A recap of the QualitaX webinar with Steffen Schacher, UDPN Lead at GFT, and Tim Bailey, VP of Global Business & Operations at Red Date Technology.
Cross-border payments remain one of the most persistent inefficiencies in global finance. Slow, expensive, opaque, and dependent on chains of correspondent banks built for a different era — the system is, as one of our guests put it, “meant for disruption.” In a recent QualitaX webinar, Steffen Schacher, UDPN Lead at GFT, and Tim Bailey, VP of Global Business & Operations at Red Date Technology introduced the Universal Digital Payments Network (UDPN) — not as a concept or a whitepaper, but as a live infrastructure already running proof-of-concepts with over 30 organisations including Deutsche Bank and Standard Chartered.
The Problem: A $120 Billion Friction Cost
The scale of the cross-border payments problem is well established. In 2022 alone, an estimated $120 billion was spent purely on transaction costs in cross-border payments — covering FX conversion, transfer fees, correspondent banking charges, and settlement delays. For end users and enterprises alike, the experience is frustratingly opaque: money leaves one account, disappears into a chain of intermediaries, and may or may not arrive at the destination within a predictable timeframe.
Underlying this is a structural issue: the messaging and settlement infrastructure that governs international payments was largely built decades ago, designed around the financial systems of the 1970s and 1980s. It was not built for digital currencies, programmable money, or the kind of real-time settlement that modern financial markets increasingly demand.
The UDPN was designed from the ground up to address this — not by patching existing infrastructure, but by building a new layer specifically for the regulated digital currency world that is now emerging.
What the UDPN Is — and What It Is Not
Steffen was clear from the outset about the scope and boundaries of the network. The UDPN is a messaging and processing infrastructure for regulated digital currencies only. It is not a cryptocurrency network. No unregulated tokens, coins, or assets participate. The network is designed exclusively for:
Wholesale and retail CBDCs issued by central banks
Regulated stablecoins approved by financial regulators
Bank deposit tokens tokenised by commercial banks within regulatory frameworks
There will be no consumer app connecting directly to the UDPN. Every participant is an institution — a bank, payment service provider, or regulated enterprise — that is responsible for its own KYC and AML processes. This design choice is deliberate: it positions the UDPN as infrastructure for the regulated financial system, not a challenger to it.
The network went live at the World Economic Forum in Davos in January 2024, following approximately two and a half years of development in close collaboration with financial institutions.
Architecture: Transaction Nodes, Business Nodes, and an Innovation Layer
Tim walked through the three-layer architecture that underpins the UDPN:
Transaction nodes sit on the right side of the network. These are operated by currency operators — central banks or regulated stablecoin issuers — and represent how digital currencies are onboarded to the UDPN. Each currency operator runs its own transaction node, maintaining control and security over its currency infrastructure.
Business nodes sit on the left side. These are operated by commercial banks, payment service providers, and enterprises. A business node functions as a gateway — once connected, the operator has access to all digital currencies that have been onboarded to the network via transaction nodes.
Both transaction nodes and business nodes are off-chain for security reasons. In the centre sits the blockchain layer, currently running on Hyperledger Besu — an open-source enterprise Ethereum client — though the UDPN is explicitly designed to be blockchain protocol agnostic.
Sitting above all of this is what may be the UDPN’s most strategically important feature: an application layer where third parties including banks and technology companies can deploy smart contract-based value-added services. Foreign exchange, KYC checks, programmable payment conditions, and other services can be built and deployed by industry participants directly onto the network.
Decentralised Governance: The UDPN Alliance
One of the most distinctive aspects of the UDPN relative to other cross-border payment initiatives is its governance model. The network is governed by the UDPN Alliance — initially six founding members, scaling to 24 — each of which operates a validator node and holds an equal vote on governance decisions.
Governance decisions put to the Alliance include: onboarding new digital currencies, admitting new alliance members, changing the fee structure, and other significant network changes. Voting thresholds vary by decision type — admitting a new alliance member, for instance, requires approximately 80% approval.
Critically, the founding organisations — GFT and Red Date — hold no more voting power than any other member. Governance is equal by design.
The Alliance is also being built with deliberate geographic diversity in mind. The goal is representation across the Americas, Europe, and Asia, avoiding the concentration of control in any single region or financial centre.
