On October 21, 2016, Visa unveiled a blockchain-based global business-to-business transfer system for high-dollar payments called Visa B2B Connect. The exchange was developed in collaboration with startup (and recipient of Visa investment) Chain, Inc. Visa has tested a prototype of the technology with 30 banks in 10 countries and plans to unveil a pilot program in 2017.
Visa B2B Connect uses Chain’s software, Chain Core, to enable businesses and their banks to make transfers through Visa’s network rather than through paper check or intermediaries. As current wire and check mechanisms are slow, inefficient, and costly, this technology offers an opportunity to significantly streamline payments. Visa B2B Connect will allow for secure and nearly instantaneous transfers by utilizing blockchain’s immutable recording. The system seeks to ensure participant trust by using a permissioned private blockchain, meaning that all parties in the network are known.
Visa B2B aims to challenge SWIFT as the predominant vehicle for businesses to move large sums of money around the world. Additionally, it will compete with other emerging competitors, such as Ripple and R3, who are also attempting to use blockchain to facilitate cross-border exchanges. As Jim McCarthy, executive vice president, innovation and strategic partnerships at Visa, explained,
“The time has never been better for the global business community to take advantage of new payment technologies and improve some of the most fundamental processes needed to run their businesses. We are developing our new solution to give our financial institution partners an efficient, transparent way for payments to be made across the world.”
The potential financial applications of blockchain are tremendous, yet unrealized. Banks alone will spend over $1 billion on blockchain projects this year, according to a Greenwich Associates survey. Visa, which already has a network in thousands of banks, offers a smooth way to bring the technology to market and to accelerate its adoption.