Solving for seamless B2B payments
“We see new business models with corporates moving from analogue to digital and rapid adoption of platforms. Corporates are looking for faster, cheaper, more transparent, and more accessible cross border payments.
At the same time, the cross-border payment market is being disrupted and a zero-cost model with end-to-end digitalisation is the target to allow the change. However, underlying correspondent banking infrastructure will not be able to accommodate this. As a result, banks are looking for alternatives that can enable this new direction. "
Patrik Havander, Head of Visa B2B Connect, Cross Border Money Movement, Europe
The world of business-to-business (B2B) bank transfers dates all the way back to the 19th Century. That’s when international trade began to pick up real pace; companies needed a way to move funds across national borders, and the correspondent banking system was born1. It was a pragmatic solution, which drew on the conventions and technologies of the time, but it had certain innate, structural limitations. Subsequent changes have helped to automate the process, but the underlying structure remains the same. No matter how much innovation is thrown at it, those underlying problems will persist. So, it is perhaps ironic that, 200 years later, this system is still used to process the majority of the world’s international B2B transactions, valued at more than US$100 trillion a year2.
In recent years, a few alternative approaches have been postulated. But, due in part to the enormity of creating a new global network from scratch, to date none have gained much traction.
With the launch of Visa B2B Connect in 2019, Visa can bring reduced costs, increased certainty, new levels of security, and an enhanced experience to the world of cross-border transfers. Structurally, it is an elegant and innovative solution, replacing complicated correspondent and intermediate relationships with an alternative, multilateral model, in which funds flow directly from the bank of origin to the beneficiary bank. Technologically, it draws on new digital tools such as DLT and tokenisation.
The strength of the proposition, combined with Visa’s reputation, relationships, reach, regulatory expertise, and risk management credentials are drivers that are fueling the growth of Visa B2B Connect. The solution now extends to 109 countries worldwide. The benefits are considerable and aligned with the Financial Stability Board G20 roadmap ambition to achieve cheaper, faster, more transparent and more accessible cross-border payments. When the sending bank and the recipient bank both participate in the Visa B2B Connect ecosystem, everyone benefits from an enhanced experience. Irrevocable payments are delivered in full value, it is clear when the funds will be delivered, and there is certainty over the applicable fees and FX rates. Also, the entire process is protected – safety is layered, tokenised data is used to safeguard sensitive business information, rich data and direct messaging enable the efficient resolution of any issues that may arise and, with Visa at the centre of the network, the counterparty risks are effectively mitigated. Visa B2B Connect was recognised by Global Finance magazine as one of the Best Financial Innovations in 20233.
According to Klarpay CEO, Martynas Bieliauskas, joining Visa B2B Connect had been a game-changer for them. “The innovative technology, global reach, and unparalleled security offered by this network have enhanced our ability to deliver top-notch services to our clients, setting us apart in our industry," he said.
As global growth continues, Visa B2B Connect is setting the foundations for a ubiquitous global experience, bringing finality, transparency and predictability in cross-border B2B payments.