The explosion of growth in the fintech industry has disrupted traditional financial services. Not even the most established banks can ignore the fintech revolution, which has made it easier for small-business owners to manage all kinds of business payment transactions, from receiving sales proceeds to paying employees on time.
But the meteoric rise of the fintech companies behind these developments would not have been possible without an advanced payments network which enables fast movement of money within and across borders. It’s this kind of infrastructure that helps fintech firms to create better tools for an improved customer experience.
Anastasia Serikova, head of Visa Direct Europe, and Stergios Tsalis, VP of Payments Experience at Nuvei, a fintech enabler that has partnered with Visa Direct, discuss the infrastructure behind the fintech revolution and the future of the industry.
How has the fintech sector evolved and what is needed to support it?
It’s an industry that’s undergone a significant transformation in the past five years. We’ve seen the emergence of lots of fintechs and all these new players need a modern payments experience.
And a modern payments experience is all about being real time or near real time1. It’s about transparency on FX rates or on different fees, and so on. It’s also about providing certainty about what amount will arrive and when it will arrive. Visa Direct has been the network behind a lot of this evolution.
How would a company like Nuvei fit into this system?
If you are one of our clients, you can use Nuvei to process payments. If you want to send money across borders or domestically, we facilitate that payment flow and get your money delivered to the endpoint.
That isn’t as simple as it sounds because there are various steps to make the transaction successful. We take the instruction and send it to Visa, who send it for authorisation and eventually land the money into the designated account.
Visa Direct is the network which facilitates that process and Nuvei is the front end.
Where in the world and in which industries is there growing interest in fast payouts?
Globally, users expect different types of settlement and transparency. But I would say that Europe is at the forefront of wanting fast payouts. A lot of consumers are used to real-time1 payments, almost free payments and a lot of transparency because of the modern fintechs.
But in terms of industries or areas where they expect this cutting-edge user experience, I would call out remittances. This is also the use case that I’m most passionate about because it’s often about sending money to family and friends abroad – and that is very often about helping them in a difficult situation. So that is a use case where it is critical to be timely and transparent.
As well as benefits to end users, what are the benefits of working with a network like Visa Direct for fintechs themselves?
A lot of the fintechs that we know today, from large US giants to our European unicorns, have gone well beyond the unicorn status. They have Visa Direct empowering them on the back end. The benefit that Visa Direct provides to those fintechs is payments to their cards.
Then we also have the account-side digital wallet2 capability. This is the experience that these fintechs would like to provide to their users. Of course, some of those fintechs can charge extra for this premium user experience.
And then, of course, there is the immense benefit of Visa’s fraud and risk controls.
How are fintechs differentiating around the world?
User experience and functionality are one area. We’ve seen the race among fintechs to offer different financial management tools and investment assets. The variety of these investment assets can, for example, cover US stocks, or US and European stocks, or US and Asian stocks, or several cryptocurrencies. Some of the fintechs also offer precious metals and other commodities.
Another key differentiation is the sophistication of financial management tools to manage budgets, forecasting, savings and so on.
But a crucial area of competition is trust. So publicity, their reputation and the user experience. That is probably paramount. The fintechs that have gained trust from their users and who acquire customers by word of mouth will win in the long run.
What does the future look like for the fintech industry?
The future is about diversification. Fintechs will need to support different use cases – especially if they want to move into the global space. It’s no long enough to support only gaming or only peer-to-peer money movement; it is all about having several verticals.
And never underestimate customer support. Customer support is how you’ll retain your customers and bring more references for new business. So, it is important to invest in this area too.
With the evolution of cross-border payments and, obviously, Visa Direct is a network with various use cases that support cross-border payments, there is an increased demand for banks and insurers to facilitate real-time1 transactions. Creating solutions that will help those traditional receiving institutions to screen transactions in real time1 will make this money movement even smoother.
For more information, visit visa.co.uk
1 Actual fund availability depends on receiving financial institution and region.
2 Wallet functionality varies by market. Please consult your Visa representative.