Who said the future is in the cards? Whoever it was clearly had not heard of the term “financial inclusion.” In Latin America, among others, the future of payments is neither in the cards nor in the cash — but in the digital payments ecosystem.
It’s just such a future that Visa and NovoPayment are working toward with their recent partnership. The companies announced in January that they would be collaborating to facilitate the implementation of payment solutions for business-to-business (B2B) transactions in Latin America and the Caribbean.
Innovation has been slower to hit the B2B sector than in the consumer space. As a result, businesses now recognize that the technology they use to send flexible, faster payments is lacking at businesses and their value chains.
Diego Rodriguez, regional head of Commercial Solutions, LAC, at Visa, explained that the key to creating this type of value is through APIs, which can be mixed and matched to enable new use cases, and also by packaging capabilities for easier consumption and faster collaborations with new partners.
But that’s just the technology side.
In order to maximize the value of that tech, there’s a need to work with partners who are closest to the customer to break down the barriers that often come with trying new things, Rodriguez said. That’s where Visa saw a niche for NovoPayment — a Latin American regional company with a core expertise in tech, tech enablement and selling solutions to companies.
“Our role in the partnership,” said Anabel Perez, CEO of NovoPayment, “is to act as facilitator to enable faster and more efficient integrations so that business customers can see the impact of new B2B tech quickly.”
The first B2B areas that the partnership aims to tackle are solutions for accounts payable and receivable, solutions for the business traveler, accelerating Visa’s bank clients’ go-to-market strategies and addressing urban mobility needs and the sharing economy.
In a recent interview with Karen Webster, Rodriguez and Perez dug into the meat of their partnership: the destination, the journey along the way and the necessary philosophical shifts that will enable banks to come along for the ride.
The Destination
From a bird’s-eye view, the point of Visa’s innovation in general (and this partnership specifically) is to accelerate the adoption of selected technologies on behalf of clients. This, said Rodriguez, will deliver them new opportunities, clients and cashflows not available to them today.
The practical impact for businesses is to increase formality and inclusion in the region, where most transactions are still conducted in cash — and that includes supply chain payments. This will also improve access to lines of credit, Rodriguez said.
But perhaps most important of all is the efficiency and related benefits of no longer managing supplier payments and account reconciliations by hand — a process that Rodriguez said can eat up time and effort across more and more departments if organizations can’t keep it in check.
Rodriguez said trust is at the core of the emerging ecosystem. The system holds together better when participants (Uber drivers, for example) are confident they’ll be paid for work at the time when that work is performed. Cash can’t do that. Technology can.
Meanwhile, at the corporate level, the business is reaching levels of efficiency and scale that it didn’t — and couldn’t — have before.
The Journey
The new economies — sharing, gig, et cetera — have created a whole new set of needs, and FinTechs are more than happy to accommodate those needs entirely outside the formal banking system.
For banks to stay in the game, said Rodriguez, they must innovate.
Locking in new technologies is a must, he said. This will move the industry into a realm of faster, more flexible, payments, where more value is added on top of simple remittances. The industry has already focused on tech products for operational expenses (corporate cards and the like), so one of the first target areas to penetrate should be supplier payments.
Part of the journey, Rodriguez said, is revising how one thinks of a supplier. Paying a driver or supplier doesn’t necessarily seem to run parallel to “receivables” on a balance sheet.
Yet a ride to the airport or supermarket is, indeed, a receivable, and, if organizations can treat it as such, then they will open the door to true innovation. Rethinking receivables, said Rodriguez, requires a different set of solutions that enable efficient, real-time payments for services provided.
Rodriguez said Visa and NovoPayment don’t plan to stop at the sharing economy. There’s the travel segment, for instance, where technology could help facilitate payments of the corporate traveler as well as the travel agencies themselves, which have suppliers around the world and reconciliation challenges to go with them.
“The [sharing] economy is opening new doors,” said Rodriguez, “but we’re looking into other payment flows as well.”
Philosophy
The future lies in the ecosystem.
New solutions are needed to accommodate new payment flows, such as those in the sharing economy, said Rodriguez. Those solutions must be automatic, electronic, real-time, seamless and completely transparent to the issuer, acquirer, merchant, account holder, delivery person and delivery company.
Having learned this, Rodriguez said Visa has been creating a framework to enable financial services organizations of any size, from FinTechs to large corporate banks, to do more business — better, bigger and faster. With NovoPayment on board, Visa can begin taking that framework to market.
“Banks are seeing that their customers are evolving. They must open their platforms to facilitate new ways of distributing financial and payments products,” said Perez.
As for Visa, Rodriguez said the company’s role comes down to identifying and solving problems.
“These changes are not only about looking for new payment flows,” he said. “It’s about innovating in the core. New technologies and solutions are allowing that: location confirmation services, Visa payment control services. They all complement and add to our current place in the industry.”
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