It was late November 2017 when the world got its public preview of Visa B2B Connect at the Singapore FinTech Festival. It was described then as an idea to solve the many frictions inherent in sending money from one bank account to another across borders, typically between corporates — and of a large denomination.
“From a speed perspective, faster is going to be critical,” said Kevin Phalen, head of Global Business Solutions at Visa, to Karen Webster shortly after that 2017 preview. “We want to make sure that with speed comes transparency as to where the payment is. Not only do we want payments to be faster, [but] we want to make sure there is visibility from origination all the way through the receiving of the payment.”
The idea of fixing that friction was also rapidly gaining traction with innovators two years ago, but through a different lens. Cryptocurrency (and the blockchain rails it rides on) was the buzz, built on a belief that nothing could really change unless everything changed — the rails, the regulatory and messaging constructs supporting those rails, the currency being moved and the speed at which those funds would move: instant, real time and on demand.
Today (June 11), two years and two successful 18-month pilots later, Visa is launching Visa B2B Connect, an end-to-end payments network, across more than 30 countries to start. This new B2B payments network is poised to take on a global payments market estimated to be worth more than $200 trillion annually, according to Juniper Research.
Visa B2B Connect will approach this by changing the things that must change to solve cross-border money movement frictions, while keeping the things that are core to Visa’s global payments network the same: trust, reliability, scalability and security.
What’s Different — And The Same
What has changed is the network itself. Visa B2B Connect is a brand new, end-to-end global payments network, built on using elements of distributed ledger technology (DLT) and the open source Hyperledger Fabric framework hosted by The Linux Foundation.
This “digital-first approach,” Phalen remarked, 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,” Phalen told Karen Webster before the public launch. “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.”
Visa B2B Connect is also built to be a transparent network — one that provides visibility into where funds are along their account-to-account journey, and how much it will cost for those funds to reach their destination. An important component of the Visa B2B Connect platform, Phalen said, is to make sure that there is an understanding and finality of the cost of moving those funds, showing foreign exchange (FX) and additional fees.
What hasn’t changed is, perhaps, what makes Visa B2B Connect both different and unique.
Visa B2B Connect brings a solution to financial institutions (FIs) that can better satisfy the cross-border payment needs of their customers — knowing those funds will move across Visa’s compliant, private, secure and permission-based network, and settle using fiat currencies. Visa B2B Connect leverages Visa’s core expertise in managing multilateral relationships among trading partners, eliminating the attendant delays and costs of sending funds across borders today.
Phalen noted that much of the existing infrastructure and solutions being proffered are traditionally tied to bilateral agreements, where several steps and parties are involved — adding to uncertainty over when funds will be received and how much it will cost to move them.
For instance, payments that move from Kansas to Africa may go through four FIs, via correspondent bank networks, to reach the receiver’s account. By contrast, Phalen explained, using Visa B2B Connect, if a corporate in Kansas wants to pay a firm in Africa, it can do so directly through FIs participating in Visa’s network — and monitor those flows every step of the way. That means corporates, through their FIs, will know where a payment is at any point, and when the funds will be available in their bank account.
“Our first goal was to make sure that Visa B2B Connect would move money around the world quickly,” Phalen explained. “Then, we wanted to make sure that there would be full traceability and visibility for those payments on a global basis.”
How — And When — It Works
In practical terms, said Phalen, being “digital first” means 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.
Moreover, he explained, since these identifiers are linked to important financial account details, any change in those details can alert FIs to potential changes within corporate structures for further follow up. Visa B2B Connect can also pass additional information across the network via ISO 20022 messaging standards — invoices, trade documents or standby letters of credit, among others.
Visa B2B Connect operates, as Phalen described, like “a pipe in the back of the FI’s payment hub,” making account-to-account transfers possible, and offering a range of flexibility for how to use it. FIs can be both originators or receivers of such transactions, opting to be one or the other.
Taken together, he said Visa B2B Connect is consistent with the operating principles that have defined Visa for the last six decades — principles that will make Visa B2B Connect both familiar to and trusted by FIs.
“We bring globality, we bring security, we bring compliance, we bring settlement, we bring the ability to manage multilateral relationships. That's what we have historically done,” Phalen told Webster, noting that those core elements are built into the Visa B2B Connect offering.
The Need For Speed
As with all transactions done through digital means, speed remains a key focus.
Visa B2B Connect helps participant banks in allowing corporate clients to settle payments same day or next day, all through APIs. Those payment settlement windows, he said, depend on currency and FX considerations.
Same-day settlement — or same-day plus one — was a deliberate choice, Phalen told Webster. As the firm looked to build out the B2B Connect infrastructure, it was important to understand the infrastructures with which it was connecting. Not all FIs are yet equipped to handle real-time transactions. As they are, Visa B2B Connect will make that capability available to them.
Connecting The Dots
The launch of Visa B2B Connect, he noted, comes in the wake of Visa “re-imagining” the breadth of solutions it offers, particularly when it comes to B2B and cross-border payments, and creating an end-to-end global payments network for FIs and their corporate customers.
The rollout also comes after Visa’s acquisition of Earthport last month, as folding the U.K. firm into its operations boosts this account-to-account transfer capability. Furthermore, the launch follows an partnership in April with Fidelity National Information Services (FIS) that will give its commercial FI clients access to the Visa B2B Connect platform. Both complement the recently announced remittance partnership with Western Union to make lower-value, higher-frequency global payments less friction-filled for senders and receivers.
“Our goal is to make sure that we provide the connectivity for high-value payments, and low-value payments, around the globe,” he told Webster.