What Does Visa’s Acquistion of Fraedom Mean for B2B Payments?

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Not long ago, we wrote about Visa’s announcement that they were rolling out B2B blockchain payments. While that was a big step for the credit card company, it appears it’s just one of several that they’re making in regards to B2B payments. Visa’s most recent announcement is they acquired Fraedom.

Founded in 1999 and based out of New Zealand, Fraedom offers transaction management services, including expense management and accounts payable solutions. Since its founding, the company has managed more than one billion transactions through its web based platform across more than 170,000 organizations. Fraedom’s recent focus has been on creating a mobile first experience.

Although Visa didn’t disclose exactly how much they paid to acquire Fraedom, it’s believed to be around $195 million. Because that is a very substantial amount, we want to dig a little deeper into what Visa is planning to do.

Visa’s Strategy for B2B Payments

Visa’s head of global business solutions recently discussed why the company has been so active with acquisitions and partnerships related to B2B payments. He started by explaining that “I think there is a perception of simplicity, but the reality in commercial payments is that there are many parties, there is a lot of friction. And once you go global, it creates more problems.”

One area the executive emphasized is that Visa wants their offerings to be very mobile, which is exactly in line with what Fraedom’s been developing. He said “whether it’s cards, whether it’s virtual accounts, or whether it’s what we’re doing with B2B Connect, we have to make sure we’re bringing our corporate and FI partners a full view of all of the payment capabilities, and now we can deliver that into one app. Through APIs, you can then connect this app into treasury workstations, connect it into other forms of reporting.”

A big initiative for Visa is taking smart actions with their data. As we’ve discussed in previous posts, businesses have access to far more data than ever before. However, the gap between having this data and being able to put it to use remains quite large. For Visa, a significant priority is “to be excellent in payments, and also make sure we’re providing extensive, enriched and expanded data. Payments are central to what we do, but just as importantly, we’ve got to deliver the full end-to-end breadth of payments data and reconciliation.”

The other topic emphasized in this discussion about B2B payments was “speed is becoming more important. They want to make sure there is security, visibility and transparency. And if you start to address those things, then all of our sudden our clients become more valuable to corporates.”

What this Acquisition Means for Small Businesses

This acquisition makes it clear that small businesses are very valuable to Visa and other companies across the payment industry. So if you’re unhappy with the way you’re being treated by your current processor, you definitely have plenty of other options. The best way to start exploring those options is by looking at our list of the top credit card processors.

Posted on Wednesday, March 14th, 2018