- This is an excerpt from a story delivered exclusively to Business Insider Intelligence Payments Briefing subscribers.
- To receive the full story plus other insights each morning, click here.
B2B Connect, which leverages distributed ledger technology (DLT) to more simply allow banks to send high-value payments across borders, will become available to 15,000 financial institution partners in 30 markets worldwide that represent all five of Visa’s business regions, Kevin Phalen, global head of Visa Business Solutions, told Business Insider Intelligence.
Business Insider Intelligence
The service was built in partnership with IBM, and both Bottomline Technologies and FIS will immediately begin offering the service to banking clients.
Here’s what it means: Visa’s new platform aims to resolve pain points in the B2B payments space, which could fulfill a major need and garner usage quickly as a result.
B2B payments are often slow, expensive, and paper-heavy, which can make it challenging for firms to pay suppliers and get paid — Visa’s DLT-based system aims to resolve that. B2B Connnect will create a multilateral network that eliminates middlemen by allowing any two banks within the network to send and receive transactions seamlessly. It also tokenizes sensitive information to prevent fraud.
These features ultimately add transparency, reduce costs, and speed up transactions — factors that could power quick uptake of the service. If peers are any indicator, the platform could be a hit: SWIFT gpi, which will B2B Connect’s primary competitor, has grown to account for 56% of total SWIFT traffic in the two years since its launch and posted $40 trillion in 2018 volume alone.
The bigger picture: B2B Connect could give Visa an opportunity to diversify its volume in two high-growth segments as it expands to 90 regions by the end of this year and continues to grow beyond that.
- B2B payments are a massive opportunity that card networks are often not exposed to. Visa estimates that the commercial payments market is worth around $125 trillion in aggregate, but these payments are split over a variety of methods, with over half remaining analog. Even more, only 5% of these payments are made using cards, Phalen said, which means that major card players like Visa have virtually no visibility into the segment overall. By developing a new set of Visa-branded rails to grow into the market, Visa can gain exposure into B2B payments, in turn gaining a new source of volume that can grow quickly as the market digitizes. Other card networks including Mastercard and Discover are building up their B2B offerings as well, so in addition to volume, the move can help Visa retain its worldwide market lead by both volume and transactions.
- Visa can accelerate cross-border growth as well.Cross-border volume is a big source of volume for Visa, but its growth has been decelerating for the past few quarters. Last week, the firm forged several consumer-facing partnerships to bolster cross-border volume. Honing in on a larger segment of the industry with a program that focuses predominantly on high-value transactions could give the segment a major boost.
Interested in getting the full story? Here are two ways to get access:
1. Sign up for the Payments Briefing to get it delivered to your inbox 6x a week. >> Get Started
2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the Payments Briefing, plus more than 250 other expertly researched reports. As an added bonus, you’ll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
- What providers can learn from the fall of Finn
- EMVCo has officially released its SRC standards — and card networks are jumping onboard
- IMF head Christine Lagarde warns of the dangers of big tech’s push into finance