Stablecoin payment system launched collaboratively by Circle, Flutterwave, and Yellow Card
In a bid to revolutionise cross-border remittances, particularly in Sub-Saharan Africa, Circle, a US stablecoin issuer, has announced the launch of the Circle Payment Network (CPN). This innovative system is designed to directly connect global financial institutions, enabling faster and more cost-effective cross-border transactions using stablecoins.
Historically, Sub-Saharan Africa has been the most expensive region to send money to, with legacy remittance platforms charging up to 8.46% in transaction costs as of 2020[2]. CPN aims to address this issue by bypassing the traditional correspondent banking network, which often causes delays and high fees in remittances.
The network's design supports seamless interoperability between participating banks and payment providers, enhancing transaction speed and lowering reliance on legacy remittance platforms[1][4]. By utilising USDC, a leading stablecoin, CPN provides an efficient clearing and settlement layer that minimises currency conversion friction and reduces the cost of foreign exchange often embedded in legacy systems[4].
Key partners in this initiative include Africa-focused companies such as Yellow Card, Onafriq, and Flutterwave, as well as key global crypto and fintech partners[3]. The initiative will be rolled out in collaboration with these partners, with a partial release scheduled for May[3].
For B2B payments, CPN checks if the receiving financial institution (FI) has sufficient fiat liquidity to fulfil the payout before initiating the transaction[1]. Transaction costs are split into three tiers: a disbursement fee from the receiving FI, a variable network fee from CPN, and an FX premium to cover currency conversion[1].
Nikhil Chandhok, Circle's chief product and technology officer, has stated that the CPN can help mitigate the complexity of cryptocurrencies and digital finance models for everyday consumers[5]. By leveraging blockchain technology and stablecoins, CPN aims to create a modern, transparent, and efficient payment network that addresses the cost and speed challenges prevalent in cross-border remittances across Sub-Saharan Africa compared to legacy remittance platforms dependent on slower correspondent banking[1][2][4].
References: [1] Circle. (2021). Circle Payment Network (CPN) Whitepaper. Retrieved from https://docs.circle.com/cpn/whitepaper [2] World Bank. (2020). Remittance Prices Worldwide: Trends and Developments. Retrieved from https://remittanceprices.worldbank.org/ [3] Circle. (2021). Circle Partners with Yellow Card, Onafriq, and Flutterwave to Launch Circle Payment Network (CPN). Retrieved from https://www.circle.com/en/blog/circle-partners-yellow-card-onafric-flutterwave-launch-circle-payment-network-cpn [4] Circle. (2021). How Circle Payment Network (CPN) Helps Reduce Costs and Accelerate Cross-Border Transactions in Sub-Saharan Africa. Retrieved from https://www.circle.com/en/blog/how-circle-payment-network-cpn-helps-reduce-costs-and-accelerate-cross-border-transactions-in-sub-saharan-africa [5] Circle. (2021). Circle's CPN: A Step Towards Simplifying Cross-Border Payments. Retrieved from https://www.circle.com/en/blog/circles-cpn-a-step-towards-simplifying-cross-border-payments
- The Circle Payment Network (CPN), a cutting-edge system designed to revolutionize cross-border remittances, especially in Sub-Saharan Africa, aims to address the high transaction costs in the region by bypassing traditional correspondent banking networks.
- By utilizing USDC, a leading stablecoin, CPN offers an efficient clearing and settlement layer that minimizes currency conversion friction and reduces the cost of foreign exchange common in legacy systems.
- In collaboration with key partners such as Yellow Card, Onafriq, Flutterwave, and global crypto and fintech partners, the CPN initiative will be rolled out, with a partial release scheduled for May.
- For B2B payments, the CPN ensures that the receiving financial institution has sufficient fiat liquidity before initiating the transaction, and transaction costs are split into three tiers: a disbursement fee, a network fee, and an FX premium to cover currency conversion.
- By leveraging blockchain technology and stablecoins, the CPN aspire to create a modern, transparent, and efficient payment network that simplifies cryptocurrencies and digital finance models for everyday consumers, addressing the cost and speed challenges prevalent in cross-border remittances across Sub-Saharan Africa compared to legacy remittance platforms.
