Read on Twitter
1/ Been having an interesting convo w @mengxilu to get this hypothesis thought out.
Let's talk about why Visa $V has many of the pieces in place (Visa B2B Connect APIs + Plaid acquisition) and is in the best position to disrupt the ACH network ...
Let's talk about why Visa $V has many of the pieces in place (Visa B2B Connect APIs + Plaid acquisition) and is in the best position to disrupt the ACH network ...
2/ The networks have always lamented ACH for obvious competitive reasons, but Visa has been particularly vocal about it at times. Here's a great 2016 earnings quote from former $V CEO, Charles Scharf. It's love love love
3/ Lots to hate re ACH, but the gist: bilateral network has multiple handoffs/handshakes between banks with disparate systems before a transaction is complete—this can introduce delays, unpredictable costs, & inconsistencies in transaction data. It's inefficient, slow, & FRAUD
4/ Visa launched their B2B Connect APIs in 2019 and positioned them as a faster, more secure, more efficient network for corporate cross-border payments https://usa.visa.com/about-visa/newsroom/press-releases.releaseId.16591.html
5/ But when you dig in a bit, you see that what lies underneath B2B Connect are the seeds of what *could* be used broadly for all B2B & C2B payments... ie replace ACH *if* Visa can convince the banks (huge *if* bc the banks & V are frenemies) to adopt. https://developer.visa.com/capabilities/vba
6/ in addition to X-border, B2B connect enables money transfer between enterprises by IBAN or debtor account h/t @mengxilu https://developer.visa.com/capabilities/vba/reference#vba__payments
7/ But more importantly, the reason the Card Networks work so well is there is a central governance structure that established rules to authorize transactions and protect counterparties. Here is a diagram of what B2B Connect is doing. SEEMS PRETTY SIMILAR DOESN'T IT?
8/ When you add in the Plaid acquisition, especially w the Plaid Connect + launch of Plaid Exchange, you now have a network of consumer bank accounts that can reliably auth accts & provide a central control dashboard for consumers https://blog.plaid.com/introducing-plaid-exchange/
9/ Plaid acquisition was interesting for many reasons, but when you look @ annual size of ACH transaction vol ($56T) vs ~$6-7T of US Card Spend, & realize that Visa runs the tolls on ~50-60% of card vol, but 0% of the huge ACH pie, you can see why they might go in this direction
10/ Plaid Connect + Exchange + their network of fintech apps gives $V a chance to go w bottoms up approach to “bypass” ACH, & cld enable consumers & enterprises to move money directly, and it could “force” banks to get onboard w this and integrate with V as a centralized governor
11/ The big hurdle here is convincing the banks to play a long. There is no love lost, but if $V can convince the banks that their network will reduce costs/toil/fraud and still provide a commercial model that benefits all players (pricing will be crucial), this is possible.
12/ So, why wouldn't the Banks just ignore this & build on FedNOW or push more to RTP since it is ramping, right? I think the answer here comes down to simple fact that while these rails work they lack the feature that makes the card networks work so well. Central Governance...
13/ Central governance & rules that regulate the entire network leads to significant trust & speed throughout, which allows them to scale and build both sides of counterparties. Trust and speed, combined with the controls to easily unwind transactions and drive consumer affinity
14/ You can see how Visa takes their experience of building massive networks with central governance that create goodwill/trust between the counterparties and applies that to bank to bank payments with a nice side of Consumer Data and PISP controls. VOILA!
15/ Still a lot to figure out here & in the grand scheme of things is probably a long shot. We don't often see a massive incumbent like $V innovate & disrupt another massive incumbent (banks/NACHA), but the bread crumbs are there. If it happened $V is 2-3x (or more) over 5-7 yrs
16/ *Late addition* We didn't really talk about the anti-trust implications of this, which is probably another long thread. suffice to say, if this happened, the market power of $V would be insane, so there is a world where this gets cut at the knees before it even gets far 
