Visa Launches New Blockchain-Driven B2B Payments Service

Visa blockchain B2B payments service Chain blockchain startup

Visa has launched a new B2B payments service that uses elements of blockchain technology to deliver faster, cheaper cross-border business payments.

The Visa B2B Connect platform was first announced back in October 2016, and was developed in its original form alongside Chain, a blockchain startup working in partnership with Visa.

The project began after the payments giant invested as part of Chain’s $30-million funding round, eventually resulting in the new payments platform launched by the firm this week.

The platform will now enable businesses to transact across 30 different markets, with a total of 90 payment corridors expected to be established by the start of 2020.

In particular, the technology is designed to allow businesses to opt out of the correspondent banking network, which is renowned for being inefficient and slow, and instead access virtually instant payments with the help of distributed ledger technology.

Correspondent banking sees many smaller banks transacting with larger intermediary banks in handling cross-border settlement, a process that adds delay and cost to transactions.

Near instant, low-cost payments on the new B2B network are delivered in part by a reliance on blockchain technology, though the system itself is not a blockchain. Instead, it uses distributed ledger technology for facilitating payments, as part of a broader technological solution.

Because the transactions occur directly bank-to-bank, many of the traditional inefficiencies of correspondent banking are removed altogether, according to Kevin Phalen, senior vice-president and global head of Visa Business Solutions.

“By creating a solution that facilitates direct, bank-to-bank transactions, we are eliminating friction associated with key industry pain points.”

While the system was originally developed in Chain, the finished product was developed alongside IBM on Hyperledger’s open source Fabric framework.

Pilot testing on the service began back in November 2017, with final iterations prepared in advance of the launch this week.

With more payment corridors coming on stream in the months ahead, businesses will now have the chance to assess its performance in a live transaction environment.

The news is the latest example of payment giants such as Visa turning to blockchain to provide more efficient services for their customers.