Borrow against settlement balances: how payment firms do it

A payment company can borrow against the settlement balances it funds with its own money. Customer funds held under safeguarding rules stay out of the collateral pool.

On 28 May 2026 Nala, a payments company founded in Tanzania, secured up to $50 million of credit from Liquidity to pre-fund customer wallets on its stablecoin payment network. That line is sized on Nala's business and pays for the prefunding itself. A company that already holds prefunded settlement balances can also borrow against them, when those balances are its own money. Credit lines for fintechs and payment companies now come from Arf (part of Huma Finance), Mansa, Liquidity, Maple, Credit Coop, Valinor and the Upshift prime stack. Arf and Credit Coop back their lines on receivables and incoming settlement, Maple on crypto collateral, and most lenders don't publish their security terms.

Upshift is onchain yield infrastructure for fintechs and asset managers with stablecoin balances. An Upshift lending vault can fund the line itself: depositors' stablecoins are lent to the payment company, with limits set onchain by the policy engine. A vault can also hold the reserve a line is secured on, and that reserve keeps earning while it's pledged.

Step 1: separate company money from customer money

A payout platform tops up its partner in Manila with a mix of two things: money its customers have already paid in for transfers, and the company's own capital, which covers payouts before customer funds clear. In the UK, only the second can be pledged: the Payment Services Regulations 2017 say that no person other than the payment institution may have any interest in or right over safeguarded customer funds. The FCA's supplementary safeguarding rules in PS25/12 came into force on 7 May 2026 and add daily reconciliation and monthly safeguarding returns on top. Rules elsewhere differ. Check with counsel in each licence jurisdiction (general information, not legal advice).

The pledgeable part can include the treasury reserve, the safety buffer and any float a company funds ahead of customer money.

Step 2: pick how the line is backed

The lenders above back their lines in different ways, as of October 2026:

• Secured on a reserve. A company can offer a balance it owns as collateral, and a lender that accepts it sets a limit as a percentage of it (the advance rate). Terms are agreed case by case.
• Short-term and receivable-backed. Arf lends USDC to licensed cross-border payment companies after assessing their operations, and the limit is reinstated once each loan is repaid. Circle reported $1.4 billion of liquidity volume in Arf's first year and 50x annual capital turnover.
• On demand, per corridor. Mansa delivers stablecoin capital at the moment of settlement. Mansa doesn't publish its terms.
• Secured on card settlement receivables. Credit Coop funds the daily Visa settlement of stablecoin-linked card programs, and its Spigot smart contract routes incoming settlement proceeds to repay each draw (Visa, 8 Sep 2026).
• A facility sized to the business. Nala's line from Liquidity starts with a $25 million tranche and can grow to $50 million, and Liquidity says it stress-tested corridor volume swings, FX moves and settlement timing before sizing it.

Maple's institutional secured lending takes crypto collateral, which a payment company with a bitcoin or ether treasury can post. A reserve held entirely in dollars has to use one of the other routes.

Valinor, a New York credit firm founded by former Blackstone credit investors, raised a $25 million seed round led by Castle Island Ventures in March 2026. Fortune reported on 30 March 2026 that it had already made blockchain-based loans to fintech and crypto companies.

Step 3: size the line against your peaks

A line pays for itself on the days a corridor needs more than its normal balance. Take a payout platform sending $2M a day to Mexico, holding 2 days of cover ($4M) at its payout partner and a $4M company reserve on top. Twice a month, payroll runs and holiday weekends push a day's payouts to $5M, which is $3M more than an ordinary day. The platform could park an extra $3M with the partner all year. At a 10% cost of capital that buffer costs about $300,000 a year. Or it could pledge the $4M reserve, take a line at an illustrative 90% advance rate ($3.6M) and draw $3M on about 24 days a year. At a hypothetical 12% interest rate, 24 days on $3M costs about $23,700 plus whatever commitment fee the lender charges (all figures illustrative; lenders set their own pricing).

Redeeming the reserve costs less than borrowing when the cash is needed on a weekday and the vault's redemption lag fits the timing. The line earns its place when a peak lands faster than that, at a weekend or on a day when instant exits are thin. It also leaves the reserve in place for the next incident. What prefunding costs a cross-border payment company has the formula and a table for the days-of-cover side of this calculation.

