Last week VISA entered into a deal enabling FIS’ financial institution clients to have access to VISA B2B Connect. VISA B2B Connect uses blockchain to make high-value corporate payments internationally without using SWIFT. To do so, the banks of both counterparties need to be on the B2B Connect network. The relationship with FIS shortcuts the process of building the network.
FIS is a major provider of solutions to the banking sector. It recently announced plans to acquire Worldpay, had revenues of $8.4 billion in 2018 and says it moves $9 trillion of money a year.
With SWIFT most banks don’t have direct banking relationships with other banks. So many payments are sent via the correspondent banking network, using an intermediary bank to make the payment. This is often the cause of slow payments and delays, particularly where there are queries which is more likely with high-value payments. By using VISA B2B Connect, banks can circumvent the correspondent banking network.
However, VISA is not offering instant payments. It says the time will be significantly shorter at one to two days. The target is high-value payments so they will all be subject to money laundering procedures.
“Innovation in cross-border B2B payments is long overdue. Visa’s core strategy is to help clients and partners drastically improve their customers’ friction-filled experiences,” said Kevin Phalen, global head, Visa Business Solutions, Visa. “We are excited to continue building momentum for Visa B2B Connect and to bring speed, efficiency and transparency to our financial institution clients through our partners, like FIS, who help make transacting on our platform more accessible and seamless.”
FIS has built a custom integration module to reduce the work required for clients to integrate with the network.
Six months ago VISA made a big switch moving the B2B Connect technology over to IBM and Hyperledger Fabric. The previous technology partner was Chain.com which was acquired by Stellar.
VISA also recently won a bidding war with Mastercard to acquire Earthport which has direct banking relationships in 87 countries and is a Ripple partner. However, that bid is currently under review by the UK’s competition watchdog.
There’s a lot of innovation happening in the blockchain payments sector outside of cryptocurrencies. JP Morgan has its Interbank Information Network of more than 220 banks which currently helps to address sanctions screening with more ambitious plans going forward. Ripple has a high profile solution and has attracted several remittance companies and some banks.
VISA has confirmed that the B2B Connect platform has been operating a pilot program since last year with plans for a commercial launch in 2019. A spokesperson stated: “Our goal with Visa B2B Connect is to build a product that is scalable and meets the needs of an industry environment where compliance, control, governance and security are all of equal importance.”
Update: last paragraph added