Visa, UnionBank of Philippines to Create Blockchain Payment System for SMEs
Visa and Philippine lender UnionBank have entered into a collaboration to build a cross-border B2B payment system that will benefit SMEs. The parties made the announcement at a briefing in Pasig City, Philippines.
UnionBank of the Philippines and payment processing giant Visa have struck a partnership to build a blockchain-based system that would allow cross-border payments in a project that is the first of its kind in the Philippines. The platform will facilitate bank-to-bank (B2B) transactions, especially those from small and medium-sized enterprises (SMEs) to recipient banks.
UnionBank chairman and CEO Justo Ortiz said on Monday that the Visa B2B Connect system would allow payment processing in real time or at least within a day rather than the typical 3 to 5 business days.
“Traditionally, for example, if an SME needs to pay a supplier in Brazil, he would request for an electronic fund transfer from his UnionBank account to his supplier’s account in Brazil. That could take three to five days and have to pass through several other banks, and pend confirmation,” Ortiz said.
“With VisaB2B Connect, thanks to blockchain technology, the SME can initiate the transfer, receive immediate confirmation, and the supplier can get funds the next day or in some cases, in real-time,” he added.
Edwin Bautista, president and COO of UnionBank, pointed out that transaction costs would shrink by about 50% once the system is launched. He added that the partnership with Visa would help SMEs avoid the need to open accounts in regions where they conduct transactions.
Vikram Kshettry, who runs B2B Partnership at Visa Asia Pacific, revealed that blockchain would be the key technology for the project. He said:
“Visa B2B Connect takes on innovative approach and eliminates friction for cross-border transactions by using distributed ledger technology to enhance the speed, security and reliability if these transactions.”
According to Kshettry, Visa’s platform will allow 23 fiat currencies and start with four partner banks: Shinhan Bank of South Korea, Commerce Bank of the US, Russia’s Sberbank, and Singapore’s United Overseas Bank.