Real-time payments have yet to become a true retail mainstay in the U.S., but trillions of dollars moved across the FedNow and RTP networks last year. Both networks recently increased their transaction limits to $10 million, dramatically expanding enterprise use cases.

The growing adoption of real-time payments will meaningfully reshape the B2B payments landscape. But it’s only one of several forces converging in what is shaping up to be a watershed year for commercial payments.

As Hugh Thomas, Lead Commercial and Enterprise Analyst at Javelin Strategy & Research, discussed in the 2026 Commercial & Enterprise Trends report, artificial intelligence-driven automation and the rise of more targeted, value-based pricing structures will also play defining roles in the next era of enterprise payments.

An Inflection Year for AI

Optimizing commercial payments flows—whether through automation or outsourcing—has long been a priority for finance leaders. Few technologies, however, offer the promise of AI.

Over the past few years, businesses across industries have invested heavily in AI capabilities. This year represents a critical litmus test: organizations are now expecting measurable returns on those investments.

Expectations have only intensified with the emergence of agentic AI, which has the potential to further accelerate automation.

“You’re looking at something now where so much of that work can be automated, where on initiation of a purchase you could begin to be provisioning an agent to go out and find goods or services that meet the criteria—find price points, look at all the tumblers that need to fall before you say, ‘I’m now ready to pull the trigger and make the payment here,’” Thomas said.

“The data has been around for a long time, the technology is just getting to the point where I think this year will be almost an inflection year in the payables space where you’ll begin to see some big case studies happening,” he said. “I’ve been interviewing people in the receivable space and they’re all talking about how well-suited AI is to managing customer interactions on their AR portals.”

In the past, accounts receivable processes required consistent human intervention—managing credit lines, reviewing invoices, reconciling payments, and handling exceptions. Generative and agentic AI now can substantially reduce time spent on these manual workflows.

That promise is compelling. However, implementing AI securely and responsibly requires strong governance, oversight, and iterative deployment. Progress will likely be incremental rather than instantaneous.

“I don’t know whether we’re going to see paradigm changes, but I think that this is going to be the year that there’s a more ubiquitous perceived need for AI in the payments mix,” Thomas said. “It’s still going to be a learning year, but there are going to be a lot of interesting case studies that happen. This is something where it moves from the theoretical to the practical and the applied.”

A New Real-Time Ballpark

Real-time payments are far more culturally entrenched in markets like India and Brazil than in the U.S., but domestic adoption is accelerating.

For years, RTP—operated by The Clearing House—was the only instant payments network in the U.S., which helped it grow from 60 billion real-time payments in Q2 2024 to around 481 billion in Q2 2025. FedNow, launched nearly three years ago by the Federal Reserve, has not displaced RTP; instead, both systems have expanded in parallel, with FedNow facilitating roughly 246 billion payments in Q2 2025.

“You’re in a different ballpark now, where you’ve got a higher average value and they’re seeing clear use cases where instant transfer of funds is required,” Thomas said. “The one that gets talked about a lot these days is housing down payments—moving from a wire or a cashier’s check to a real-time payment, where both parties can be sitting at their terminals and observe the money move from one account to the other.”

“It’s a great way to avoid a lot of steps versus handing a cashier’s check to a lawyer and having them affirm to the counterparty’s lawyer the funds are on their way,” he said.

Speed introduces new risk considerations, most notably fraud. In traditional payment systems, settlement delays provided time for fraud screening and dispute resolution. With real-time settlement, those buffers largely disappear.

While instant payments introduce unique risk management challenges, they also deliver powerful benefits.

“These observable instant funds movements are going to be where you’re going to see quick take-up,” Thomas said. “And they’ll drive the business case for investing in managing these new risk parameters. As real-time use cases become broadly known, the functionality will be expected of the smaller banks, and you’re seeing companies building out the functionality to offer this to the smaller providers at scale.”

Targeting Price-to-Value

As real-time rails gain momentum in B2B payments, card networks remain formidable competitors.

For years, leading credit card issuers have sought to replicate their consumer-market success in commercial payments. However, translating retail-based pricing models into the B2B environment has proven more complex than expected.  

“There are a million different kinds of consumer, but not much differentiation in how they want to pay for things,” Thomas said. “People either want rewards or access to credit, or they want to be as cheap as possible—and they tend to know the best way to meet their own needs.”

“As a consumer, if you go to a grocery store today, try and pay for it with a check—it’s not The Big Lebowski days, you can either pay with card or cash,” he said. “However, if you’re a business you can pay with ACH, you can pay with real-time payments, you can pay with a check, you can do direct debit, or you can use a card. Rarely would you ever do cash, but some people do. You tend to have a lot more options than consumers, and many of them turn on whether you want to pay now or later, and what sort of discounts or later payment options are available.”

Commercial payments operate under different economics, workflows, and value expectations. As a result, issuers face well-established alternatives and deeply embedded processes within enterprise finance teams.

Still, cards offer significant advantages in B2B contexts. Organizations can authorize one amount and settle for another within defined parameters, and chargeback rights provide strong recourse protections. From both a control and risk-mitigation perspective, cards remain one of the safest payment methods available.  