Proof-of-Concepts: Moving Beyond White Papers
Since the Davos launch, GFT and Red Date have been running a series of 12 proof-of-concepts with over 30 participating organisations — commercial banks, payment companies, professional services firms, law firms, and technology companies — on a live sandbox environment.
Two examples were highlighted during the webinar:
Deutsche Bank and Standard Chartered recently published a joint press release on the successful completion of their first UDPN POC — a digital currency transfer and swap. Both institutions have been collaborating with the UDPN team for over two years.
Standard Chartered, G+D (Giesecke+Devrient), and DZ BANK published a further joint press release on a CBDC proof-of-concept using G+D’s Filia CBDC product — just days before the webinar.
The emphasis on working proofs-of-concept on live infrastructure, rather than theoretical frameworks or white papers, is a deliberate differentiator.
ISO 20022 and Integration with Legacy Systems
A question was raised about ISO 20022 compatibility — the global standard for financial messaging that underpins modern payment systems. The answer from GFT was direct: the UDPN is designed to be compatible. For institutions operating on existing payment infrastructure using ISO 20022 messaging, integration with the UDPN can be as straightforward as redirecting payments to a different API, with the same message standards and the same destination — just routed through the UDPN network.
POC number four in the current series specifically covers this use case, and GFT is actively looking for financial institutions to participate.
Beyond Banking: Airlines, Telcos, Insurers, and E-Commerce
While the UDPN is institutional infrastructure, the use cases extend well beyond interbank settlement. Stefan described significant inbound interest from non-banking sectors:
Insurance: A POC is underway for a Southeast Asian insurance use case.
Airlines: Large Southeast Asian carriers with significant user bases are exploring integration for receiving and initiating payments.
Telecoms: Telcos are interested not only in payment flows but in combining UDPN capability with their existing loyalty programmes and point-of-sale systems.
E-commerce: Perhaps the most compelling non-bank use case involves e-commerce platforms acting as wallets for their users — using the UDPN and a banking-as-a-service partner to settle cross-border payments for international purchases in real time.
ERP integration: Some large enterprises have expressed interest in connecting SAP and other ERP systems directly to the UDPN, enabling programmatic payment initiation and settlement to be triggered automatically from procurement and invoicing workflows.
The common thread across all of these is programmability — the ability to attach conditions to payments, automate settlement upon delivery, and embed financial logic directly into operational systems. This is the dimension of digital money that existing correspondent banking infrastructure cannot support.
The Road Ahead: 2024 and Beyond
Looking ahead, both Steffen and Tim expect 2024 to see a significant acceleration in digital currency deployments. Key themes they anticipate:
- A wave of new regulated stablecoin launches from banks and large enterprises, many of which are already in advanced internal testing.
- Growth in complex settlement use cases — DvP and PvP — building on the foundations laid by early production deployments.
- A shift from small, isolated POCs to larger sandboxes connecting multiple financial institutions and regulators across a complete end-to-end value chain.
- Increasing interoperability testing between different systems, networks, and jurisdictions.
On the technology side, the UDPN team is working on integrating additional blockchain protocols beyond Hyperledger Besu, expanding the application layer capabilities, and selectively open-sourcing parts of the codebase — with the exception of the transaction node infrastructure, which will remain proprietary for security reasons.
Key Takeaways
- The UDPN is live: it launched at Davos in January 2024 and is running active POCs with over 30 organisations — this is real infrastructure, not a roadmap
- It is designed exclusively for regulated digital currencies — CBDCs, regulated stablecoins, and bank deposit tokens; no cryptocurrency
- The application layer is a key differentiator: it enables third parties to deploy smart contract-based value-added services on top of the network, creating an innovation ecosystem rather than a closed system
- Decentralised governance via the UDPN Alliance (initially 6, eventually 24 geographically diverse members with equal voting rights) separates it from bank-led single-entity ecosystems
- ISO 20022 compatible: integration with legacy payment infrastructure is straightforward; POC number four specifically covers this
- Interest extends well beyond banking: airlines, telecoms, insurers, and e-commerce platforms are all exploring use cases
- 2024 is expected to be a breakout year for regulated digital currency deployments, with many organisations currently in advanced testing but not yet public