayment statuses. Public transaction data can record the flow of tokens, while Visa's data stream links these flows to specific settlement obligations and the operational performance of projects.

This gives Visa a broader role. Its infrastructure mitigates timing differences, while its records help lending institutions determine how much funding is needed to bridge this gap.

Performance Records Are Large, Highly Concentrated, and Self-Reported

Visa stated that since 2023, the Credit Coop model has provided financing for over $2.5 billion in settlement volumes, with zero defaults. The company also indicated that increased lender participation has reduced borrowing costs for participants in this program by up to 30%.

Both claims need to be approached with caution. The cumulative financed settlement amount measures the turnover capacity of revolving credit lines. The same funds can be loaned out, repaid, and reused, so the figure of $2.5 billion itself does not indicate any single day’s outstanding principal or risk capital and should not be interpreted as Credit Coop's revenue, total credit card spending, or market share.

The source of the data is equally important. Visa's supplementary explanation indicates that the data is provided by Credit Coop, with on-chain event counting as of August 19, 2026, and states that the zero default status should be reconfirmed before publication. As for the claim of declining borrowing costs, Visa did not provide specific financing rates, sample sizes, or calculation methods.

Payment company Rain is a primary member of Visa and accounts for most of the disclosed activities. Visa reported that since August 2023, Rain has utilized Credit Coop's revolving credit facilities, and as of August 19, the company has completed over 2,000 borrowings and 7,000 repayments, totaling approximately $2 billion in settlement amounts.

The repeated borrowings and repayments over three years indicate that this is a functioning operational system, but the existing data reveals limited insight into the nature of credit risk. Initial credit limits, current risk exposures, lender concentration, and performance during loss cycles are not disclosed.

Karta's experience illustrates how far Visa believes this model can go. Visa stated that Karta initially completed its launch and expansion using Credit Coop's funds before transitioning to larger institutional credit.

Karta itself confirmed this subsequent larger funding in a June announcement: a $140 million financing led by Galaxy Ventures and Community Investment Management (CIM). However, this announcement made no mention of Credit Coop—so the statement that "Karta's early growth relies on on-chain financing" currently rests solely on Visa's assertion.

This sequence of events also highlights a potential role for on-chain credit: smaller projects can first use on-chain funds for repeated borrowing and repayment, building an operational record before seeking traditional institutional financing once they scale up. Thus, blockchain credit appears more as a stepping stone to private credit rather than a replacement for it.

Programmable Prioritization Still Faces Loss Issues

Credit Coop's documentation states that a credit arrangement can involve multiple lenders, with cash flows controlled by the Spigot contract assigning priority repayment rights to them. The contract enforces pre-set fund flow paths.

Credit Coop's technical documentation also highlights the personnel and software dependencies surrounding this commitment. The protocol grants significant powers to arbitrators and Spigot owners. Its extreme case documentation describes potential changes in revenue contracts, misappropriation of cash flow, malicious control, and complexities in execution after a default. These are all design-level risks, with no indication that they have occurred in Visa-related credit arrangements.

Legal protections exclusive to each credit arrangement remain outside the spotlight. Public disclosures do not list every lender behind Visa-related plans and do not provide the complete waterfall order for determining loss distribution, nor do they answer the following questions: whether borrowers provide first-loss equity or reserves, whether guarantees or insurance exist, and how far lender’s claims extend when controlled receivables are insufficient.

Programmable vaults can enhance lenders' control over incoming value, but they cannot generate value when clients default on payments or are in dispute over receivables, nor can they route funds that never followed a controlled path. Any resulting losses will depend on the protective measures and contract rights that Visa and Credit Coop have yet to publicly elaborate.

Compared to the label "on-chain lending," this boundary more clearly defines the essence of this experiment. A useful product offers priority claims over payment flows, delivers services at blockchain speed, and relies on Visa's records. Public chains provide execution evidence, while Visa’s data and credit contracts determine the extent to which this evidence illustrates credit quality.

For on-chain credit, this is a product with significant market potential, as it addresses the ongoing funding needs generated by credit card settlements. It also strengthens Visa's position in the market: the network offers channels, crucial credit review data, and the contextual information necessary to convert token transfers into credit signals.