One of the major trends we’ve seen over the past couple of years is credit card firms moving into push payments. Being able to push money out to a debit card influences the types of fintech applications currently being built and further cements firms like Visa in the fintech ecosystem.
Bill Sheley, the head of Visa Direct at Visa, joins us on the podcast today to talk about his role and the importance of Visa Direct for the firm and its customers. We discuss the growing pervasiveness of faster payments and the work Visa has done with cash flow tools for small businesses. Bill describes his plans for expanding Visa Direct’s capabilities around the world.
My job is an interesting, new role at Visa. We’ve been working on Visa Direct the last three or four years. We move money on behalf of consumers and small businesses. We try to answer a simple question — everyday, millions of consumers and small businesses get asked how they want to get paid. Visa provides the infrastructure to be able to fulfill on the question for consumers and SMBs.
Direct’s importance to Visa
The best way to think about Direct is in the context of the use cases it serves. If you look at person to person payments, it wasn’t always seamless. It may have taken a day or two to get your money to move through the systems from one account to another.
We’re leveraging the Visa infrastructure, like you would returning something to a store. You get an instant credit for the sweater you bought that you didn’t like. We took that infrastructure and commercialized it, so that if I want to send money to you, we can leverage the Visa infrastructure to push funds from one account to another in real time.
It changes the dynamic of these use cases. Think about a gig worker who gets paid and wants access to her money now. Think about a pizza store owner that needs to make inventory tomorrow because he’s sold out — he can get instant access to his register receipts. It could be an insurance claim where a person needs to make a payment to an auto repair shop and needs access to funds today. Visa Direct gives the infrastructure to be able to make all these real time payments.
We’ve put the Visa infrastructure in reverse in order to enable these real time cash flow experiences to happen. So, in the case of a small business, there’s a variety of different use cases at play. We mentioned instant settlement and instant access to proceeds. So, if I’m a small Square merchant, I can register my Visa debit credentials to be the way I want to access my proceeds. This merchant can click a button to let them cash out whenever during the course of a day.
We have a variety of ways access to loan proceeds. We have merchants that have a variety of loans and lines of credit available and there’s a way for them to cash out those proceeds.
We’re also building things into accounting tools that support small businesses. We recently announced a partnership with Intuit and QuickBooks, where they act as an acquirer for many small merchants around the U.S. So, we provide instant access to their proceeds during the day, as simple as clicking a button.
Payroll payments and Visa
Many of these gig economy firms weren’t around a handful of years ago. But today, one out of three people hold a gig economy job. For these individuals, cash flow is as important as it is for small businesses. The ability to get your money on demand is a huge feature. It is a great employee experience and helps the gig economy firms — Lyft, Uber, Postmates — provide a differentiated service when they’re trying to hire and retain people. Accessing earned wages is a very important attribute.
In the cross border space, it sometimes takes days or even weeks to get money to its destination. There are a variety of intermediaries that have to pass the money from bank to bank. We’re using the same infrastructure that we use for domestic P2P to power cross border payments.
We just announced a partnership with Moneygram. They launched a service that moves money from the U.S. to Spain in a real time customer experience, leveraging a card to card type transaction.
Longer term ambitions
We think about moving money like a supply chain. On one end, you need distribution — end points for the money to go into. Card credentials stand in front of 50 percent to 60 percent of individuals. We’d like to create a ubiquitous model where we can reach every bank customer around the globe.
We acquired a company called Earthport. It’s a network of domestic ACH and RTP rails that cover about 100 countries globally. We’re now matching their capabilities with the Visa network. So between cards, accounts, and wallets, we can basically cover the banks’ consumer and small business space. With a single connection to Visa, I can move money to debit cards, to accounts through ACH and RTP and to wallets — all important stores of value to consumers and SMBs around the world.
Push payment trends
Visa has been in this purchase and money transaction business for nearly 60 years. There are 54 million merchants, 20,000 financial institutions and 3.5 billion cardholders connected to our network. The operating scale we can achieve by leveraging that backbone for all these use cases — everyone who has a Visa card in their wallets can not only make purchases, but attach themselves to the network to receive funds.
We already have over 30 use cases enabled and have crossed 2 billion transactions running across the network on an annual basis. We have great brands sitting on top of the network. We power eight out of eight of the largest P2P brands in the world — in the US, Russia and Latin America.
Sitting underneath all this is the power of VisaNet. If you think about safe and secure commerce, we’re applying all of that to make this the safest way to move money domestically and cross-border. Instead of building this anew like many startups, we’ve had this in place for decades.