# Payment Financing (PayFi)

### What is PayFi

Payment Financing (PayFi) refers to the **financing of payments using stablecoins**. It involves the provision of **short-term stablecoin credit** to businesses, enabling them to settle transactions on blockchain rails that would otherwise be costly and slow.

### Why PayFi

Traditional payment rails are expensive and slow, especially for cross-border transfers. To speed things up, payment providers often pre-fund local currency accounts across multiple corridors so they can settle transactions with speed. While effective, this **ties up large amounts of working capital.** 

PayFi solves this by enabling businesses to tayp into **on-demand stablecoin liquidity** and blockchain rails for near-instant settlement, **eliminating the need for pre-funding** and freeing up capital for other purposes.

### Key Features

* Stablecoin-denominated credit
* Short-term repayment cycles (1 to 5 days)
* Liquidity provision aligned with real-world payment flows
* No need for borrowers to maintain idle, pre-funded balances

### Clearpool's Role in PayFi

Clearpool is the credit layer powering PayFi. By aggregating capital from both retail and institutional lenders, **Clearpool supplies PayFi firms** with the stablecoin credit they need to operate at scale. PayFi firms then extend that credit to fintechs such as payment service providers (PSPs) and remittance platforms, enabling them to settle transactions faster and more efficiently. Clearpool is the **liquidity behind the liquidity**.

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