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Visa is modernising global business-to-business (B2B) payments with blockchain technology at the core of a participant-based network.
The system launched by Visa to enable corporates to make payments directly to the bank of the company they are paying, which was announced earlier this month, is being built using Hyperledger Fabric framework from Linux Foundation.
Distributed ledger technology, like blockchain, lends itself to this type of network where trusted partners can connect sensitive data and processes with transparently for participants.
The blockchain will be integrated with Visa’s core systems and create a network that allows participant corporates to make cross-border payments to other participants directly from bank to bank.
The software making up the system, known as Visa B2B Connect, gives corporates a unique digital identity on a network, through tokenisation.
Traditional B2B payments made by cheque, automated clearing house and wire transfer require multiple exchanges of data between the origin bank, the beneficiary bank and non-partnering intermediary banks spread across the globe.
“This less-than-optimal system can create challenges like data truncation, payment delays and compliance issues, and that makes the entire process of exchanging high-value sums of money inefficient and unpredictable,” said Visa.
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The system built alongside technology suppliers Bottomline, FIS and IBM will initially cover more than 30 global trade corridors, and aims to expand to as many as 90 markets by the end of 2019.
“As a pilot participant, we are excited about the Visa B2B Connect launch,” said Alessandro Seralvo, director at Cornèrcard and executive vice-president Cornèr Bank.
“This modern way of carrying out cross-border B2B payments will create a substantial added value for our corporate clients. Velocity, security and control of transactions, as well as lower counterparty risks, are essential for a successful business with international partners.”
Visa is one of the early adopters of blockchain. According to a recent Gartner study, there is generally a lack of understanding of how blockchain can be used in the enterprise.
Only 11% of CIOs have deployed or are in short-term planning with blockchain, according to analyst firm Gartner, which said the majority of projects fail to get beyond the initial experimentation phase.