Visa joins NAB, Westpac, Salesforce at data start-up Basiq

Payment giant Visa has made a strategic investment in Basiq – a Sydney-based start-up that captures bank data for fintechs – in a move that points to payments and broader data sources being combined to improve digital services across the economy.

Visa joins National Australia Bank and Westpac’s venture capital fund Reinventure Group, and big US software players Salesforce and Plaid, as investors in Basiq, which sits between more than 100 banks and around 200 fintechs.

Through a process known as “screen scraping”, it allows fintech customers to access the data in their bank accounts. Basiq is accredited to operate in open banking, which regulates this process, and is providing data services under the new regime.

Visa’s investment in Basiq comes on the back of its global “network of networks” strategy, under which Visa is investing beyond its core payments network, which processes global debit and credit card transactions. It wants to ensure its networks remain relevant as alternative payment infrastructure is built.

For example, if the federal government adds an ‘action initiation’ power to the open banking regime – as recommended to Treasury – this could see the open banking infrastructure (part of the consumer data right) be used to make payments in competition with Visa’s existing network.

The equity investment (Visa and Basiq declined to reveal the amount) comes after Visa bought Tink, a Swedish open banking fintech, for $US2.2 billion ($3.04 billion) in June this year.

It also comes almost a year after the US Department of Justice rejected Visa’s $US5.3 billion acquisition of Plaid, on concerns it would give Visa too much market power in digital card payments. Plaid has a similar business to Basiq in the US, building connections between US banks and fintechs using application programming interfaces (APIs).

Visa still maintains an equity investment inPlaid, which also has a strategic partnership with Basiq,which is seeing the two companies connect fintechs to banks between Australia and the US.

Afterpay venture fundAP Ventures and former Westpac CEO Brian Hartzer are also investors in Basiq.Afterpay is using Basiq to categorise transactions and create personalised customer experiences.

Damir Cuca, Basiq’s founder and CEO, said combining a payment with data relating to a bank account can be very powerful. One use case is ensuring a recurring payment is only made by an account if there are sufficient funds to pay.

“Card and bank payments are currently executed blindly – we just hope there is money on account,” Mr Cuca said. “But we can use data, so payments are not done blindly. With data, you can dynamically determine when is the right time to take funds out. Bringing data and payments together can change the landscape.”

Visa’s group country manager in Australia, New Zealand and the South Pacific, Julian Potter, said Visa and Basiq could co-develop products, and the investment reflects its global thinking on open banking.

“We are a global commerce network that enables the movement of money and data more broadly, which we see as being highly complimentary,” he said.

Visa’s investment in Basiq, which has been accredited as a data recipient under the consumer data right by the Australian Competition and Consumer Commission, comes less than three months afterMastercard unveiled its intentions to participate in open banking in Australiawith new products.

Mastercard paid $US825 million last year for US company Finicity, which builds APIs that connect to banks to extract data. Finicity is preparing to enter Australia through Mastercard, where it will compete with Basiq.