nanopay announces new B2B service: Canada-US cross-border and domestic payments
Solves for B2B friction: instant transfers, lower fees, more transparency, open API, ISO 20022
Could NPP provide opportunities for a similar service in the future?
Point of View
Canadian fintech firm, nanopay, has announced new cross-border and domestic business-to-busines (B2B) payments services, due to launch in February 2018. The cross-border service will initially be between businesses in Canada and the US, but nanopay intends to expand to India and China in Q2 2018.
nanopay expects the account-to-account service to be less expensive and less complex than traditional correspondent banking, with transparency around FX costs and payment status, and straight-through processing using ISO 20022 metadata. Furthermore, nanopay provides an open API to allow third parties to provide integrated services, e.g. accounting and invoicing software service providers.
The nanopay platform comprises a 'distributed system of secure asset stores', with no intermediary, and a messaging protocol that enables payment messages to be cryptographically secured. This reduces costs and removes payment settlement risk. The platform uses cash as a bearer asset to create a fiat-backed digital currency, which was originally developed by the Canadian Mint. The digital currency does not use blockchain technology.
Separately, nanopay has partnered with Interac to provide instant account-to-account remittance services, initially to India. Canadians initiate transfers in Interac e-Transfer, Canada's instant bank transfer system, which are deposited in the recipient's Indian bank account.
Firms have long experienced friction when making B2B payments. Domestically, the inability to attach invoices to electronic payments sees businesses often paying by cheque. And while many new entrants are disrupting the P2P cross-border market, such as TransferWise, supply chain finance via correspondent banking has a number of inefficiencies, lack of transparency and high costs. nanopay's offering appears to solve for these problems, offering businesses a less-friction payment alternative.
Could we see B2B overlay services using the New Payments Platform (NPP) in the future? Many commentators expect services such as NPP and digital B2B transfers to accelerate the decline in commercial cheque use.
Cross-border B2B transfer friction is, however, more difficult to resolve. Although, as the NPP uses the ISO 20022 messaging standard and provides a similar payment service to Interac e-Transfer, could nanopay see Australia as a good fit for its "vision for simple and secure global B2B payments"?