Major financial services provider Visa is reportedly launching a new network which can eliminate correspondent banks in cross-border payments enabling direct Bank to Bank transfers AKA “Visa B2B Connect,”. The system contains elements of distributed ledger technology/Blockchain – namely, elements of Hyperledger Fabric.
Visa B2B Connect
Visa is one of the largest financial services providers in the world at the moment with hundreds of thousands of people using its cards daily for a wide range of activities mainly for transactions. Now, the company aims to revolutionize the industry even further by bringing in direct B2B transactions eliminating all middlemen in the process.
According to Reuters, the network aims to make international payments hassle-free by allowing businesses to transact directly with each other without having to use an intermediate banking network. This can ensure quicker transactions and decrease the complexity of these transfers.
More interestingly, however, Visa has decided to cash in on distributed ledger technology. In fact, the company has opted to use IBM’s Hyperledger Fabric – an open source distributed ledger framework developed by the Linux Foundation (backed by IBM) in an attempt to push blockchain adoption further. Other partners include FIS, Bottomline, and many others.
What this means for Ripple
Visa’s entry into cross-border payments is a huge challenge for Ripple, as cross border transaction is the main use case which Ripple aims to tackle.
Back in late 2018, Ripple launched its xRapid technology (XRP), which focuses on providing significant reductions in both time and cost for sending international payments.
However, a multinational company as established as Visa which is trusted internationally has higher chances of deploying its network and getting new partners on board.
At the same time, though, Ripple provides Interledger Protocol (ILP) in Java for enterprise usage and also is a part of the Hyperledger consortium.
What makes matters more interesting is that back in 2018, Visa bought the British payments firm Earthport for $250 million. Earthport is themselves a partner of Ripple. Their collaboration aims to integrate Ripple’s protocol into the existing payment network of Earthport in order to improve international transactions.
Visa hasn’t clearly revealed how it plans to use Hyperledger technology in its new network. Whatever be the use case this is a positive step for Blockchain and Distributed Ledger technology as we now have real-world use cases and multinational companies coming forward to put it to practice. Regardless of whether Ripple or Visa comes out on top, faster cross-border payments will definitely revolutionize the finance industry for the better.
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