To gain broader traction in commercial payments, however, issuers will likely need to move beyond retail pricing frameworks and adopt models aligned specifically to B2B value creation.

“The pricing schedule for Visa and Mastercard used to be a six- or seven-page document for the United States and Canada,” Thomas said. “Now, it’s about a 30-page document, and most of the new pages are describing different types of B2B transactions—a page for different flavors of fleet payments, two pages for different flavors of virtual card payments, new tranches of card types and interchange schemes associated with them.”

“So, the networks are getting smarter about pricing, but the problem is they’re not seeing both sides of the transaction. They don’t know the full costs and benefits the counterparties are seeing by using the network, how much rebate the buyer may be getting, and how much it’s costing the supplier to accept cards,” he said. “These new pricing schemes are an attempt to balance the economics of the transaction without actually controlling the final costs; they’re designed to encourage maximum and sustained network use. Given the priority the card networks have been putting on B2B growth, one has to assume they’ll continue to tweak their pricing further to capture specific spend types where they can price to the value their solutions deliver.”

The post From Theory to Application: The Impending Transformation of Commercial Payments appeared first on PaymentsJournal.

Although consumer payments have become increasingly digitized, many business-to-business transactions still rely on manual processes that add unnecessary friction. This dynamic is beginning to shift.

Freight management software firm Carrier Logistics has introduced FACTSPay, an online payment tool designed to streamline invoice settlement for shippers. Currently, paying freight invoices—whether by credit card or ACH—often requires contacting customer service. Moving these interactions into a digital, self-service environment could bring substantial benefits to the industry, reflecting similar trends seen in other sectors.

“Independent software vendors (ISVs) in the B2C space have been the hottest market for integrated payments and embedded financial services,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “Toast is a good example, where restaurants benefit from seamless payment processing and other business financial needs like payroll and working capital.”

“Combine that with the B2B supplier space which still represents the largest greenfield expansion opportunity for card acceptance, and this announcement from Carrier is significant,” he said.

The Primary Blocker

Along with ease of use, this model also presents opportunities for cost reduction. By enabling self-service payments, motor carriers can reduce administrative work associated with collecting from shippers, while shippers face fewer barriers when paying their invoices.

“The primary blocker to card payments in B2B is the 3% average cost that businesses will pay to accept corporate and purchasing card types,” Apgar said. “In this application for the less-than-truckload (LTL) logistics vertical, the cost of accepting payments over the phone and fielding inquiries about invoices and payments is significant.”

“Embedding payment processing into the software that enables users to look up invoice data and make payments on their own represents a huge potential cost savings for the carriers,” he said.

Underpinning the Next Wave

For many software-as-a-service companies, embedded payment capabilities represent just the beginning. For example, Toast evolved from a restaurant point-of-sale solution into a full-scale financial services provider.

As flexibility and cost savings become increasingly important in B2B commerce, platforms that integrate payments directly into operational workflows are set to play a much larger role in the future of the payments landscape.

“This will be one to watch, because if successful it will be the case study that underpins the next wave of growth for electronic payments in B2B applications,” Apgar said.

The post Carrier Logistics Launch Is a Case Study for Next-Gen B2B Payments appeared first on PaymentsJournal.

When a traveler books a hotel through an online travel agency (OTA) like Expedia, the OTA pays the hotel some or all of the value of the booking, but the OTA may or may not have been paid the full value of the booking by the traveler. The amount the traveler is willing to pay upfront to secure the booking, and the amount the hotel will insist on receiving upfront from the OTA to hold the room, are functions of their perceived potential risks and rewards at the time of booking. By pricing based on certainty of travel, OTAs have become a tool for travelers and travel providers to hedge risk, in part through payment authorization and payment timing.  

This need for variable timing and commitment of funds has created a durable use case for virtual cards as the instrument OTAs use to push funds to travel providers. Their ability to authorize for one amount and settle for another, as well as pay suppliers on day 1, then pay card providers on day 45, allows OTAS to manage final payment amounts automatically and bridge gaps in working capital.

However, as Hugh Thomas, Commercial & Enterprise Lead Analyst at Javelin Strategy & Research, sets out in the report The Virtual Economy: Measuring Buyer Industry Receptiveness to Using Virtual Cards, these sorts of cash management and automation challenges are not unique to online travel agencies, suggesting use cases for virtual cards in B2B payments in many other industries.

In this report, and its companion, The Virtual Economy: Identifying Supplier Industries Receptive to Virtual Cards, Thomas offers perspectives on other industries where virtual cards may be poised for a breakthrough based on factors like cash management, the need for automation, and vendors that already accept cards, setting out a new way for banks and networks to uncover use cases.

Not as Intuitive as Its Predecessors

Early card applications for B2B payments were fairly straightforward. Products like travel and expense (T&E) cards had a clear purpose and use, enabling staff to travel on business without reaching into their own funds. As the notion of spending with a card issued to a company became more broadly accepted, use expanded to indirect spending on things like maintenance, repairs, and operations, areas where purchasing cards, with strict controls on purchase amounts and locations, empowered other employees to pay on behalf of the company without raising purchase orders.

