Visa Inc (NYSE:V)’s B2B Connect, a blockchain platform for payments, has been embraced by five financial institutions based in the Philippines. UnionBank, a publicly-listed Filipino bank is spearheading the regional effort and has already been joined by four rural banks.
The B2B Connect platform of Visa was initially announced two years ago and a pilot of the platform started last year. The primary use case of the platform is cross-border payments and this has led to cheaper fees since middlemen have been cut out. As the first bank to test B2B Connect, UnionBank is hoping the partnerships with the smaller banks will raise their efficiency with regards to payment flows.
Though Visa has embraced blockchain technology it has spurned virtual currencies including Bitcoin (BTC) which is credited with introducing the concept of a distributed ledger. Alfred Kelly, the chief executive officer of Visa, is on record as saying that the financial services firm does not intend to offer support to transactions based on virtual currencies. Kelly has even branded Bitcoin a speculative commodity rather than a currency or a digital coin.
“I don’t view [bitcoin] as payment system player,” “We at Visa won’t process transactions that are cryptocurrency-based. We will only process fiat currency-based transactions,” said Kelly.
Despite Visa’s reluctance to embrace virtual currencies other financial firms have taken a different view. Money transfer companies such as MoneyGram and Western for instance have been experimenting with xRapid. This is a liquidity solution based on blockchain technology and which was developed by Ripple (XRP), a San Francisco, California-based startup.
In order to cut down on the levels of capital required by financial institutions in order to meet liquidity requirements in emerging markets, xRapid uses the XRP token. The solution also enables transactions to be settled in real time.
This comes in the wake of the central bank of Saudi Arabia inking an agreement with Ripple with a view to assisting banks in the Gulf country settle transactions using blockchain software. The pilot marks the first time a central bank has used the software developed by Ripple in instantly settling inward and outward payments.