coindesk.com
Brazilian merchants, who are used to waiting months for credit card payments, could soon receive cash instantly through an initiative that allows them to sell the debt, tokenizes it and rewards the purchasers with double-digit returns in a $100 billion market for merchants desperate for working capital.
Onchain asset management and payments platform BlackOpal said it will buy the debt at a discount, tokenize it on its GemStone platform using the Plume Network blockchain and sell it on to institutional buyers worldwide. The platform goes live later Thursday.
The program spotlights tokenization's growing uses in emerging markets, shifting beyond government bonds to unlock economic assets like the credit card receivables. Brazil already boasts a thriving real estate tokenization scene and its central bank's DREX digital currency project, making it fertile ground for products like GemStone.
In Brazil, 70% of credit card swipes let customers pay in up to 12 monthly installments, delaying payments to merchants. GemStone taps into the system, buying receivables at a discount with ownership locked in Brazil's Central Bank C3 Registry. The transaction, known as a true sale, is a legal transaction in which the seller transfers all ownership, rights, risks and rewards of its accounts receivable to the buyer.
In exchange, merchants receive 95 cents on the dollar immediately instead of waiting months for credit card payments. Later, when Visa or Mastercard automatically sends full payment to BlackOpal, not the original merchant, the tokens are redeemed at full value. Investors profit from the spread, buying tokens cheaply and cashing out at full price.
"GemStone represents a fundamental rethinking of emerging market credit," said BlackOpal CEO Jason Dehni in an announcement shared with CoinDesk. "We don't underwrite merchants. We don't take credit risk. We purchase receivables as True Sale that settle through Visa and Mastercard payment rails, with ownership locked at the Central Bank level.
"The structure is designed so that collection is not a question of 'if' but 'when.' This is what institutional-grade emerging market yield should look like," Dehni added.
Token buyers could earn an annualized 13% yield (USD-denominated and FX-hedged), with card companies covering any customer defaults, BlackOpal told CoinDesk. That compares with the 4.2% available on the U.S. 10-year Treasury note, the so-called risk-free rate worldwide, without the risk of high inflation, defaults or currency swings associated with investing in emerging market assets.
The GemStone launch is backed by a $200 million investment over three years from Mars Capital Advisors, a Swiss firm with $2 billion in assets under advisory that specializes in working capital solutions.
"Brazilian credit card receivables are a massive, liquid asset class that has been underserved by institutional capital. GemStone changes that," said Rick Pearson, CEO of Mars Capital Advisors, in the statement.
Advisor firm Draupnir Capital, which specializes in the intersection of institutional private credit and the Web3 economy, served as the sole lead adviser and capital introduction partner on the deal.