“You’ve got people on your staff that you need to go visit a customer, or you need to pick up some tools and cleaning materials,” Thomas said. “You don’t want them to go out of pocket, you don’t want to spend employee time raising purchase orders, and you’d like to manage those expenses and gain whatever benefit you can gain—from some chunk of whatever the bank itself is gaining by issuing the cards—in the form of things like rebates. So these things are fairly intuitive.”

With the emergence of virtual cards, businesses are now looking at card networks for making all kinds of payments, up to and including direct purchases of goods and supplier payments, leveraging card networks’ ability to message that a transaction is authorized, then later settle it. Cards also allow buyers to pay suppliers faster, then use card cycles to hang on to funds longer before they pay the card provider. Virtual cards also come with controls; such cards have maximum transaction limits, set within the parameters of what the business estimates the purchase order will cost, and virtual card numbers can also be set to work only for a given vendor or vendor industry.

“It’s only good to be used to make payment to that one supplier, conceivably on that day,” Thomas said. “It’s got all the benefits of a card wrapped on top of it, the recourse to charge back if you don’t get what you said you were ordering, and so forth. Now you have a solution that has a bunch of benefits to it, but also a bunch of costs to it where you need to be conscious of where the thing is best applied—and that is not something that’s immediately intuitive.“

Shortening the Payment Cycle

Delving deeper into using virtual cards as purchasing cards uncovers more use cases.

For example, a business may have a vendor it doesn’t plan to work with on a long-term basis. Instead of going through the typical know-your-supplier or know-your-customer checks, the company could simply pay the vendor with a virtual card.

This way, the business doesn’t give the vendor any banking information, avoids creating purchase orders, and eliminates significant costs in the process.

“The business case for cards begins to expand, and as that happens, you come to realize it shortens the payment cycle time and thus begins to get used even more broadly,” Thomas said.

Everyone Has Exigencies

As the B2B use case expands, it becomes clear that virtual cards are not simply an X-that-does-Y product.

To identify some of the best fits for virtual cards, Thomas used the OTA industry as a blueprint. He identified the defining traits of the target market for virtual cards. One characteristic he discovered: a high number of potential vendors.

“There’s a vast number of vendors for any OTA business,” Thomas said. “The number of vendors is basically equal to the number of hotels, car rental companies, airlines, and train companies in the world. Whatever they book, that’s a potential vendor to them, so the numbers are obviously in the millions. High volume seems to be something that drives this use case.”

Another characteristic of virtual card candidates is they require flexible and potentially slow incoming payments or, conversely, high days payable outstanding.

Taking the criteria gleaned from the OTA model into account, Thomas began to focus on the industries where virtual cards could make the most impact. What he found was these were often sectors which have complex supply chains, such as home centers, food manufacturers, or general merchandise stores.

“Another is the healthcare business,” Thomas said. “Healthcare payments have to go through so many different parties, and everybody’s got their own, ‘I want to be paid sooner exigencies’ or ‘I want to pay later exigencies.’ It’s obviously a data intensive payment process in healthcare, so it’s a great tool in that respect.”

Selling Opportunistically

For all the promise of virtual cards, businesses have very few resources they can rely on to guide them through the usage of virtual cards. This was the impetus for the Javelin report—to analyze the landscape and predict where virtual cards might emerge next as a solution.

“In all my time working with banks data, what I found was that the characteristics of suppliers being paid with virtual cards was vastly different from bank to bank,” Thomas said. “There were no two banks that looked alike. Now, if you made that comparison for a T&E product or a purchasing card product, the patterns would be very much largely the same.

Thomas notes that with virtual cards, there are some financial institutions that heavily over-indexed in healthcare, some in auto, others that are heavily indexed in utilities, and still others in OTA.

“That, to me, says there’s no uniformity among the banks for a product where everybody’s product is by and large pretty much the same,” Thomas said. “That suggests this is something that water has just begun to find its level on in terms of use cases for virtual cards—and that it’s being sold opportunistically, rather than with an eye to the typical exigencies of the industry in question

“It says that there just is not a common awareness of where it’s best used and how to determine the circumstances of where it’s best used,” he said.

The post Uncovering the Buyer Industry Opportunities for Virtual Cards appeared first on PaymentsJournal.

Stripe’s network of businesses will be able to offer their customers in Brazil the option to make Pix payments in Brazilian Reals, with settlements available in the merchant’s domestic currency.

The integration, facilitated by Latin American payments firm EBANX, will be available to both businesses directly integrated with Stripe and those using e-commerce platforms built on Stripe’s infrastructure.

A key use case for the launch is cross-border payments. One of the most effective ways to improve international transactions in Brazil is to offer local payment methods.

This approach can deliver measurable results: data from EBANX shows that merchants who support Pix increased revenue by 16% and grew their customer base by 25% over a six-month period.

Capitalizing Upon Ubiquity

Pix has quickly become the predominant payment method in Brazil since its launch in 2020. The real-time payments system processed over six billion transactions per month last year, and 93% of Brazilian adults say they use Pix.

The main reasons the network has gained traction so rapidly are that it is fee-free and transactions are real-time. These factors have driven the platform to surpass credit cards as the leading payment type in Brazil.

