Chris Walker, Credit Coop | Follow the Money: Payment Flows as Collateral

Good morning everybody. How's everyone doing? My name is Chris. I am the founder and CEO of Credit Cooperative, Credit Coupe for short. And today what we're going to do is walk through how we view payment flows as collateral and follow the money through that transaction.

So, as we think about what's going on in in the world of payments, there's a lot of exciting developments. Um, the most important thing that we're really monitoring right now is stable coins being used for payments and stable coin settlement. So, when a payment company, whether they're a card issuer, uh, a merchant acquirer, or even a remittance company, uses stable coins for payments, these all settle in seconds. Settle nearly in real time. They're cost effective, subscent to do a transaction, and again, real time.

Uh, on the right hand side, you'll see what actually happens though in the fiat world. So despite Visa using stable coins for settlement, they still pay out, you know, in fiat to a lot of different participants in Visa network. That takes two to five days depending on where you're at. And the same thing applies for Mastercard. So you know, if you're a payment company, how are you going to bridge that gap between an instant payout and not getting paid from your merchant or from the network two to three days later?

and they use their own capital or if you're a bank, you'll use deposits to kind of fund that gap. And if you're a non-bank issuer, it gets very severe because your idle capital is just locked up. And that's what this money or that's what this slide shows, which is well, where does that money actually go and how does it just stop flowing? So, if you're a non-bank issuer, on the left hand side is a just a column of the daily volume that you're processing. So what we've shown here is the darker the purple on the right hand side, the more manageable this this would be.

So if you're a payment company doing a million dollars a day with Visa network, you're probably locking up $2 million at least just sitting idle in cash, not earning anything for the ability, right, to issue cards and process payments. You can imagine how that gets very strained on a balance sheet for a startup who's not a bank. Um, imagine hund00 million a day. That's $200 million locked. So, they need to find that capital somewhere and that's where credit coupoops comes in.

Otherwise, their growth is is really limited to their balance sheet. Outside of that, we have a few interesting things that are happening that are making more companies, specifically non-banks, use stable coins in their settlement. We see four main forces. The first one would be the clarity that we're getting from regulators. So in July of 2025, the Genius Act was passed and more recently we've had some exciting developments about well how will we actually implement that in the markets.

So the OC in America uh which regulates all the banks about a month ago they put out a request for comment about how they can implement the Genius Act. So we're getting much closer to that being law. The other thing that happened is broker dealers who facilitate trades in the markets, they used to have to haircut any stable coins on their balance sheet by 98%. So you can imagine the impact. You know, if you want to, you're a big client, you want to settle with your broker dealer, they're just going to say no.

About 3 weeks ago, that changed. So instead of a 90 or excuse me, instead of 100% haircut, it's only 2%. So if they have $10 million on their balance sheet, they can value that at 9.8 million. A year ago, that was 0.

So effectively they prevented that market from growing. Um the second element that we see is just continued momentum in the in the data of number of transactions uh total volume and we're getting to a point where this is at scale. So Stripe last year in their annual report they announced close to $2 trillion in stable coin payments 1.9 to be exact. Another company in the space called Slash they're a Visa issuer and they issue cards globally and do payouts.

They processed $4 billion last year. This is all in stable coin rails. So this isn't a new thing. Uh the third and fourth points that we see are a global macro trend of private credit as as banks retreat from assetback financing and securing loans with the receivables. A lot of that's regulatory driven and we're seeing private capital really over the past two decades, this isn't a new trend, grow their their private credit aum.

So that's from Apollo, Blackstone, uh Aries Capital, even KKR who historically is a private equity firm in 2024, they raised more private credit than they did private equity. I think that's a sign of the markets. And then the last thing that we see here is um some independent validation from external parties. So whether it's Visa network writing about stable coins and their settlement or more recently there was a post uh you guys should check it out by Galaxy Ventures. It's called the new age of one chain credit.

And what they do is they talk about this trend of programmable money, secure lending with receivables, and they they specifically highlight one of our borrowers, RAIN. They're a card issuer, a principal member of Visa and and Credit Coupe in the work that we've done together. So, we've built it, they've named it, and and now it's about scaling the platform. So, how do we actually secure receivable and do programmatic finance on chain? We have a smart contract called the Spigot.

And what the spigot does is it controls that cash flow. So before any dispersement happens to a payment company, that borrower must transfer ownership of their smart contracts that facilitate the money movement to the spigot. What that allows us to do is in the top right corner programmatically route that payment flow from their address to the line of credit. And this is really important for lenders because it removes the trust. So it enables automatic repayment.

And most importantly, the borrower doesn't touch it. They have no discretion on repayment. It flows automatically to the spigot and then to the line of credit. The most important thing here is certainty for how this can be enforced off chain. And in the United States, 25 out of the 50 states have adopted article 12 of the UCCC uniform commercial code.

And most excitingly for Credit Coupe and for borrowers, this is a new way to secure your loans. It's actually a super senior position by control. So instead of doing a a paper filing or, you know, logging into a government website, borrowers now are able to transfer ownership in a click of a button and a lender can perfect that interest by the control, therefore preventing others by having a competing claim. And then the last element here, given everything settles on the blockchain, we have real-time monitoring of any risk that occurs. So at Credit Coup specifically, we look at what we call a spigot repayment rate, SRR.

