One of the main themes in the CEP 2020 Outlook is globalization and, as you would expect, cross-border payments is a key part of that dynamic. This referenced announcement in BusinessWire is another in a string of activities over the past couple of years around streamlining the traditional methods of cross-border payments. Certainly not an unexpected development, given that Visa spent a few bucks to acquire Earthport earlier this year.
“Adding to its current ecosystem of remittance partners around the world, Visa today announced that TransferWise, a global technology company for international payments, will begin offering its customers an additional capability to quickly and securely move money to debit cards in real-time. The integrated service, initially available in Spain, is also planned to go live in Romania, Hungary, Czech Republic and Bulgaria. TransferWise gives customers a clear understanding of their fee structure upfront, providing transparency into the cost associated with sending and receiving money internationally. TransferWise plans to continue to collaborate with Visa and scale its offering using Visa Direct, throughout Europe and globally in 2020.“
Just in terms of what has been going on recently, here is a summary:
- Mergers and acquisitions between processors, networks, and cross-border systems to gain reach and scale (FIS–Worldpay, Fiserv–First Data, Global Payments–TSYS, Mastercard–Nets, Visa–Earthport).
- New cross-border payments networks based on or involving blockchain, such as IBM Worldwire and Visa B2B Connect, which can be added to the SWIFT gpi expansion and broader RippleNet access.
- Digital currency focus by banks (JPM Coin, Wells Fargo Cash), central banks (Sweden, Uruguay, Japan), and tech giants (Facebook). The incremental mainstreaming of cryptocurrencies is also occurring. Although free-floating cryptocurrencies (non-fiat) are now too risky for banks to adopt as a B2B payment asset, digital currencies like JPM Coin should meet with reasonable success. A bank the size of JPMorgan Chase has global reach and an existing network of correspondent and interconnected banks—345 are already reportedly utilizing JPMorgan’s Interbank Information Network (IIN). Additionally, JPM Coin is a stablecoin, backed initially by the U.S. dollar, and therefore should meet little resistance from regulators.
- Real-time payments interoperability between sovereign systems seems inevitable. Several initiatives are already underway, including in ASEAN Nordic countries.
Since targeted at consumers and the SMB space, the Visa Direct/Transferwise collaboration would not seem to overlap into the larger corporate cross border payments space being addressed by Visa B2B Connect.
“Technology is bringing us closer together, yet there are still challenges that it hasn’t solved when it comes to individuals and small businesses moving money around the world,” said Bill Sheley, SVP and Global Head of Visa Direct, Visa. “The TransferWise collaboration is the latest addition to Visa’s efforts to help our clients enable individuals and small businesses to send and receive international payments quickly and securely by utilizing the power of Visa Direct.”
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group