Pix has capitalized on its ubiquity by launching new features like contactless payments, recurring payments, and a buy now, pay later service. These features have increased the platform’s popularity to the point where merchants who want to tap into the Brazilian market must offer Pix capabilities.

Options Are Effective

Reaching more customers in Latin America is one of Stripe’s goals, as Brazil is the largest market in the region. It also represents a shift toward incorporating more real-time payments, after Stripe has been heavily focused on crypto-related ventures in recent months. The company also made significant acquisitions of both stablecoin company Bridge and crypto wallet Privy.

However, the Pix integration isn’t Stripe’s first foray into instant payments—it already  operates its own pay-by-bank platform, which was first launched in the UK before expanding into France and Germany.

While there have been questions about how much traction this platform will gain, certain options have proven effective. Stripe noted that merchants offering at least one additional relevant payment method beyond cards saw average revenue growth of 12%.

The post Stripe Adds Pix Payments Through EBANX Integration appeared first on PaymentsJournal.

The latest available data from the Federal Reserve found that there were roughly $1.6 quadrillion in payments in the United States alone. However, because this data includes financial economy transactions like company acquisitions and stock sales, as well as consumer payments, quantifying the total addressable market for B2B payments—much less share shift that is happening between different payment instruments—can be difficult.

This is exactly what Hugh Thomas, Lead Commercial & Enterprise Payments Analyst at Javelin Strategy & Research, set out to do in the Commercial Payments Factbook. His report examines the commercial payments market, identifies growth rates on a product-by-product basis, and details how financial institutions can make an impact with business customers.

Defining the Addressable Market

Out of the total volume of payments reported by the Fed (the most recent data was from 2021), there was roughly $1.4 quadrillion in wire transfers. Although wire transfers may be a base competency for financial institutions, they typically aren’t a growth driver for payments.

“Wires tend to be something that you use to execute at the end of events that are not necessarily in any way payments-focused,” Thomas said. “They are more just, ‘Here’s this stock getting traded, and we move the funds using a wire transfer.’ It doesn’t tend to drive treasury businesses.”

“You use it for high-value, very low-volume transactions, and so we don’t look at that as addressable when you talk about total addressable market in the wholesale payments business,” he said.

Leaving out wire transfers, there was more than $200 trillion in payments value. Once customer payments are removed from the equation, roughly $175 trillion was identified as the total addressable market for commercial payments.

The lion’s share of these payments was ACH credit transfers, where the initiator pushes funds to a payee. The next most prevalent payment type was ACH debit, whereby the payer has an arrangement with the payee where they can pull funds from an account, such as in bill pay or loan payments.

“Still hanging in there with a decent-sized share of B2B payments is check,” Thomas said. “Check payments are hanging in there primarily because they’ve become more of an exception solution. Basically, checks almost doubled in terms of average transaction size and almost halved in terms of volume of transactions between 2015 and 2024.

“They’re effectively becoming a solution where either your payee is not set up to receive ACH credit transfers or direct debit, is unwilling to receive, or it’s just not worth it—it’s a one-time payout where doing a wire would be unnecessary or too expensive, It’s no longer as much of a high-volume, low-value payment system as it has been. That’s how checks are hanging in there is they’re becoming an exception management solution.”

Water Finding Its Level

As paper checks fade, there has been speculation that real-time payments through FedNow or the RTP network could be pushed into the limelight. This hasn’t yet been the case because the established financial infrastructure in the United States has been sufficient enough for commercial use cases.

However, there has been some growth in Same Day ACH, especially since the transaction limit was raised a few years ago. Still, the payment mechanism accounts for only roughly a 3% share of total ACH.

Although card-based transactions are ubiquitous among U.S. consumers, this is not the case in B2B, where card payments represent less than 2% of total value. Because B2B spending typically dwarfs consumer payments by a roughly 10-to-1 ratio, commercial payments represent a significant opportunity for card companies. Visa and Mastercard have acknowledged this in recent announcements¹.

Cards are gaining more traction, with substantial growth seen in many types of commercial cards, from fleet to prepaid to small-business credit.

There was also demonstrable growth in small-business debit, as more smaller enterprises have recognized that the payment mechanism is an effective and inexpensive way to pay suppliers.

Beyond these areas, one of the most promising payment types for B2B transactions is virtual cards.

“We think there are a ton of possible use cases for virtual cards, and our forecast is that virtual card spend will overtake purchasing card spend in the next two years, though it may have already done so,” Thomas said. “We think this is the growth engine, something that can help with automation, make payments more secure and reliable, offer the sort of fungibility that’s useful in a number of circumstances, and potentially provide working-capital acceleration.

“Water has far from found its level at this point with that product, so every possibility that growth comes even faster, particularly as you see the networks moving into things like making hashed card number and virtual card number solutions for agentic AI spend,” he said. “There could be some serious force multipliers there, depending on how quickly people come to embrace those sorts of emerging technologies.”

The 5 Sectors

In addition to evaluating the most prevalent products, the study also broke down B2B spending by sector and segment. It showed that there are five segments dominating real-economy spending: wholesaling, manufacturing, retail, healthcare, and social assistance instruction.

