Visa Launches New Blockchain Solution to Speed Up Cross-Border Transactions
Visa Inc has launched a new network to help financial institutions with processing cross-border payments globally on behalf of corporate clients faster and at a lower operational cost. From the company they said that the Visa B2B Connect network launch will cover 30 trade corridors globally and is expected to expand to 90 markets by the end of this year.
Kevin Phalen, SVP, global head of Visa Business Solutions said:
“By creating a solution that facilitates direct, bank to bank transactions, we are eliminating friction associated with key industry pain points.”
Phalen explains that with this solution, financial institutions could see payment fees upfront and transactions will settle quicker, in one to two days.
Visa B2B Connect is slightly based on blockchain technology but it also has elements of Hyperledger, the open source distributed ledger technology (DLT) developed by a group led by the Linux Foundation.
Currently, most cross border payments go through Swift, but Visa is hoping to break into the market which it says is worth $125 trillion. From the company they also said that their newly launched distributed ledger software will facilitate direct bank connections.
The B2B Connect rails are new, so Visa isn’t leveraging the pervasive credit card rails it has spent decades building and maintaining. But it is leveraging its boundless experience in areas like complex payments, cybersecurity and compliance.
This “digital-first approach,” as they explained from the company, moves and settles funds across borders on the same day or next day, down from what is typically a five-to-seven-day trip.
“We did not build this infrastructure by adding to the traditional card network infrastructure, as we knew it. We knew that for what we were building for, and what we were solving for, we needed to really build a brand new network from scratch.”
He also said that in practical terms, being “digital first” means that the transactions that flow across Visa B2B Connect use a digital identifier to pass payment instructions. That digital identifier tokenizes an organization’s sensitive data, including banking details and account numbers, sidestepping the vulnerabilities to fraud that exist when sending checks, ACH and wire transfers.