Circle launches stablecoin payment system in partnership with Flutterwave and Yellow Card

Circle, a global payments firm, has announced a new system designed to settle cross-border transactions between global financial institutions using regulated stablecoins like USDC and EURC.

The initiative will roll out in collaboration with key global crypto and fintech partners — including Africa-focused companies such as Yellow Card, Onafriq, and Flutterwave.

The details 

• The system, dubbed the Circle Payment Network (CPN), will connect partner financial institutions (FIs) in one global payment ecosystem. 
• While CPN will not move funds around by itself or function as an escrow, it will act as a facilitator for FIs across different countries to conduct transactions seamlessly. 
• In a press statement, Circle announced that the CPN is scheduled for a partial release in May and will look to incorporate more FIs as it expands its network. 
• It added that it will establish stringent criteria for global payment firms that wish to join the network, with particular focus on regulatory compliance and cybersecurity protocols. 

How it works 

• When a user initiates a cross-border transaction through a partner financial institution (FI), the FI collects fiat and converts it to a supported stablecoin.
• Circle’s platform (CPN) generates a signed transaction request via its offchain APIs, which is broadcast to the blockchain and processed through a smart contract.
• The smart contract verifies transaction details — recipient identity, wallet address, token type, and amount — before releasing the stablecoins to the receiving FI.
• The receiving institution can either hold the stablecoins or convert them to fiat and immediately pay out to the end user in their preferred currency.
• For B2B payments, CPN first checks if the receiving FI has enough fiat liquidity to fulfill the payout before initiating the transaction.
• 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.

Key quote 

• Circle’s chief product and technology officer Nikhil Chandhok said: 

“Circle Payments Network is a foundational layer for the always-on economy — enabling trusted institutions to move value across borders, instantly. With programmable infrastructure at its core, CPN makes it possible to embed value transfer into modern financial applications in ways that weren’t feasible before.” 

Why this matters 

• Historically, Sub-Saharan Africa is the most expensive region to send money to globally with legacy remittance platforms taking up to an 8.46 % in transaction costs as of 2020. 
• These transactions are not renown for their speed either, sometimes taking days before the beneficiary gets credited with the funds. 
• In recent times, cryptocurrencies and digital finance models have been touted to replace these legacy cross-border remittance systems.  
• While there have been arguments in favor of legacy systems as being relatively simpler to use for the everyday consumer compared to crypto, Circle’s payment system can help mitigate this. 
• However, the CPN payment system is still in its early, relatively untested stages, and three layers of fees could see remittance costs go as high as is charged by legacy platforms, if not higher.