Visa teams with fintech to improve international small-business payments

Thunes, a Singapore-based fintech, insists there's more to selling internationally than simply finding customers and suppliers — so it's working with Visa to expand into digital wallets in multiple 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 payment companies, particularly as more small businesses seek international suppliers and customers. 

"There's a lot more beyond remittances," said Peter De Caluwe, CEO of Thunes. "Managing a plethora of API integrations, connections and algorithms and integrating them into one ecosystem can be a challenge for even the most robust of global players."

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

Thunes attempts to bring a remittance-style experience to supply-chain and consumer-to-business transactions. The firm's B2B payments platform has connected to the Visa Direct 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 that are trying to offer small businesses and consumers the ability to send funds to different countries — mostly 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 to access financial services. The Visa/Thunes collaboration is designed to promote financial inclusion by allowing access to digital wallets without an existing bank-issued card. 

The partnership expands Visa Direct's reach to about from about 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 the collaboration with Thunes opens another 1.5 billion endpoints for payments in 78 countries. "Everybody understands the role that we are playing. The user experience is similar in Mexico or India or anywhere else the small business wants to sell." 

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

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

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Both Visa and Mastercard have made acquisitions in recent years that allow them to expand their cross-border payments networks and underlying technology. Visa Direct 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 that you are providing for both parties in the transaction," Salazar Genovez said.

Visa and Thunes' collaboration is the latest in a series of efforts by technology companies to cut intermediaries such as correspondent banks out of 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 require to manage currency conversions. Other firms like Flywire also partner with banks to speed such transactions. 

Thunes uses cloud technology to fix what it sees as gaps in the correspondent banking system, creating a platform for emerging markets that connects disparate 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 to involve more individuals around the world in the global digital economy," De Caluwe said. 

The scale of the two firms can also potentially remove the need for other parties to manage payment-processing tasks in local jurisdictions. That could appeal to merchants that are looking for more certainty as they expand into international markets. 

"For small to medium-sized corporate users, it's about having predictability of how much they're going to have to pay," said Enrico Camerinelli, a strategic advisor at Aite-Novarica.

Eighty-two percent of small businesses in the U.S., for example, plan to expand into new markets in 2023, with 51% planning to expand outside of the U.S., according to research from AirWallex. AirWallex also reported 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 granular, and that can reach out to even smaller companies," Camerinelli said.