Leveraging blockchain for cross-border corporate payments

No longer is blockchain just a topic for conferences and market research reports. Blockchain is being increasingly leveraged by businesses, and being put to use in the real world.

Sectors including logistics, public health and finance are leading the charge. The distributed ledger technology – which leaves an immutable audit trail – is also being embraced in the payments space.

Visa is among those embracing it. The company, in conjunction with IBM and FIS, one of the world’s leading payment technology providers, recently launched Visa B2B Connect, which employs blockchain-based architecture.

The solution speeds up, safely, cross-border corporate payments.

BNamericas spoke with Visa's VP of commercial solutions for Latin America and the Caribbean, Diego Rodríguez, about the product.

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BNamericas: Will the service encompass global trade corridors that have one end in Latin America? If not, are there plans to include countries/banks in the region?

Rodríguez: Yes, in its first phase Visa B2B Connect will encompass more than 30 global trade corridors, including countries in Latin America and the Caribbean such as Brazil, Mexico, Colombia, Peru and Panama, with a view to expand to up to 90 markets before the end of 2019. It is a product that will revolutionize international payments between companies across the globe and will add much value to our banks in the region.

BNamericas: What is the target market of B2B Connect, large companies or SMEs, and why?

Rodríguez: As the name suggests, Visa B2B Connect is focused on B2B payments, business to business, and the focus is on bank-to-bank high-value transactions. In this way, it seeks to remove friction, and reduce the time involved, in conducting international corporate transactions, facilitating transactions from the bank of origin to the bank of destination of the funds.

The target market of Visa B2B Connect includes banks that process high volumes of international payments between companies.

BNamericas: Visa B2B eliminates friction and the time involved in international corporate transactions. But is the service, for clients, cheaper than a similar traditional payments service?

Rodríguez: Visa B2B Connect is a competitive service, and its focus is on providing flexibility in terms of executing and facilitating international payments. Visa has developed Visa B2B Connect so that financial institutions can respond to the changing commercial needs of their clients.

BNamericas: In terms of adoption of innovative payments services like B2B Connect, what potential does Latin America hold?

Rodríguez: In 2018, international corporate transactions represented US$153tn globally, according to estimates from Juniper Research, of which US$12.6tn corresponded to Latin America and the Caribbean. It is forecast that transactions will grow 10% a year – more than double the pace of global GDP growth.

The payments technology industry is constantly evolving. In our region we're offering a variety of solutions that improve, substantially, the payment experience of companies, such as automated payment and collection solutions, real time virtual account issuance, and mobile payments for small businesses.

BNamericas: With B2B Connect, Visa is using blockchain-based architecture. Since Visa is a very important player in the global payments chain, how significant is this development for the company and the payments industry?

Rodríguez: The launch of Visa B2B Connect constitutes a historic achievement for the industry; it will accelerate the pace of change in how commercial payments are moved around the world. By creating a solution that facilitates direct transactions, from bank to bank, we’re removing friction related to key industry challenge points. With Visa B2B Connect, we're making payments easier and simpler while at the same time improving data transparency and consistency.

BNamericas: Does Visa have other projects underway in the area of blockchain?

Rodríguez: At Visa we’re constantly exploring new technologies that have the potential to promote the development of digital payments. We recognize the potential of blockchain, we’re studying the architecture of networks based on blockchain and exploring how it could be applied to benefit the payments ecosystem.