Visa’s new payment system for business-to-business (B2B) transactions has made it one of the newest blockchain-based international payment providers.
Its Visa B2B Connect platform is based on blockchain technology and offers seamless cross-border payment processing for businesses without any third-party interference.
Visa’s latest endeavor allows the scheme to compete directly with cryptocurrency startups, like Ripple, and significant players, like BNY Mellon.
A Plan Long in the Works
In 2016, Visa announced it would build a blockchain-based network for business payments After the credit card company’s partnership with blockchain business, Chain, didn’t work out; Visa opted to partner with IBM, Bottomline Technologies, and FIS. After getting a quality blockchain team together, Visa was ready to roll out the platform, which aims to solve many of the challenges associated with cross-border payments.
How the System Works
According to Visa, its new platforms take the complexities out of the processing business payments around the world. Most importantly, it removed the confusing, awkward transaction flow process required in interbank settlements for business payments.
The Visa B2B Connect platform is available in 30 markets across the globe, and it has plans to triple its reach by the end of this year.
How Blockchain Is Integrated into the Platform
Only part of Visa’s non-card based platform is based on blockchain technology. It uses several elements of distributed ledger technology to create an interbank network to settle business transactions. With the platform, businesses make transactions directly with one another across the globe through their own banks. Visa B2B Connect becomes the only connection between all transacting entities.
The funds move from a company’s bank to a domestic correspondent bank. The next pass-off involves a transfer to the first transaction authenticator before it arrives at the account held by the foreign correspondent bank where the company is located. Then, the money is moved to the company’s bank account.
Benefits of Using Visa’s Platform
Using Visa’s system will not only costs and throughput time for interbank payments, but it limits inconsistencies in the data flow.
Another plus is that Visa’s system will have all fee calculations displayed before each transaction begins. Finally, participants also have the capability to track the progress of transactions in real-time, which could significantly boost the transparency of international business payments.
The Newest Company Using Distributed Ledger Technology
Visa is the newest major payment processing player to introduce a product that uses distributed ledger technology in settlement infrastructure.
Earlier this year, JP Morgan introduced the launch of its blockchain-based platform for institutional payment settlements. It also plans to introduce its own crypto, JPM Coin, which will act as a stablecoin facilitator for transactions between corporations.
Other banks from Europe, the U.S., and Japan have launched the Fnality Consortium with the help of $63 million Series A funding. The consortium will use a system of USCs to facilitate cross-border payments that are made using fiat currencies around the globe.
This project, which has been in the works for years and is expected to be running by mid-2020, also aims to establish a network of blockchain-fueled distributed Financial Market Infrastructures (dFMIs). This type of infrastructure permits full value exchange transactions.
The inclusion and acceptance of blockchain technology by major companies, like Visa, adds legitimacy to the use of cryptocurrency, which has been labeled as a fraud or a fad by many others in the public eye.
As more well-known powerhouse companies enter the arena, expect many others to up their games get in on it, too.
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