Arf Financial — a Swiss liquidity and settlement platform for companies operating in cross-border payments. The project uses stablecoins and blockchain infrastructure to provide licensed financial institutions with short-term working capital without requiring them to pre-position large amounts of funds in destination markets. Arf has become one of the early practical examples of Payment Finance, or PayFi, where lending is directly connected to real payment flows. Following its merger with Huma Finance, the model gained an additional RWA layer that connects institutional capital with short-term receivables generated by payment companies.
Contents:
- Arf Financial: How PayFi Works
- Arf Liquidity: Liquidity Without Prefunding
- USDC, Blockchain, and Real-Time Settlement
- Huma Finance, RWA, and Arf Institutional Liquidity
- Arf Financial: Regulation, Development, and Key Risks
1. Arf Financial: How PayFi Works
Arf Financial was created as infrastructure designed to address liquidity challenges in international payments. The traditional model often requires payment companies to hold funds in advance with partners or in bank accounts in the countries where transfers are sent. This mechanism is known as prefunding: it helps accelerate payouts to recipients but also locks up working capital.
Arf moves the financing stage directly to the payment transaction. When a client needs to execute a transfer through a supported corridor, the platform provides short-term liquidity that is used to settle with the partner responsible for the payout. This allows a payment company to process transactions without having to reserve a comparable amount of its own capital in advance in every market.
This model has become one of the practical implementations of PayFi — a segment combining payments and financing. Unlike conventional DeFi lending, demand for capital is linked to specific cross-border transactions carried out by licensed financial institutions. By 2026, Arf describes PayFi more broadly as a payment finance layer combining programmable liquidity, compliance, and transaction execution.
The main objective of the system is not to replace local payment companies. They continue to handle interactions with senders and recipients, currency conversion, and local payouts. Arf provides an intermediary capital and settlement layer designed to reduce businesses' dependence on correspondent accounts and permanently idle liquidity.
2. Arf Liquidity: Liquidity Without Prefunding
The core product is Arf Liquidity — a short-term revolving credit line for licensed cross-border payment companies. Before providing capital, Arf analyzes the client's business, financial condition, and creditworthiness. The assessment uses financial and alternative data, a proprietary credit engine, and an internal scoring system.
Once a limit has been established, the client receives access to liquidity across approved payment corridors. When a payment instruction is initiated, Arf can provide the required amount to the partner responsible for the payout. Under the traditional Arf Credit Line model, repayment periods ranged from one to five days. After the principal and fee are repaid, the available credit limit is restored and can be used for new transactions.
The Arf Liquidity model includes several key components:
- Short-term liquidity — capital is provided for short payment cycles.
- Revolving credit — the repaid credit limit becomes available again.
- Receivable-backed financing — financing is linked to payment companies' receivables.
- No traditional collateral — conventional collateral for each transaction is not the foundation of the model.
- On-demand funding — liquidity is provided when a payment transaction occurs.
- Onchain settlement — movements of digital settlement assets are recorded on the blockchain.
- Licensed institutions — the service is designed for regulated participants in the payments industry.
The short duration of financing has a significant impact on capital turnover. According to a Circle case study, Arf processed more than $1.4 billion in USDC liquidity during its first year of operation, while annual capital turnover reached 50 times. These figures represent the volume of financed transactions rather than the amount of Arf's own capital or a guaranteed return for lenders.
3. USDC, Blockchain, and Real-Time Settlement
Arf uses stablecoins as settlement infrastructure for rapidly moving liquidity between financial institutions. Historically, one of the main assets used by the platform has been Circle's USDC. Its value is designed to maintain a 1:1 peg to the U.S. dollar, with reserves backed by cash and highly liquid dollar-denominated assets.
A typical payment cycle begins when a client receives an instruction to execute an international transfer. Arf provides USDC to the payout-side partner, which accepts the digital asset as a settlement instrument and uses its own local liquidity to transfer funds to the final recipient. The client then repays the financing within the agreed short-term period.
Blockchain primarily performs a settlement function in this model. Transactions can be executed around the clock and tracked onchain, while international bank transfers depend on correspondent infrastructure, operating hours, and other operational constraints. Arf has also used Stellar: during the project's earlier development, a payment corridor between Europe and the Philippines was established using USDC.
However, stablecoins do not eliminate the need for local financial infrastructure. Final payouts still require licensed partners, bank accounts, currency conversion, and compliance with the requirements of individual jurisdictions. PayFi accelerates the movement of settlement capital between participants but does not turn the entire international payment process into an exclusively blockchain-based transaction.
4. Huma Finance, RWA, and Arf Institutional Liquidity
In 2024, Arf merged with Huma Finance, which develops blockchain infrastructure for Payment Finance. The combined model connects two layers: Arf generates demand for short-term liquidity from payment companies, while Huma provides infrastructure through which capital can flow into these payment assets. In September 2024, Huma announced $38 million in funding to scale its PayFi network.
The financing involved Distributed Global, HashKey Capital, Folius Ventures, Stellar Development Foundation, and other investors. Part of the capital was allocated to Arf's RWA assets. At the time of the announcement, the combined Huma and Arf ecosystem reported more than $1.8 billion in payment financing transactions.
| Component | Function | Role in PayFi |
|---|---|---|
| Arf Financial | Liquidity and settlement | Cross-border payment financing |
| Arf Liquidity | Revolving credit | Replacing part of prefunding requirements |
| USDC | Digital settlement asset | Onchain movement of liquidity |
| Huma Finance | Payment financing infrastructure | Connecting capital with payment assets |
| Receivables | Short-term debt obligations | Economic basis of financing |
| RWA structures | Investment instruments | Institutional capital access to PayFi |
By 2026, Arf describes Payment Finance as a distinct short-term RWA category. Under the institutional structure, an investor can gain exposure not to a cryptocurrency token but to notes issued by a bankruptcy-remote SPV and backed by short-term receivables from licensed payment institutions. Returns in this model are linked to real payment financing, although credit and structural risks remain.
5. Arf Financial: Regulation, Development, and Key Risks
Arf Financial GmbH operates from Switzerland and is a member of the VQF Self-Regulatory Organization. The company targets its services at licensed financial institutions, distinguishing its model from permissionless DeFi lending. Compliance, client verification, and creditworthiness assessment are integral parts of the liquidity provision process.
The infrastructure continues to integrate with larger payment networks. In 2025, Arf and Huma announced plans to provide credit services to participants in the Circle Payments Network. In 2026, Arf also demonstrated a programmable liquidity model with LuLu Financial Holdings, where receivables-backed financing can be activated directly when a payment transaction is executed.
The main PayFi risks are associated with the creditworthiness of payment companies, the quality of receivables, the performance of local payout partners, and compliance with regulatory requirements across different jurisdictions. Additional risks include stablecoin infrastructure, blockchain networks, smart contracts, currency conversion, and liquidity. Short loan durations reduce the length of exposure but do not eliminate the possibility of delayed repayment or default.
Arf Financial demonstrates how blockchain can be used not to issue a speculative asset but to finance existing international payment flows. The economic impact of the model depends on how effectively short-term on-demand liquidity can replace prefunding and how reliably credit scoring, compliance, and capital repayment processes operate. The future development of Arf and PayFi will therefore depend primarily on the scale of real payment demand, borrower quality, and the ability to integrate onchain settlement with regulated financial infrastructure.
