Visa teams with fintech to improve international small business payments | Payment source

Thunes, a Singapore-based fintech, insists there’s more to selling internationally than just finding customers and suppliers – so it’s partnering with Visa to expand into digital wallets in more markets.

The partnership covers both consumer transfers and small business payments. Streamlining international connections between banks, consumers and merchants has become a prominent focus for payments companies, especially as more small businesses seek international suppliers and customers.

“There is much more beyond money transfers,” said Peter De Caluwe, CEO of Thunes. “Managing a multitude of API integrations, connections and algorithms and integrating them into one ecosystem can be a challenge for even the most robust global players.”

Small businesses can use the combined payment technology from the two companies to speed up payments to suppliers and remote workers, as well as use more international suppliers and employees, De Caluwe said.

Thunes seeks to bring a remittance experience to the supply chain and consumer-to-business transactions. The firm’s B2B payment platform has connected to Visa Direct’s real-time rail, adding a cross-border digital payment option for 78 wallet providers. The integration is aimed at money transfer operators, neobanks, financial institutions and governments trying to offer small businesses and consumers the ability to send funds to different countries – mainly in emerging markets in Asia, Africa and Latin America.

In these markets, which often lack a traditional financial services system, digital wallets are a primary means of accessing financial services. The Visa/Thunes collaboration is designed to promote financial inclusion by providing access to digital wallets without an existing bank-issued card.

The partnership expands Visa Direct’s reach from approximately 5.5 billion endpoints to 7 billion. Visa Direct also supports Automated Clearing House payments, about a dozen real-time networks and a set of international payment gateways.

“It doesn’t matter if there are five or seven parties in a transaction,” said Ruben Salazar Genovez, global head of Visa Direct, adding that the collaboration with Thunes opens up an additional 1.5 billion payment endpoints in 78 countries. “Everyone understands the role we play. The user experience is the same in Mexico or India or anywhere the small business wants to sell.”

Visa, which has focused on building sources of income that are not directly linked to card fees at the point of sale, can use the Thunes collaboration to expand both users and use cases for small merchants who want to sell or send funds across countries.

For example, small farms in countries like Bangladesh could use the system to make payments, or professionals in London or another city in a developed market could send funds to family members in other countries, Salazar Genovez said.

Both Visa and Mastercard have made acquisitions in recent years that allow them to expand their cross-border payment networks and underlying technology. Visa directly has become one of Visa’s primary tools to expand its role in faster payment processing

“The most important competitive advantage of any network is the reach and the data you provide for both parties in the transaction,” said Salazar Genovez.

Visa and Thunes’ collaboration is the latest in a series of measures by technology companies to cut intermediaries such as correspondent banks from cross-border payments. Ripple has used its blockchain technology for years to enable cross-border transactions to bypass correspondent banks, and thus the time and fees that correspondent banks charge to manage currency conversions. Other companies like Flywire also works with banks to expedite such transactions.

Thunes is using cloud technology to fix what it sees as holes in the correspondent banking system, creating a platform for emerging markets that connects different payment systems. The company also has a global network of mobile wallets, banks and fintechs that create payment rails to reduce the need for dedicated parties to manage international payment processing.

“This partnership can help involve more individuals around the world in the global digital economy,” De Caluwe said.

The scale of the two firms could also potentially remove the need for other parties to manage payment processing tasks in local jurisdictions. It may appeal to sellers looking for more security as they expand into international markets.

“For small and medium business users, it’s about having predictability of how much they’re going to pay,” said Enrico Camerinelli, a strategic advisor at Aite-Novarica.

For example, 82 percent of small businesses in the U.S. plan to expand into new markets by 2023, with 51% planning to expand outside the U.S., according to research from AirWallex. AirWallex also reported that 36% of firms cite new partnerships as key to expansion, while 36% also said identifying new suppliers was key.

“Visa provides a network that is also very detailed and can reach even smaller companies,” Camerinelli said.