Visa, the American multinational financial services giant has recently launched their new blockchain cross border payments solution. The company has named this platform Visa B2B Connect, and it has partnered with IBM, the technology giant for this project.
The commercial launch of this new platform is important since it addresses the structural limitations of current cross-border payment platforms. Visa is focusing on corporate cross-border payments with their offering.
Cross-border payment is a large sector, and corporate cross-border payments form a significant segment within it. The market for corporate cross-border payments was $21.3 trillion in 2018, and it will likely reach $26.64 trillion in 2022, according to a Statista report.
The sector has its challenges, though. Experts have noted that cross-border payments are slow, costly, and opaque. The lack of transparency is especially noticeable with respect to FX rates.
Small businesses often lack access to cross-border payment services. There are choices in terms of front-end service providers, however, the back-end processes like clearing and settlement still depend on traditional methods.
Blockchain with its distributed ledger, tamper-proof records, security features, and smart contracts can improve cross-border payments. Industry experts have pointed out how blockchain can reduce the cost, and expedite cross-border payments.
They have also highlighted the transparency and security benefits in this regard. Given these promises, the commercial launch of Visa‘s new blockchain cross border payments platform assumes importance.
A promising partnership for the sake of cross-border payments
Visa is utilizing its core business systems along with a key blockchain offering from IBM. Visa B2B Connect uses Hyperledger Fabric, the popular enterprise blockchain framework on the IBM Blockchain Platform.
Fabric enables controlled access, moreover, it scales well. This open-source framework has a modular architecture, therefore, it’s easier to implement. Fabric offers “channels” to protect the privacy of confidential transactions, moreover, there are “Hardware Security Modules” (HSMs) to secure digital signatures.
Implementing an enterprise blockchain network can be hard, however, the IBM Blockchain Platform provides open-source tools, making it easier to implement Fabric. IBM has had significant success stories with this platform, e.g., TrustChain for supply chain assurance in the jewellery industry.
Visa B2B Connect will benefit from the distributed ledger of Fabric, moreover, it will also be able to guard sensitive information like banking transaction details. This is important in a highly regulated industry.
Good days ahead for corporate cross-border payments?
Visa expects to reduce the cost of corporate cross-border payments by simplifying the processes, moreover, the company expects to improve transparency. The company will initially cover 30 global trade corridors, however, they expect to cover 90 before 2019 ends. We need to wait and watch how this promising blockchain cross border payments platform helps corporate cross-border payments.