Vcheq - Transforming banking payment

Vcheq had played a major role in building Visa's B2B platform. Starting last year, the company began working closely with the credit card company to deliver a new vision for cross-border payment to the Asia-Paicific region. “I think for any bank to try and go into this space of aggregating payment and acting as a global clearer, it’s going to be very difficult,” said Chris Furness, Vcheq’s product director.

“All the other banks will fight to resist it. Whereas Visa is owned by the banks.”

The solution, which was developed jointly by Vcheq and Visa, will be owned and branded by Visa. The plan is to make use of Visa’s messaging and settlement network of 22,000 banks across the world to facilitate large amount, cross-border payments from business to business.

The platform manages inter-bank payment and billing information. It will oversee the credit and debit operation of participating banks, supply a presentment system at the back-end of the network and net off the transfer amounts on a daily basis.

“Our competitors are the alternate payment methods like Swift,” commented Furness. “Global banks like Deutsche, Standchart or HSBC, they would view us as threatening their franchise.”

Traditionally, the task of cross-border payment has been an arduous one, requiring banks to create and maintain a presence in every member country within its network. The banks will have to maintain funds in every country, create and sustain a report and reconciliation framework locally. Only the largest bank who have invested heavily to put such an infrastructure in place are able to do it well.

When an enterprise initiates a cross-border payment today through banking systems such as Swift, the process takes a long time and every bank in the process will want to take a cut. The result is an infrastructure that is costly and difficult to build and maintain; and a process that is expensive when it is employed.

From Vcheq’s view, the Internet has the potential to change all that. By leveraging on Visa’s settlement network, and Web-enabling its payment infrastructure, Vcheq, conceivably, can create an alternate network that is much cheaper and more transparent in terms of cost.

“The field is not level out there for cross-border payment. Typically, 2nd or 3rd tiered banks, and even some regional banks are unable to do cross-border or even multiple currency payments,” said Furness. “Large global banks have invested big time to have branches all over the world. This is the new space that Vcheq is working with Visa to go into.”

The Visa Commerce initiative, now being piloted in the Asia-Pacific region, involves four major banks of the region to test out and measure the effectiveness of the system.

The initiative, however, is not the only solution that Vcheq provides. Going along the same trend of cross-border, business-to-business e-payment, the company is also working on a gateway product to link banks and enterprises together in a network of payment facilitation. Vcheq is also heavily marketing the product as a solution for B2B exchanges and marketplaces.

“As corporations start to globalize, they will start to want to do cross-border payment. And if banks want to compete for customers, they will have to offer a full range of corporate services,” said Furness.

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