Giving credit… onto a credit card

Trying to think of better ways to get money back to someone who didn’t make an initial credit card purchase, I have been hitting a bit of road block on a clean solution that is cost effective and simple.

This is the dilemma that I discussed in my previous post…  Paul in Singapore rents his apartment on Airbnb to Ellen who is in town from Australia.  How does Airbnb get Paul money in SGD that Ellen paid in AUD?  PayPal, bank transfer, local schemes…

I know that I am avoiding some important risk factors here, but the answer here may lie in the credit card schemes.  Visa has had something called the Original Credit Transaction (OCT) for a bit of time, and it looks like they are actively promoting it to developers as Visa Personal Payments.  The caveat is that you need to be a large financial institution with a Visa acquiring license to actually use the APIs provided, but when you do, you as a service provider can send money through the system to individuals globally onto their Visa card on file.

To be clear, the main purpose that it is outlined in the marketing collateral for OCT and Personal Payments is a person-to-person international payment network.  In the example above, Ellen could directly send money to Paul’s Visa card for the amount required.  Here’s what this would look like in real life:

But if you dig into some of the Personal Payments API documentation, you realize that there are some really robust tools for either a company like Airbnb or a payments company partnering with Airbnb to plug in and manage all of those outbound payments for their users through the use of FX, OCT and other tools to facilitate payment into the service provider’s Visa card.

cross_border_payments_flow - Visa Personal Payments

 

If this is all that is seems to be, a service provider would need to do a few things.  First, get all of the required funds from the inbound flow of payments into a funding account.  Second, validate that the person getting paid is indeed the right person with the proper AML (anti-money laundering) checks and balances.  And finally, ensure that the card on file checks out against the person who need to be paid.  If you could get all of these items to line up, it would appear that there is a workable solution here that would make the lives of a lot of people much easier.  Would love to hear more from anyone who has more insight on Visa Personal Payments, and how this could potentially not be as simple as it sounds.

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Filed under Payments, Product Innovation