Step 4: hold the collateral where it earns and a lender can see it

A pledged reserve sits still for most of the year, and in a stablecoin vault it earns while it waits.

Upshift deploys vaults that can be limited to allow-listed wallets or a single depositor. A payment company usually starts its reserve in the Cash band, where the vault holds tokenized money market funds and earns close to the T-bill rate. The 13-week bill yielded 4.14% on 6 October 2026, per the US Treasury's daily bill rates. At that rate a $4M reserve earns roughly $165,000 a year before vault fees (rates move daily and aren't guaranteed). The vault shares sit in a wallet the company controls, and a lender can check the balance onchain at any hour without waiting for a bank statement. A sole-depositor vault also keeps the reserve out of a shared exit queue, which segregated vs co-mingled vault accounts covers in detail. Most Upshift vaults have a 72-hour withdrawal period, and instant exit is available up to the vault's liquidity buffer for a fee of about 0.2%. Upshift validates each vault's net asset value before it reaches depositors, and a lender sizing a line against vault shares gets the same price the company sees.

Through the Upshift prime stack, partners can reach a network of institutional lenders, including credit lines for card and payment programs, and terms are agreed per partner. On the other side of the same stack, CeFi lending vaults let depositors fund loans to institutional borrowers, with a policy engine controlling the risk onchain.

Step 5: draw for peaks and repay once payouts settle

A line secured on a reserve gets drawn the afternoon before a peak and repaid when customer funds for those transfers clear. Arf's loans run 1 to 7 days, per Huma's August 2026 update, which also reported $17 billion of transaction volume since Huma started (a cumulative figure). Short tenors keep the interest bill small. They also mean the company needs incoming customer funds to land on schedule. A delayed bank wire on the collection side can turn a 2-day draw into a 5-day one. Weekend payouts are one common use; how PSPs fund weekend payouts covers that case, and receivables financing vs stablecoin credit compares the two ways of borrowing.

A stablecoin can trade below $1 for a period, which shrinks the value of a pledged reserve. A stablecoin depeg also moves the lending markets that accept that coin as collateral. A vault contract can have a bug, a large withdrawal may wait for liquidity, and a lender can cut a limit at the point a company needs it most. Upshift's contracts have been through 11 smart contract audits by 6 independent firms, and a compliance team will usually run a vault provider review before moving a reserve. Always make sure to do your own research and be aware of the above and any other risks before depositing.

Frequently asked questions

Can a payment company borrow against its prefunded settlement balances?

Yes, for the part funded with its own capital. A lender that accepts the balance as collateral sets a limit as a share of it, and in a stablecoin vault the balance keeps earning while it's pledged. In the UK, safeguarded customer funds can't be pledged: the rules bar anyone else from holding a right over them.

Who offers institutional stablecoin credit lines to fintechs?

Arf (Huma Finance), Mansa, Liquidity, Maple, Credit Coop, Valinor, Upshift lending vaults and lenders reached through the Upshift prime stack all lend to fintechs, payment companies or institutions. Mansa raised $10 million in February 2025, with $7 million of it as liquidity financing.

Can a payment institution pledge safeguarded customer funds as collateral?

In the UK, no. Regulation 23(8) of the Payment Services Regulations 2017 reserves any interest in safeguarded funds to the institution itself. The FCA's PS25/12 template also has the safeguarding bank acknowledge it has no right of set-off over them, except for its own fees and after an insolvency event. Huma describes Arf's credits as backed by funds already deposited into safeguarding accounts; how that fits each jurisdiction's rules is a question for counsel. This is general information, not legal advice.

How long are stablecoin working-capital loans for payment companies?

Transactional lines like Arf's run 1 to 7 days and refill once repaid. Nala's facility starts with a $25 million tranche and can scale to $50 million.

Does a pledged reserve still earn yield?

It can, if the reserve sits in a stablecoin vault and the lender accepts the vault shares as collateral. That depends on the lender, and lenders reached through the Upshift prime stack have accepted vault shares before. The yield accrues in the vault's share price, which means the collateral grows slowly while a draw is out. The lender can check its value onchain at any time.

Keep reading

• Stablecoin cross-border payments: how corridors work and where the float earns.
• What is PayFi: payment finance and where payment balances sit.
• Whitelisted and sole-depositor vaults: providers that limit a vault to one depositor.
• DeFi lending: how lenders earn and get their money out.