Push payments are the reverse of how we think credit cards work. Instead of pulling customer funds to pay a merchant, push payments have merchants sending money out to the cardholder. Visa Direct is a major player in the space and the payment firm is now announcing Visa Direct Payouts, which allows Visa clients and partners to push payments to cards and accounts for cross border payments. With this new addition, Visa Direct now provides multi-rail access to 5 billion cards and accounts combined across more than 200 geographies, supporting 160 currencies.
Bill Sheley, svp, global head, Visa Direct joins me on the podcast to discuss the launch of Visa Direct Payouts. We talk about the challenges and opportunities of sending money cross border and how Visa is positioning itself in this market. Bill gives us an update on Visa Direct and how the ecosystem has grown over the past year and where it’s headed in the future.
I actually describe Visa Direct as an ecosystem. It provides the abilities for people who want to send money to people who want to receive money. We leverage a number of different money movement rails to facilitate that — one of the biggest ones we use is our card network.
We’ve issued over 3.5 billion cards across the planet and we’ve enabled those Visa cards to receive funds, in addition to paying for goods and services. So, each card that’s hanging off the network can participate with senders of money, like banks or remitters, receiving money across the network in real time.
Growth in push payments
There’s still a lot of cash and checks in the way money moves today. Traditional automated clearing systems still take days to move money. When you can replace that with an ecosystem that does it in real time and with more certainty, it creates a better, faster, cheaper operating model that’s in demand today.
There are socio-economic changes driving push payments as well, like the advent of the gig economy. You have millions of people working in different types of jobs that want a fast and easy way to receive their payroll. In many instances, they’re strapped for cash, and so cash flow becomes an important element of that exchange. When you take something as ubiquitous as the debit card and make it how you get paid, you make it really easy to enrol in these new digital applications.
So, if you’re an Uber or Lyft driver or participating in food delivery with Postmates, the card networks deliver payroll to the gig economy. It’s a real transformative way to make work happen in today’s day and age.
How Visa looks at push payments
We think of push payments as net new payment flows to Visa. It’s all incremental new traffic to Visa that flows over our rails. We split that into two buckets. One is high value money movement, like corporate transactions. The other is low value, high velocity money movement, and includes P2P, B2C, G2C, and other forms of payments. It’s this second bucket that Visa Direct serves. It’s a system that incorporates a lot of different stores of value. We can push to account-based, traditional banking credentials. We can push to wallets. We have a network now that can connect and create a user-friendly way to incorporate all of this using APIs.
Introducing Visa Direct Payouts
Visa debit cards are inherently cross border — you can travel and use them internationally. In addition, we acquired Earthport, a world-leading connection to cross border domestic ACH systems, a few years ago. They can drop in to 200 countries across the globe via bank account credentials. We have now integrated Earthport, taking the best it offers with Visa Direct, to be able to push to any number of stores of value through a single interface, domestically and cross border.
Fintech is a huge and important element to what we do, especially if you look at the growth of new use cases and the adoption of those use cases. Their modernization of how work is done creates a catalyst for us to make our system different and accessible in order to get scale. Our system is entirely API-driven. If you look at PayPal, Zelle, Square, these have all been huge catalysts to how the payment ecosystem has gained traction. They are looking for faster, simpler, more customer friendly ways to gain adoption of their particular use case.
They come to Visa for scale, reach, risk management and compliance. We’re using our 65 years of moving money through purchases — now, we’re leveraging that same infrastructure to provide the same payment stability and scalability to fintechs. They’re driving a lot of the growth that you see today.