More blockchain pilots for global B2B payments have been announced but the R3 consortium calls for collaboration to direct the efforts of a largely fragmented fintech market.

There was much talk at EuroFinance in Vienna earlier this month about the potential of blockchain to change the financial services industry, particularly in the areas of payments and KYC. A panel featuring speakers from both SWIFT and Ripple debated the roles of the two organisations and whether the latter might eventually eclipse the international transaction services provided by SWIFT. The speakers on the panel amicably conceded that it probably would not be an 'either/or' situation. They pushed the message that new blockchain-based systems such as Ripple would most likely complement the status quo in global payments, rather than usurp it completely. And SWIFT emphasised that it, too, is a technology company and is exploring how it can deploy distributed ledger technology.

Visa to pilot blockchain payments infrastructure

However, Visa's latest venture also positions it as a player in the interbank funds transfer market, alongside both SWIFT and Ripple. Of course this doesn't change things yet – the system announced by Visa Inc. on Friday is in very early stages and will be piloted in 2017. Nonetheless, there are now several contenders emerging in the global interbank payments space – a market that SWIFT had to itself until recently and Finextra reported the development saying that Visa is “treading on SWIFT's toes”.

Visa's platform enables financial institutions to process business-to-business high-value payments globally on a private blockchain-based infrastructure. Visa B2B Connect is a collaboration with Chain, a fintech company that builds blockchain networks for financial organisations. Visa claims this platform will offer “clear costs, improved delivery time and visibility into the transaction process” and will reduce costs for both banks and corporates. Transactions carried out on the system will:

• have near real-time notification and finality of payment;
• be signed and cryptographically linked; and
• be done on a 'permissioned' private blockchain, ensuring trust.

And Visa Inc.'s sister company, Visa Europe, is also experimenting with blockchain. Last month it announced it is piloting blockchain technology in domestic and cross-border funds transfers, in collaboration with BTL, a Vancouver-based blockchain company.

R3 calls for collaboration

Other announcements in the past week suggest an increasing intensity of activity in the global B2B payments market. The banking consortium R3 announced that it will make the code for its blockchain platform, Corda, publicly available as of 30 November 2016, when it will be shared with the Hyperledger project. R3's statement said that the code “could become the industry standard for the nascent technology.” R3 also said that it has been working with 12 banks from its 70-member consortium to use Ripple's DLT for cross-border payments. And R3's David Rutter wrote last week: “If this technology is to be applied successfully to financial markets, we need collaboration, not fragmentation.”

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CTMfile take: Any technology that enables companies to make global payments in near real-time (intra-day would do for most), rather than the current two or three days (plus), would be welcomed with open arms - provided costs are also lower. No one knows yet whether SWIFT will itself develop or adopt such technology but more players in the market seems to be a positive future step towards faster, transparent, tracked global payments.