This announcement is posted in Ledger Insights and reviews a deal between Goldman Sachs and Visa for the use of Visa B2B Connect (a cross-border payments network using blockchain), as well as Visa’s strategy around cryptocurrencies. Members of our Emerging Tech service can read a recent piece on cryptos, which also includes references to Visa providing merchant access to certain crypto exchanges. While B2B Connect is a blockchain network with multiple markets , it uses non-card local payments systems and fiat currencies.
‘The news is that Goldman Sachs has signed on to use Visa B2B Connect, which links with 80 markets. Visa B2B Connect is a corporate payment solution for cross border payments intended to sidestep SWIFT and correspondent banking by using the Visa network instead. It targets high-value payments that aren’t instant but settle within one to two days, subject to AML procedures. The solution incorporates a digital identity token that includes banking information. FIS has integrated with the network.’
In terms of a crypto strategy, Visa separates digital currencies into cryptocurrency and payment tokens (stablecoins and CBDCs) buckets. As we have pointed out many times, cryptos are not especially suited to corporate payments due to their instability and general regulator skepticism, which leaves banks wary.
Visa allows for the purchase of decentralized cryptos, but not as a payment vehicle. That is why the JPM Coin and other bank stablecoins were developed, and the recent category endorsement by the OCC validates the usage. Visa sees itself as an eventual enabler of stablecoins and CBDCs, since they are in effect simply alternate forms of fiat currency. As their CEO explained during an earnings release call:
‘For the second segment, fiat-backed digital currencies, including stablecoins and central bank digital currencies, these are an emerging payments innovation that could have the potential to be used for global commerce, much like any other fiat currency. We think of digital currencies running on public blockchains as additional networks, just like RTP or ACH networks. But we see them as part of our network of network strategy….Across both of these segments, we are the clear leader in this space. Today, 35 of the leading digital currency platforms and wallets have already chosen to issue Visa, including Coinbase, crypto.com, BlockFi, Fold and Bitpanda. These wallet relationships represent the potential for more than 50 million Visa credentials. The next leading network has a fraction of that.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
