Visa Adopts Blockchain For Cross-Border, Bank To Bank B2B Payments
Visa is integrating blockchain technology with its core systems to enable participant businesses to make direct, cross-border, bank to bank payments to other corporate participants.
The news system called Visa B2B Connect is being built using the Hyperledger Fabric framework from the Linux Foundation, and will mean that, rather than paying another corporate by cheque, automated clearing house or wire transfer, all of which require intermediary banks and exchanges, payments can be made directly and instantly from bank to bank of corporate customers.
This will mean cost and time savings, and the ability to pay and get paid 24-hours a day, regardless of location, local time differences, and other problematic traditional banking anomalies such as data truncation, payment delays and compliance issues.
Suite of APIs
The Visa B2B Connect system essentially provides a suite of Application Programming Interfaces (APIs) which allow participating banks to automate B2B, cross-border and cross-currency payments, by developing an end-to-end B2B payments solution to onboard customers, set up their suppliers, check Visa B2B Connect foreign exchange rates and submit payments. Alternatively, banks can choose to integrate just a subset of the APIs to address more specific needs e.g. checking on the status of certain payments through the Visa B2B Connect site.
Although the new system will only work for those corporates signed-up as participants to Visa’s pilot scheme, there are already plans to expand it so that it will cover more than 30 global trade corridors and 90 markets by the end of this year.
The benefits that the blockchain-based B2B Connect system offers include cryptographically secured B2B transactions, transaction transparency and predictability, and the peace of mind and security of operating within a trusted network where all parties are known participants on a permissioned blockchain operated by Visa.
Blockchain Lacking Functionality
Recent research by Gartner showed that Only 11% of CIOs have deployed or are in short-term planning with blockchain, partly because of the fact that, at the moment, blockchain is a technology and not a complete, ready to use application, and therefore, lacks business-friendly features like a user interface, business logic, data persistence and interoperability mechanisms.
What Does This Mean For Your Business?
For corporates, Visa’s B2B Connect system appears to unlock some of the long-promised benefits of blockchain in terms of fast and easy cross-border payments, security, transparency, and the reassurance of a trusted name in the payments world. Also, the fact that a suite of APIs are available to participants means that the system can be set up relatively easily, thereby tackling the issue (as highlighted by the Gartner research) of confusion among corporate tech heads about how best to incorporate blockchain and worries about there being few ready to use, complete applications available.
For smaller businesses the hope of being able to use blockchain to add value, reduce costs and gain competitive advantages is being boosted by a growing Blockchain as a Service (BaaS) market which offers the chance to deploy distributed ledgers without the cost or risk of deploying it in-house, and without needing to find in-house developers. The cloud-based CRM platform ‘Salesforce’ for example, is adding a low code, blockchain-powered service that will allow enterprise users to share data with third parties in a secure, transparent, and auditable way.