Whether it’s a multinational making payments to strategic suppliers or a company making payments to temporary workers, the globalization of commerce and the massive digital switch-over over the past 18 months have amplified the need. to streamline the way money flows between people and businesses. across borders.
A recent PYMNTS /Visa a study shows that on average 26% of a company’s income now comes from cross-border buyers; the larger the company, the greater the percentage of sales coming from outside their domestic market.
These sales are also accompanied by a delay in accessing these funds. On average, according to the same study, businesses wait up to a third longer for cross-border payments to be posted to their accounts.
In this context, Goldman Sachs and Visa on Monday, June 7, announced a strategic partnership that will simplify cross-border payment flows for Goldman’s banking customers. Through this partnership, Goldman client companies can streamline both high-value, low-frequency cross-border payment flows, such as real estate transactions, and low-value, high-frequency flows, such as recurring payments. small businesses, through a single application. online programming interface (API), file, or web platform integration.
High value-added flow lever B2B Visa Connection, a cross-border account-to-account (A2A) payment network now available in 97 markets. Low-value payments will take advantage of the cross-border capabilities of recently launched Visa Direct payments, which will push payments to millions of consumer and small and medium-sized business (SMB) accounts.
Visa’s cross-border money transfer efforts are part of its “network of networks” strategy, Alan koenigsberg, Global Head of New Payment Flows at Visa Business Solutions, told Karen Webster. Visa aims to be a single point of connection for customers to transfer value over Visa networks, such as Visa Direct and Visa B2B Connect, or new networks in the future, he said.
With Visa Direct, financial institutions (FIs) and their corporate clients can access 16 card networks, 65 ACH networks, seven real-time payment systems and five payment gateways, all through a single connection. In addition, they can access all relevant Real-Time Gross Settlement (RTGS) systems in all 97 markets for Visa B2B Connect.
Koenigsberg said the partnership with Goldman is an important reflection of Goldman Sachs own efforts to modernize B2B payments.
According to Koenigsberg, the partnership talks revealed more than just a desire to “fix” cross-border payments, but a shared vision to give businesses better tools and more control over their own payment flows. Reinventing the process meant aligning with the need to redo the core infrastructure for how money and data flows securely move between parties on a global scale, offering banks like Goldman and their companies new ways to reinvent their cross-border business opportunities.
Making progress, Koenigsberg said, was a collaboration focused on resolving some of the most pressing sticking points that have existed for decades in traditional cross-border processes.
Reimagine the experience
FIs may have a lot to consider about the impacts of overhauling cross-border payments. Increasingly, players like Goldman Sachs are becoming key collaborators and innovators, knowing that the status quo of existing processes no longer meets the needs of modern businesses.
When Goldman Sachs started chatting with Visa, Koenigsberg said the company’s goal is to make all cross-border payments – complex, high-value vendor payments to any business account – that simple. than making a low value domestic payment.
This kicked off a large-scale discussion that didn’t focus on the nuances of a particular payment rail or use case, but instead targeted a better end-user experience through the combined powers. of Visa’s network of networks strategy. The pressing need was to overcome the three things that continue to challenge the industry: where the funds are, when they will arrive and how much they cost.
The Visa-Goldman partnership that has emerged represents a stark contrast to how FIs facilitate cross-border B2B payments, and indeed, embracing a paradigm shift is likely to have an impact in other areas as well.
Regarding Visa B2B Connect, Koenigsberg said it has already experienced significant expansion since entering the market two years ago. The addition of Goldman Sachs as a client will continue to drive growth, Koenigsberg noting that the collaboration is “more than just selling and distributing products.” It’s a strategic relationship.
Visa and Goldman will continue to work together with the common goal of reinventing cross-border payments from scratch, and there is still a lot of work to do. On the high-value payments side, as Visa B2B Connect adds new currencies, geographies and financial partners, Koenigsberg highlighted other key opportunities for moving forward, including taking an industry-focused approach to meet global payments needs. companies. On the Visa direct payments side, the number of use cases of established businesses and internet platforms to pay workers and suppliers will only increase as new direct-to-consumer retail models ( D2C) and remote workforce models are proliferating.
Koenigsberg said innovations in cross-border payments are currently addressing the challenges from two angles. One tackles the underlying rails and infrastructure to make changes, to reduce or completely eliminate system friction for FIs. The other improves the user interface experience with the goal of providing an “easier to use mousetrap”.
Visa is working on both, building new infrastructure and using existing infrastructure in new ways to make improvements. For business cross-border B2B payments, it’s not just about speed, but also enabling the movement of rich data for reconciliation, funds application and other high-value activities.
“Data is extremely important, and without adjusting the underlying rails and infrastructure to accommodate more robust and enriched data payloads, how is it going to go? Said Koenigsberg.
As Visa continues to invest in the infrastructural approach to transformation, Koenigsberg recognized that there is plenty of room in the industry for innovators to experiment with new interfaces, non-fiat technology and more.
“At the end of the day, we are delighted that there is so much activity in space,” he said. “Bring everything. The consumerization of this space is long overdue.