Delving deeper, the study examined which sectors were dominated by large-market, mid-market, and small- to medium-sized enterprises, and how much each of these sectors purchase. Although roughly a third of all spending comes from manufacturing, healthcare comprises a substantial amount of business payments because of its multiplier effect.

“You pay your insurance company, and if you go to see your doctor, you pay a copay, your insurer pays an HMO,” Thomas said. “The HMO maybe pays somebody who manages the wages of doctors. That entity pays the doctor’s company, then the doctor’s company pays the doctor. There’s just a giant multiplier effect as a consequence of the structure of that industry.”

A Resource at Your Fingertips

Understanding the total addressable market, the predominant payment types, and the breakdown of each sector is crucial for financial institutions as they build strategies to reach business customers.

For example, identifying slower-paying industries could help organizations improve cash management.

“We looked at the businesses with the highest days payable outstanding who may want things like supply chain finance or other ways to get their suppliers paid faster if they want to hold on to their cash longer,” Thomas said. “Which industries have the higher day sales outstanding? Who waits the longest to get paid? Businesses in these industries may need bridging solutions, so the document helps providers as they decide which industries to focus on and what solutions and messages to emphasize

With so much supply chain disruption and uncertainty in recent months, many organizations are revisiting their supply chain strategies, a great opportunity for providers to have a conversation about solutions that is informed by the exigencies of specific industries.

“It’s a good perspective in terms of where to weigh in with your financial solutions,” Thomas said. “It’s a good primer for anyone who wants to be able to say in 2025, ‘My boss is going to ask me X, Y, or Z question about where the market is, or the size of X, Y, or Z, the sector percentage,’ or whatever the case might be. It’s just a good resource to have at your fingertips.”

¹ Visa 2024 Annual Report, Mastercard 4^th Quarter Earnings Call, January 30, 2025

The post A Definitional Discussion: Exploring the Shape and Trajectory of the U.S. Commercial Payments Ecosystem appeared first on PaymentsJournal.

Business-to-business (B2B) payments dominate the global payments landscape, and Visa is launching a platform designed to connect the major players.

The card company noted that its Commercial Integrated Partners program provides an ecosystem that banks can leverage to offer enterprise clients a range of services, including expense management, a mobile app, and tokenization of virtual cards.

In this model, Visa’s APIs are the rails through which banks can both access products from fintechs and embed them into their business clients’ enterprise resource planning (ERP) software. The objective is to deliver a plug-and-play solution that enables all parties to focus their time and resources on innovation and improving the customer experience.

“This is an interesting announcement,” said Hugh Thomas, Lead Commercial and Enterprise analyst at Javelin Strategy & Research. “The most analogous thing I can think of at Mastercard is their Accelerate program, which takes in things like Start Path and Fintech Express. There are a few big differences here, but the biggest one to my mind is the focus on commercial.”

“Where Mastercard’s Accelerate initiatives run the gamut from emerging solutions like blockchain to consumer-focused offerings like P2P payments to B2B stuff, this Visa program is strictly focused on commercial,” he said. “This seems smart to me, because the ecosystem for commercial payments definitely has a shorter and more manageable set of potential partners, and the forces that drive change are totally different from what you see in the consumer world.”

Speeding the Fleet

As an example, Visa spotlighted its partnership with fleet technology provider Car IQ, best known for software that turns a vehicle into a payment credential. Physical cards still dominate the fleet management industry and are often a pain point due to the risk of loss or misuse.

Through Commercial Integrated Partners, a financial institution could provide Car IQ software to its business customers, enabling virtual card payments through a mobile app at fuel stations.

Visa noted that this type of integration reduces the need for extensive supplier onboarding or development and could potentially save a company “18-24 months of due diligence, integration work and project management.”

What it Says on the Tin

For all the potential benefits of this model, financial institutions will likely have concerns about the security of their data once it is shared with more parties. These concerns have become especially prominent following the collapse of fintech Synapse, which left millions of dollars of its bank client’s funds in jeopardy.

To address these concerns, Visa stated that all fintech partners on the Commercial Integrated Partners platform are pre-evaluated and already integrated with the card company.

“The other thing that struck me was the notion of certification,” Thomas said. “Certifying solutions presumes you have the in-house expertise to not only understand your own products but are able to certify their use in others’ products.”

“It’s a great idea in principle—enabling issuers and other partners to avoid 18 months of certification work before they can launch something that will drive spend volume. But in practice, you’re also then on the hook for whether or not the thing does what it says on the tin,” he said. “It certainly says something about the commitment to growing the card network-driven commercial ecosystem that they’re willing to play this role.”

The post Visa Platform Aims to be the Hub for Banks, Fintechs, and Enterprises appeared first on PaymentsJournal.

Truist is launching a bill pay solution for RTP, introducing an alias-based Request-for-Payment (RfP) platform within RTP, the instant payments platform operated by The Clearing House.

The solution will leverage 150 million available mobile and email tokens to keep user data confidential.

Although the service will be available to both consumers and businesses, Truist highlighted the benefits for large corporate billers. These include immediate acknowledgment of payment receipt—speeding up the reconciliation process—and faster access to funds, which should improve liquidity.

