Hundreds of millions of consumers and businesses use digital wallets — and not traditional bank accounts — to transact across the globe.
That’s especially true in emerging markets, where the ubiquity of mobile devices offers a springboard to transitioning away from bills and coins. But moving from cash to a digital environment also demands that stakeholders grapple with different regulatory and compliance schemes — and for businesses there’s the need to obtain licenses to operate in a given country.
The pain points are especially acute for small businesses (SMBs) that employ 90% of the population and account for 70% of GDP.
To improve that participation amid the continued great digital shift, Visa and TerraPay announced Wednesday (May 10) that they are working together to connect Visa solutions to the TerraPay network of wallet providers to expand SMBs’ access to commercial cards, bank accounts and mobile digital wallets across 26 global markets. It’s a fast track to financial inclusion as Visa rails connect seamlessly to a network of senders and receivers who are adept at using, and prefer to use, mobile and digital channels to send money across borders.
Visa also announced it has made a strategic equity investment in TerraPay. Financial terms were not disclosed.
“In a cross-border environment,” Genovez told Webster, “we’re in the early days of defining better networks. The technology is fragmented. … Financial inclusion is partly digital inclusion, but it’s also about Visa collaborating with other networks that are reaching consumers that we’re not reaching today.”
And in sharpening that network focus, as Genovez remarked to Webster of TerraPay, “They have developed a set of capabilities that we at Visa believe will enhance the user experience to extend to cards, banks accounts and mobile wallets,” adding that the relationship is “an important aspect in extending the network to reach any consumer — anywhere.”
Genovez said the joint efforts of Visa and TerraPay, through Visa Direct (and TerraPay’s Request to Pay digital wallet solution), will streamline peer-to-peer (P2P) remittances across borders and speed business payouts for smaller businesses across more than 100 countries — with mobile devices as the point of access.
In terms of scale and reach, TerraPay touches about 4.5 billion bank accounts and 1.5 billion mobile wallets and has seen significant growth in emerging markets in Africa and the Middle East.
In those markets, Genovez said, several factors are influencing the transformation of money movement. Larger commerce platforms, financial institutions (FIs) and providers (such as Western Union and MoneyGram, and Remitly and Wise) are seeking to push cash transactions more firmly into the digital realm.
“Expanding the network to facilitate digital and financial inclusion is an important aspect of Visa’s expansion,” Genovez said.
The Visa/TerraPay announcement comes against the backdrop where cross-border trade is projected to top $8 trillion within the next two years, led by emerging markets. And per Genovez’ observations, wallets, as used in cross-border P2P transactions, are increasingly being embraced by consumers. By the end of 2025, he said, there will be more than 5 billion mobile wallets in the field, so to speak, and those billions of wallets will reach 800 million individuals who do not have a debit card and do not have a bank account.
The use of mobile wallets has also been marked among SMBs, he said, where many companies use those wallets to run their businesses — buying raw materials or inventories — without establishing formal banking relationships. Enabling a more seamless flow of funds across borders, Genovez said, can improve supply chain dynamics as businesses pay vendors, and improve consumer-to-business payments.
“What Visa Direct does here,” he said, with some detail on the efforts with TerraPay which have been taking shape through the past six months as APIs and protocols were in development, “is take the debit card, the bank account — and especially, in this case, the mobile wallet — and transfer the transactions to these endpoints, while eliminating the friction from the entire money movement experience.”
At the center of it all, Genovez said, is the “consumer who is demanding a better experience as they send funds. … They want a digital solution, but they also want the ability to send money to accounts and to mobile wallets.”