We also look at debt service coverage ratio and liquidity duration. This is all made possible by real-time payments, settling on blockchain, and the data that we get as a result of it. So, you know, what does this actually look like in practice? On this slide, we can see a payment cycle. So, on the left hand side, there are card holders like you and I, we make payments, we buy coffee, we go to dinner, and if you use a stable coin, that happens instantly.

And the reality is on the right hand side, step five, you don't have to pay your bill for 30 more days if it's a credit card. Steps two, three, and four is kind of the card issue. We're trying to figure out what I was talking about earlier. How do I fund this? Right?

I've got 30 days or if I'm halfway through the month, I got 15 days remaining. And that's where we come in. So, the spigot step two actually will secure that repayment when it happens 30 days later. And we route that to the credit coupe vault, which is continuously advancing USDC, for some borrowers globally, USDT, to those payment companies for settlement. And then as they get paid from their card holders or their users in fiat, that's on-ramp and continuously flows through that smart contract.

So it's a revolving facility. It's not like a term loan. Step four, the borrower, the card issuer, the merchant acquirer, or the remittance company now gets that USDC and can scale higher volumes. And this process continues every single day. Takes about a second.

On Salana, it's less than a second, 200 milliseconds. On base it's 400 milliseconds. On Ethereum it's 12 seconds but it's many multiples faster than traditional finance. Uh when we look at our platform because this is very short duration and continuously revolving on average our our loans are only outstanding for 3 days. Again the reality is they continuously revolve but if you were a lender and wanted to remove you would could be repaid in about 3 days.

So the capital is always turning. Um, and what we've seen is a really accelerating trend in 2025 and it's not slowing down in 2026. So, what these flows have revealed to us is that number one, that that payment flow actually is the collateral. So, on the bottom row here, we have some of those metrics that we look at. For those of you from like real estate finance or even, you know, the the traditional credit world, you're probably used to seeing a coverage ratio of 1.

25, 25, 1.5, you know, 2x for really good borrowers. Uh the reality is these payment companies are are great borrowers. They can cover their obligations many times over because of how short duration this is. And if you look at it, you know, we've got close to 45 46x coverage ratio.

That's the legal maturity. Spigot repayment rate is let's do the same math, but let's look at the the past 31 days. a moving trailing 30-day average, still 15 to 16x coverage. Uh, and this, as a result, has led to no defaults on our platform. Uh, we've processed $1.

4 billion, and that rate is accelerating into 2026. We're doing about $250 million per month. And this is not Credit Coupe. This is our borrowers running really good businesses. This is our borrowers having more emerging markets u that they enter.

This is more card holders signing up. This is more merchants accepting stable coins, right? That's not us. Without our borrowers, there's no, you know, thing to lend against. So, as their demand increases, our volume also increases.

Where are we taking this and kind of how will this evolve over the next year? We're really excited about it. And on the right hand side, you can kind of see where we're at today. Secured Credit, all these different payment companies. Um, in about 3 months we'll be launching our vault product and opening that up to the public.

Uh, the receipt token is called CCUSDC. If you guys are familiar with Maple and and their token syrup USDC, it's akin to that. So, think of it like a vending machine. You put USDC in. You get CCUDC back and then that is allocated to the payment companies and continuously revolving.

uh later this year in Q4 we'll have some DeFi composability and start integrating CCUSDC with money markets on chain such as Morpho such as a using collateral to do some leverage looping and what I'm really excited about is integrating this on Pendle so marketplaces where you ship the principal token from the yield token um this is this is what we're building and then in 2027 as we scale this network we will be opening up our liquidity network really to every payment company globally every depositor globally. And we have a saying here, you know, use the network, own the network. And for the crypto people, I think you have a a pretty clear understanding of what that means. And that'll be in 2027. So, we're pretty excited.

Wrapping it up, I would say summaries are 3-day duration, super short duration. You know, even even money market funds will have one to three months of exposure to T bills. We're many multiples less than that. We've had no defaults. The payment flow serves as the collateral itself.

This isn't theoretical. This is in production and has worked for three years. And our expectation is despite the rapid growth in 2025, we'll see even more in 2026 and 2027. Some estimates say 30x from where we're at today. We we're going to take a more conservative one and say 10x.

What that means is networks like Visa are settling anywhere from 3 to four billion annualized in stable coin flows. We could see anywhere from 30 to 40 uh billion dollars of settlement from stable coins on Visa cards just in 2026. So that's really exciting if you think about where those networks are at in fiat. And just to put that into perspective, they do about 15 trillion. If you include Visa and Mastercard, we're at 25 trillion.

So, we have a lot of room to grow here and a lot of efficiencies to bring to both banks and then non-bank issuers in this system. So, for those of you in the room who are payment companies or borrowers, we'd love to chat with you. I think every single payment operator in this space will need a wholesale credit facility and credit serves as that back stop. If you're a lender and would like to make secured loans, we'd love to talk with you and have you in our uh private beta before we open up the vault product. Uh that's all I have for you today.

Thank you guys.