Securing Everyday Digital Payments

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Disrupting the 130-year-old correspondent banking network, to which more than $100trillion in global cross-border B2B payments are entrusted each year, is a monumental task.

And even a world leader in digital payments like Visa doesn’t expect to displace the complex relationships that have built up between correspondents overnight. However, there’s a ‘$10 trillion opportunity’ in cross-border transactions to compete for by using an alternative network, as Visa’s Executive Chairman Al Kelly described it.

That service is Visa B2B Connect, a bank-to-bank money movement network for high-value, cross-border transfers. It forms a key part of the company’s points for a long period of time,” he says. “We know this because we’ve done the surveys, we’ve talked to the banks and the corporates, and we’ve asked them ‘what are the challenges?’.”

Solutions to those challenges – for high-value payments at least – have not been as easy to find as those that address the lower-value B2B and consumer markets.

“Because, if you’re going to solve it,” says Ellis, “what it takes is a company that knows how to build and operate a network at scale – from a technology perspective, from a rules and regulation perspective, from a compliance and security perspective and from the perspective of how you service a large number of financial institutions in the right way.

“That’s what Visa does and has been doing for decades in our traditional business.”

The service was informed by a survey conducted for Visa in 2019 that showed nearly 70 per cent of corporates across 20 countries had experienced systemic issues in cross-border payments, ranging from speed to cost and visibility into the transaction journey, as well as limited ability to send information alongside the payment to assist with reconciliation.

The aim with Visa B2B Connect was to dramatically simplify the journey by facilitating transactions between the bank financial institutions with a faster (within the same business day, depending on when the payment is sent), cheaper and fully transparent cross-border payments experience for the user. Last year, for example, the network added banks in Tanzania, Uganda and Angola.

“The quest to deliver fast global business transfers is taking on greater precedence, with clients eager to adopt more visible and efficient payment processes,” says Ellis. “What banks are getting by using Visa B2B Connect is the trusted expertise and capabilities that help enhance the payments experience for their customers: innovation at a global scale from one of the most trusted brands is a true differentiator.”

One of the advantages of Visa B2B Connect for banks is that it gives them a set of options, says Ellis. As the world recovers from the 30 per cent slump in global trade that put a dampener on international B2B transaction flows following the pandemic, anything Visa B2B Connect can do to facilitate global trade by giving banks and corporates a fast-track to growth, it will, says Ellis.

“We’re seeing more and more businesses increasingly operate across borders, and the rise of B2B e-commerce and online marketplaces is driving

‘network of networks’ strategy. Visa B2B Connect is another way to grow out a robust Visa infrastructure, which adds more endpoints and attracts more clients.

There is no doubt that there is demand among financial institutions and their corporate customers for such an alternative to traditional correspondent banking corridors, according to Ben Ellis, SVP and global head of Visa B2B Connect at Visa Business Solutions.

“Cross-border payments for businesses paying other businesses has been an issue with a lot of pain of origin, directly to the beneficiary bank with no stops in between.

“So, we built a multilateral banking network for high-value B2B payments where banks can sign on to the network and send directly through Visa B2B Connect, to anyone else on that network,” explains Ellis. “You can deliver payments with full value, full predictability, and full knowledge of what the fees and costs are going to be.”

Visa B2B Connect is currently available in more than 100 countries and territories where it’s accessed by more than 60 more cross-border transactions,” he says.

“But several factors complicate cross-border commercial payments –payment infrastructures vary by country; the landscape of regulations governing cross-border transactions is fragmented by geography; providers are plagued by complex internal business processes and operations… the list goes on.

“Visa is committed to helping merchants, fintech clients, corporate partners and individuals alike move money around the world, and at scale.”