The financial institution also noted that the system would strengthen data management and security, while potentially reducing costs.

Expanding to B2B

There has been much speculation about when real-time payments networks will play a larger role in the U.S. payments landscape, and there have been significant recent strides in this direction. For example, the RTP network saw the total value of its processed instant payments nearly double in 2024.

While most payments on RTP were initiated by businesses, nearly all of them last year were business-to-consumer transactions. In an effort to expand its use to business-to-business payments, the Clearing House raised the network’s payment cap from $1 million to $10 million.

A Step in the Right Direction

Some of the proposed business use cases for RTP have been real-estate and supply chain transactions. However, both RTP and FedNow haven’t gained traction with retailers because they currently only allow users to send money—there is no request functionality.

Although it’s typically the customer who taps their debit card in a retail store, it is actually the merchant who initiates the payment request for these transactions. Currently, this functionality is not supported on RTP or FedNow. Additionally, the networks aren’t yet able to provide merchants with an approval code when a payment is declined.

While these issues will likely keep instant payments on the backburner for U.S. retailers, RTP’s expanded bill pay capability is a step in the right direction.

The post In the Next Step for RTP, Truist Pilots Bill Pay Solution appeared first on PaymentsJournal.

More companies are placing a premium on the technology that enables fast and accurate payments, yet many business-to-business (B2B) companies still lag in payments automation.

According to a study by American Express, 91% of business leaders surveyed recognize that an optimized payments system drives overall business growth.

However, while roughly a quarter of respondents said that payment issues were a frequent reason for ending a relationship with a supplier, even fewer (17%) reported having fully automated their own payments processes.

The top three reasons cited for not fully automating payments were cost concerns, doubts about the benefits of automation, and security.

Automating the Reconciliation Process

While concerns exist—as they do with all aspects of payment processes—two of the main benefits of payments automation are increased efficiency and security. For example, automating the reconciliation process can help reduce errors and mitigate fraud risks associated with manual processing.

Additionally, payment automation gives business owners much more insight into their operations. With increasing regulatory scrutiny on the relationships between businesses, banks, and fintechs, external audits have become more common. An automated reconciliation process can be instrumental in providing accurate reporting to regulators and avoiding potential penalties.

Driving Business Growth

Becausemany companies have found themselves in these complex relationships with multiple financial services providers, finance teams often struggle to get a consolidated view of the company’s cash position.

Manually aggregating bank statements from multiple institutions and generating reports and forecasts can be a substantial burden on operations. Automation can reduce this lift and allow finance teams to focus on strategic initiatives that drive business growth.

As a result, the trend toward payments automation in the B2B space will continue. However, the central consideration remains on improving the customer experience. According to the American Express report, among business decision-makers planning to update  their payments process this year, the most cited reason is to support  business growth.

The post While Most B2B Companies Value Payments Tech, Automation Adoption Lags appeared first on PaymentsJournal.

In the minds of many, blockchain is synonymous with cryptocurrency. However, the technology can be much more than a framework for crypto transactions. B2B blockchain could serve as a powerful solution to the longstanding challenges businesses encounter in sending, receiving, and recording payments.

This transformative shift is already underway for the one million businesses that have migrated to the Paystand platform. The company recently acquired Teampay, and the two companies collectively processed over $10 billion in B2B transactions since their inceptions. That’s roughly 2% of a market that’s expected to grow by more than 40% by 2028.

“Blockchain is going to be a game-changer,” said Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research. “Sending payments over legacy rails and structures, also known as correspondent banking, is costly and opaque. I’m very bullish on blockchain shedding some of its tie-in with crypto and making a mark on the B2B rail space.”  

DeFi in Traditional Spaces

Consumers have long benefited from seamless and accurate payments through peer-to-peer (P2P) platforms like Venmo. Meanwhile, businesses have grappled with outdated accounts payable (AP) and accounts receivable (AR) processes that can be inefficient and expensive. Paystand aims to bring the P2P experience to business payments.

The company’s network is built on the Ethereum blockchain, which allows for reliable and quick payments with no fees. According to Paystand CEO Jeremy Almond, adding Teampay to the fold, “not only revolutionizes payments and creates a seamless, fee-free B2B network, but also ushers decentralized finance into traditional spaces.” 

Bold Moves

Paystand hopes to offer relief for B2B customers who have suffered under persistent inflation and high interest rates for some time and are looking to cut costs. To capitalize on that environment, the company has made several bold moves beyond the Teampay acquisition.

It recently bought full dynamics integration with Microsoft Dynamics 365 Business Central, and the initial application for Dynamics users will be Paystand’s ability to streamline AR.  

Bodine, who examined the role of B2B blockchain in his recent report, Movements in Global Payments and Banking: 2024 Edition, noted: “As it moves away from crypto, blockchain will be extremely influential. Particularly in cross-border payments, where the situation is ripe for a new way to send payments. Then comes cross-continent and cross-ocean.”

The post Blockchain-Based B2B Platform Aims for Venmo-esque Experience appeared first on PaymentsJournal.

A successful payment acceptance policy encompasses flexibility, convenience, and, above all, economic efficiency. However, it can be hard to hit all of these marks in an ever-changing payments landscape.

