Today Visa announced its corporate blockchain payments platform B2B connect is live. Initially, it covers more than 30 global trade corridors with plans for 90 by year’s end. By using Visa’s own network, it cuts out the need to use SWIFT and the correspondent banking network. The payments do not use Visa cards.
The solution will “accelerate the evolution of how commercial payments move around the world,” said Kevin Phalen, SVP, global head of Visa Business Solutions. “By creating a solution that facilitates direct, bank to bank transactions, we are eliminating friction associated with key industry pain points. With Visa B2B Connect, we are making payments quicker and simpler, while enhancing transparency and consistency of data.”
A lot of cross border payment friction comes from compliance and getting bank details wrong. That’s compounded if there’s a need to add an intermediate bank. JP Morgan introduced its blockchain based Interbank Information Network to address this issue as a first step.
Visa’s solution to the problem is to create a digital identity for organizations, tokenizing banking details and account numbers. Plus it integrates with legacy systems. Payments won’t be instant because the target is high value cross border transfers which will have to go through Anti Money Laundering procedures.
Pilot participants included Commerce Bank and Cornèr Bank. To onboard client banks as previously announced, Visa has partnered with FIS as well as Bottomline. FIS provides infrastructure to banks. As does IBM with whom Visa partnered to develop the platform based on Hyperledger Fabric.
Visa initially worked with startup Chain to develop the solution, but switched to IBM after Chain was acquired for $500 million by Stellar and became Interstellar.
“Enabling modernization for financial institutions across all payments systems is a key tenet of FIS’ global strategy, and we’re glad to be amongst Visa’s first partners to bring Visa B2B Connect platform access to our mutual clients at scale,” said Raja Gopalakrishnan, international head of Banking and Payments for FIS Global Financial Solutions.
“With Visa B2B Connect, we are leveraging Visa’s existing assets and our expertise in cybersecurity, data privacy, the scale of our network – and layering that with new elements of distributed-ledger technology to meet unique needs of this industry,” said Sam Hamilton, SVP, data product development at Visa. “This lays the foundation for a service with the potential to transform cross-border payments.”
Earlier this year, Visa acquired Earthport, a UK company with 87 direct foreign banking relationships. A spokesperson told Ledger Insights via email: “Our goal is to make Earthport a complementary service to Visa B2B Connect and to the Visa Network overall. We are at the very early stages of integrating Earthport’s capabilities and reach across Visa’s portfolio of products and services. The value of Earthport is that it will enable us to extend the reach of our existing services and provides flexibility in the store of value.”
This article has been updated with comments from Visa re Earthport.