Colossus Overview

Colossus is a stablecoin credit card network. It works with existing cards and terminals and settles noncustodially on Ethereum.

Colossus turns credit cards into a private key and the network into an Ethereum L2.

How does it work?

In short, we have repurposed the standard EMV (Europay, Mastercard, Visa) credit card terminal into signing an Ethereum ERC-4337 transaction.

The cardholder taps their card or phone at the terminal, signing an ERC-4337 transaction. That signature is sent from the terminal to a credit card acquirer. The acquirer submits the signature to the ColossusNet sequencer, which executes the transaction and returns a preconfirmation in 100ms.

The preconfirmation is the authorization, sent from the acquirer back to the card terminal.

Acquirers are the key

Credit card acquirers are the interface between the card network, merchant, and issuing bank. Acquirers own the relationship with the merchant, so a Colossus integration with an acquirer makes the card available at all their merchants.

An acquirer's purpose is to settle and authorize transactions. Acquirers authorize the transaction by validating the card signature with the credit card network (Visa, Mastercard, American Express, etc.).

Once authorized, the acquirer queries the issuing bank for funding. If funding is available, the acquirer initiates a transfer from the issuing bank (the cardholder's bank) to the acquiring bank.

Acquirers bear the risk in the transaction for chargebacks and fraud, and pass the chargebacks onto the merchant.

When the funds have landed in the acquiring bank account, the acquirer distributes the funds to each merchant.

The acquirer makes 0.13-0.15% for the services.

Why is Colossus better?

Colossus is a closed-loop stablecoin credit card network built as an Ethereum L2. By vertically integrating the processor and card network, Colossus eliminates network assessments, per-authorization fees, and the dozens of hidden surcharges that make legacy card processing expensive and opaque, representing a 92-96% fee reduction compared to traditional card networks.

A Colossus transaction moves stablecoins from the cardholder (or issuer's collateral pool) to the merchant instantly and immutably. In the Direct Debit model, the merchant pays zero fees. In the credit models, the merchant pays a single flat rate (1.70% or 2.20%) with no online surcharge, no downgrades, and no per-transaction charges.

Acquirers own the merchant distribution, not Visa. Colossus achieves the same distribution as Visa by integrating directly with acquirers (Fiserv, Elavon, Global Payments, Worldpay, etc.).

Colossus' integration is EMV standards compliant, meaning integration with acquirers and merchants is familiar and intuitive.

The GENIUS Act grants Colossus the ability to move stablecoins without KYC/AML or a money transmitter license.

Fee structure

Colossus has three tiers. One rate per tier. Card-present and card-not-present rates are identical.

The network fee is the cost of processing the transaction on ColossusNet. It is typically less than one-tenth of a penny and is never charged to the merchant.

There are no assessment fees, no per-authorization fees, no batch processing fees, no online surcharges, and no interchange downgrades. The merchant pays the tier rate and nothing else.

Three settlement tiers

1. Direct Debit: The cardholder holds stablecoins on ColossusNet. Transactions debit directly from their balance. The merchant receives the full transaction amount. No issuer involved, no chargebacks.
2. Consumer Credit: An issuer posts collateral and a $100K refundable deposit, then funds transactions on behalf of cardholders. The merchant is settled instantly from the issuer's collateral pool at 1.70% interchange. Dispute resolution is backed by the $100K deposit.
3. Premium Credit: Same settlement model as Consumer Credit but at 2.20% interchange. Permissioned issuance with KYC/AML mandatory, capped at 20% of total ColossusNet card issuance. See the issuer guide for details.

Network identifiers

See Terminal Configuration for the full network parameter reference.