Visa takes faster payments beyond the digital realm in Western Union pact
Mobile technology has improved the process of sending cross-border remittances, but most international money transfer services still have a long way to go before they’re streamlined and real-time.
Visa wants to close that gap for banked customers through an agreement with Western Union, which will eventually make Visa Direct available as an option for instant cross-border remittances in most countries, according to a Wednesday press release.
A solution enabling Western Union customers to select Visa Direct for real-time cross-border payments will roll out in the coming months in certain regions, Visa said in the release. Plans call for making the service available to businesses and consumers in more than 200 countries, but a Visa spokesperson said no timeline has been set.
“Western Union has the largest money transfer retail network and this agreement represents a key milestone for our account payout network, combining the best of Visa and Western Union’s cross-border capabilities to enable a world-class payments platform,” said Jean Claud Farah, Western Union’s executive vice president, in the release.
Visa isn’t the first to latch on to WU to expand distribution for debit push payments.
Mastercard in 2017 announced a partnership with the Denver, Colo.-based company enabling WU to deliver funds to U.S. debit cards. Mastercard Send also has been an option since 2016 for cross-border remittances sent to consumers in Bangladesh through a collaboration between WU, bKash and BRAC Bank.
Observers see Visa’s move as having an incremental benefit to both Visa and WU.
In a note to investors, Mizuho analyst Thomas McCrohan said Visa Direct delivery ranges from instant to up to 24 hours, which in some WU markets is faster than its current speed for account payouts.
“In markets where there is a high penetration of debit or prepaid cards, Visa Direct will facilitate real-time remittances, which is pretty cool. The problem is that many recipients are unbanked, so this payment method may not get a lot of usage in places like Africa or Latin America,” said Talie Baker, a senior analyst with Aite Group.
Both Visa and Mastercard are intent on expanding their share of the $80 trillion in U.S. funds sent via wire transfers or banks accounts each year by increasing funds-transfer speed and convenience for some users.
Visa last month finalized its acquisition of London-based Earthport, a cross-border payments service, after winning a brief bidding war for the company against Mastercard — which subsequently purchased Transfast, a different cross-border payments company based in New York.