During a recent PaymentsJournal webinar, Mike Passifione, Vice President of Payments for Billtrust, spoke to Albert Bodine, Director of Commercial Enterprise Payments at Javelin Strategy & Research, about what it takes to build an effective payment acceptance strategy. They discussed automation, dynamic pricing, and why businesses like to pay with credit cards.

Creating a Policy

The first step of any payment acceptance policy is identifying the target audience, timing, and locations for accepting payments. This could be at the point of sale, during cash-on-delivery transactions, e-commerce or in B2C and B2B environments. Ideally, you want to maximize your chances for customer engagement. And having the necessary technology to adhere to a policy becomes extremely important. Having a written policy that lacks full execution is the equivalent of not having a policy.

Despite the desire to satisfy customers, it’s essential to adhere to established protocols. “As an example, a rule of mine is I do not take a credit card payment for a late payment or from a customer over the phone after they’ve been invoiced,” Passifione said. “If I were a sales rep in that scenario, and I’m trying to please my customer, I might make an exception to that rule to get the money in the door and deal with the backlash later.”

Policies must strike a balance between meeting suppliers’ and buyers’ needs. As in any relationship, both parties must benefit. It’s the technology that will enforce this balance, rather than relying solely on your employees. . This approach sets the stage for success for your both your business and for the accounts receivable team.

Digitizing and automating the payments experience offers immense value, allowing you to consider the types of payments you prefer, such as ACH, card, check, or electronic data interchange—and how they are processed. Then, you can evaluate the types of cards and formats you accept, keeping in mind that each buyer may have preferences for interacting with merchants or suppliers.

It’s important to consider the costs associated with accepting each type of card. Can you establish rules that allow you, as a supplier or merchant, to benefit more from these transactions?

“You can say, ‘Yes, I’ll take that card, but I prefer if you pay me within 10 days of my invoice,’” Passifione said. “If not, I’m going to push you towards ACH, because that’s what makes sense for my company.”

Surcharging, too, has grown more popular in recent years in the B2B space. It can be the most punitive way of conducting a transaction because there is an impact on the buyer.

“The surcharge is an interesting development,” Bodine said. “When we originally came to market with virtual cards, the value proposition was, ‘I’m going to pay you in net 10.’ As the supplier, I’m going to be more OK with paying 200 basis points for those funds than they would be if it was net 30. When you go into a buyer-initiated payments scenario, you take that control away from the supplier being able to pull the payment when it’s ready. I have been seeing more surcharging as a direct result of buyer-initiated payment.”

Providing Options

According to Passifione, suppliers and merchants have many ways to control their costs and their acceptance policy without turning to a surcharge program. “A lot of folks are very happy to pay 250 basis points if it means they will get paid within 5 or 10 business days,” he said. “It’s a bit more of an equal playing field. There are things you can do around negotiating terms, as well. A Custom Rate program could get you even more card spend and grow your network.”

Many players in this space are eager to grow card spending, and more collaboration is taking place. “But they need to do it somewhere in between the traditional cost of a very expensive downgraded credit card and the much cheaper ACH,” Passifione said. “A perfect touchless payment that they can apply cleanly, somewhere in between that cost, starts to make a lot of sense for suppliers. I think that’s ultimately where we’re going to see a lot of B2B spend grow in the future.”

Bodine added that with dynamic discounting, it comes down to choice. “I find that suppliers are sometimes willing to pay for different choices,” he said. “The net 5 might be a lot more expensive than the net 15, but they might have the remittance data that goes along with the suit. That’s how you get to a more balanced relationship between suppliers and buyers.”

Differences Across Businesses

Across the buyer spectrum, you may work with enterprise buyers who engage with enterprise customers, often utilizing EDI, ACH, or wire transfers. Midsize customers typically access an online portal for invoice selection and payment processing, while some—particularly those from larger enterprises—opt for virtual credit cards.

Then there are smaller businesses. “In the building material space, as an example, a lot of small to medium-sized construction businesses need the float, and they want to use their credit card to make payments,” Passifione said. “They’re relying on that card issuer and the float and the rewards they get. As you get into the enterprise world, they may prefer to pay with a virtual credit card, but they don’t have to run their business and can quickly pivot to ACH.”

Despite advancements, more than 40% of B2B payments still occur with checks. However, checks pose significant fraud risks due to the exposure of bank account information.

“We should be encouraging buyers to move to an electronic fashion,” Passifione said. “We’re creatures of habit. We’ve been sitting in that 40% range on check usage for what seems like for 20 years. I’m hopeful that changes dramatically over the next 10 years.”

This issue is crucial not only because of fraud concerns but also because of inefficiencies. “Something we talk about constantly is the fact that we can figure out ways to reallocate your employees so that they are doing things that are beneficial for the business,” Passifione said. “They should not be stuck in a room trying to reconcile a $1 million ACH payment that came in the bank because you can’t find any remittance. There are tools to solve for that. These individuals should be doing more thought leadership, higher-impact opportunities, and dealing with higher-impact items that can help you grow the business.”

