Visa vs ACH: The Future of B2B Payments | $200 Trillion Market Explained

Discover how Visa is challenging ACH in the massive $200 trillion B2B payments market. In this video, we dive deep into Visa's innovative strategies to revolutionize business transactions and compete against the established ACH network.Key points covered:

• The changing landscape of B2B payments
• Limitations of traditional ACH transfers
• Visa Direct's real-time payment capabilities
• Cross-border payment solutions with Visa B2B Connect
• Potential impact on global trade and business finance

Learn how Visa's multi-faceted approach, leveraging speed and global reach, positions it as a strong contender in the evolving digital payments space. Essential viewing for finance professionals, business owners, and anyone interested in the future of financial technology.

#B2BPayments #VisaVsACH #FinTech #BusinessFinance

Read our in-depth analysis: https://www.girolino.com/how-visa-will-compete-against-ach-a-deep-dive-into-the-b2b-payments-battlefield/

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Transcript

Are you ready to uncover the high-stakes battle shaping the future of business payments? Get ready for a thrilling exploration of how Visa is taking on the Automated Clearing House in the massive $200 trillion B2B payments market.

Welcome to Giro' Podcast. I'm your host, and today we're diving deep into the world of B2B payments, examining how Visa plans to compete against the long-standing ACH network. This showdown could revolutionize how businesses handle their financial transactions.

Let's start by setting the stage. The B2B payments sector is undergoing a major transformation. While checks and ACH transfers have long dominated this space, there's a growing demand for faster, more efficient payment solutions. Enter Visa, the global digital payments giant, eyeing a significant piece of this lucrative market.

Now, before we delve into Visa's strategy, let's understand the current landscape. ACH has been the go-to choice for many businesses, especially for high-value transactions. Its low fees and reliability have made it a staple in corporate finance departments across the country. However, ACH isn't without its limitations. Transactions typically take 2-4 business days to process, which can be problematic in today's fast-paced business environment. Moreover, ACH is primarily a domestic U.S. system, posing challenges for companies engaged in international trade.

Visa sees these limitations as an opportunity. With its vast network and technological prowess, the company is positioning itself as a formidable competitor to ACH in the B2B space. But how exactly does Visa plan to take on this entrenched player?

Let's break down Visa's arsenal of tools and strategies.

First up is Visa Direct, the company's real-time push payment platform. This technology allows for near-instantaneous fund transfers, with money typically available within 30 minutes, even on nights and weekends. The speed advantage of Visa Direct is particularly appealing for time-sensitive B2B transactions. Imagine a scenario where a company needs to make an urgent payment to a supplier to secure a critical shipment. In such cases, the ability to transfer funds instantly could be a game-changer.

To illustrate this point, let's consider a quote from Ryan McInerney, President of Visa. Quote: "Visa Direct transactions grew 20% year-over-year to 1.8 billion in the fiscal third quarter. We're seeing strong growth across use cases, including B2B payments, where businesses are increasingly turning to Visa Direct for its speed and reliability." End quote.

As an example of how this could be applied, picture a software company using Visa's solutions to accept card payments from their business customers. This could potentially accelerate their cash flow compared to traditional invoicing methods, which could be particularly beneficial for SaaS companies dealing with recurring payments from multiple clients.

Moving on to Visa's second major advantage: cross-border capabilities. In an increasingly globalized business world, Visa's ability to handle international payments efficiently gives it a significant edge over domestic ACH. Visa B2B Connect, the company's multilateral B2B cross-border payments network, is a key part of this strategy. In fiscal year 2023, Visa increased the number of banks signed onto Visa B2B Connect by over 70%. This expansion enhances Visa's ability to facilitate seamless international B2B payments, addressing a pain point that ACH struggles to solve.

To put this into perspective, consider a mid-market manufacturing company in the U.S. that sources materials from suppliers in Asia. Using Visa B2B Connect, they could make faster, more transparent payments to those suppliers. This would help improve their supplier relationships and potentially negotiate better terms due to quicker payments.

In conclusion, Visa's multi-faceted approach to competing against ACH in the B2B payments space is both ambitious and innovative. By leveraging the speed of Visa Direct and the global reach of Visa B2B Connect, the company is positioning itself as a strong contender in this $200 trillion market. As businesses increasingly demand faster, more efficient payment solutions, the battle between Visa and ACH is sure to intensify.

For more in-depth analysis on this topic and other investment insights, be sure to check out our blog at girolino.com. This is Giro' Podcast, thanks for listening!