SoFi Just Made a Big Move Into Blockchain Payments. Here's What Investors Need to Know. - Yahoo Finance

SoFi Technologies is betting that blockchain technology can transform how money moves, moving beyond traditional banking and lending. The company launched its own digital dollar, called SoFiUSD, in September to settle transactions across its Mastercard card program.

The new system allows participating institutions to transfer and record funds on a shared digital network. This could enable transactions to settle at any time of day, potentially offering a faster alternative to the current process where banks must settle funds between themselves.

SoFiUSD is designed to maintain a value of $1, unlike Bitcoin, whose price can rise or fall sharply. If the system works well, it could help move money more quickly and give businesses faster access to their funds.

Mastercard Partnership

Building a new payment network is difficult, as it requires banks, merchants, and customers to adopt it before the network becomes useful. SoFi Technologies does not have to start from scratch, as its partnership with Mastercard allows it to introduce blockchain settlement through an established global payments network.

The potential benefits of digital currency go beyond speed. Faster settlement could help businesses access their money sooner, while payments that operate around the clock could make moving money between institutions more convenient.

Having said that, the real financial benefit in the long run will depend on whether the new system reduces costs, improves capital use, or helps SoFi win additional business. SoFi still needs to prove that its blockchain business can generate meaningful profits.