The post Beyond the Check: Smart Strategies for Managing Payment Acceptance appeared first on PaymentsJournal.

Cognizant of the rise of credit-push fraud, Nacha has approved a new set of rules aimed at addressing it. Credit-push fraud uses social engineering and email phishing attacks to deceive someone into sending funds to a criminal-controlled account, whether through a compromised business email, vendor impersonation or payroll fraud.

In a recent PaymentsJournal Podcast, Michael Herd, Executive Vice President of ACH Network Administration at Nacha, and Brian Riley, Director of Credit & Co-Head of Payments at Javelin Strategy & Research, spoke about how the new rules establish a base level of payment monitoring on all parties in the ACH Network. They discussed how the changing payments landscape has made these rules necessary and the next steps for organizations to take.

Changes to the System

The Nacha membership began this journey late in 2022 with the publication of a new risk management framework that identified frauds resulting from attacks such as business email compromise or vendor impersonation. These resulted in payments being pushed out from the account of the victim to the account of the criminal. That propelled the desire for stronger action against credit-push fraud.

At their core, the new rules raise the bar for fraud monitoring and transaction monitoring across all ACH participants except consumers.

“This was an expansion of focus for us from the perspective of ACH risk management,” Herd said. “Our objectives were to not only reduce the successful incidents of those types of frauds but to improve the ability for recovery after those types of frauds and payments have occurred. Everyone has a role to play in fraud mitigation and detection and recovery. All parties have a basic-level requirement to monitor transactions. It would no longer be acceptable to do nothing.”

One of Nacha’s key targets is payroll impersonation fraud. This involves an ordinary worker being spoofed into providing payroll portal credentials to a scammer. As a result, the worker’s Direct Deposit  gets rerouted to a fraudster’s account.

The rules are broad-based, and to some extent all financial institutions and ACH processes will be affected. But many of the participating organizations already conduct robust fraud monitoring. Although the impact to those groups might be minimal, others that are not doing much in this area today will have a bigger lift to become compliant.

For the first time, this rule set defines a role for the receiving financial institutions with respect to transaction monitoring. Under the current Nacha Operating Rules and Guidelines, receiving financial institutions do not have an explicit role in monitoring this type of fraud. Their obligations are simply to post transactions on a timely basis and make the funds available to accountholders. Although these rules don’t shift any liabilities for transactions, receiving institutions will have requirements for transaction monitoring, which means many of them will have additional work to do.

The system is designed to look for red flags such as payroll transactions going into an account that looks like a mule account, or someone no longer receiving their regular payroll deposit. One of the rules creates a standard description for payroll transactions to make that kind of monitoring easier for the receiving institution.

“We’re following the flow of a payment from origination through the sending institution and then through to the receiving institution at the point of the receipt at the account,” Herd said. “It is intended to follow the flow of the transaction and have all the parties to it performing some level of transaction monitoring.”

Once a credit-push payment gets to a receiving account and the funds are available, the fraudulent actors are going to try to move that money elsewhere as quickly as they can. Time truly is of the essence in detection and recovery.

Fraud Happens Before the Payments

It’s important to remember that the payments are not the fraud. The fraud happens when an organization is phished or spoofed. The payments are typically authorized; the treasury or the payroll function has approved them and wants them to be issued. From the perspective of the payment network, they look like any other type of authorized payment.

With consumers changing their transaction processes more often than ever, heightened scrutiny has become increasingly necessary. 

“When I look at myself versus my millennial children as an example, I haven’t seen a physical paycheck in 35 years,” Riley said. “They’ve all been Direct Deposit. And I’ve used the same bank for 30 years. But then I look at my millennial kids, and they go from fintech to fintech to bank to fintech and can move their destination bank account more times in a year than I have in my life.”

Nacha sees an opportunity to raise the bar to try to help identify these instances and aid in recovery. “Let’s say you’re the payroll office,” Herd said. “You have obligations to be able to validate changes within a payroll system. Should you just take anybody’s word that payroll should now go somewhere different? There should be some type of validation of that change order for the payroll. The same is true with vendor payments or the classic instance of the CEO saying, ‘Issue an emergency wire transfer somewhere.’”

Those transactions require validation and verification through different channels. The financial institution that processes them might be able to detect the change, or when a payment comes into an account, it might be able to detect when a mule account is suddenly receiving these new payments or a very large payment.

Next Steps

Information about the rules is already available on Nacha’s website. Anyone can sign up at no cost to receive Nacha rules information, regardless of membership. The organization will have additional resources available at its annual payments conference in May, and it will be hosting webinars on these rules changes and providing fact sheets.

The post A Step Forward in the Fight Against Credit-Push Fraud appeared first on PaymentsJournal.

The Reserve Bank of India’s directive to Visa and Mastercard to halt all card-based business-to-business payments in the country has begun raising questions. Although no official answer has been given, experts are speculating it is related to a crackdown on Know Your Customer (KYC) regulations.

The RBI, India’s central bank, confirmed that the decision will not affect all corporate card payments; only commercial transactions routed through third parties. If the RBI had suspended all B2B payments, it might have been seen as a move intended to curtail credit card challengers to its UPI instant payments system, but that is not the case. It’s worth noting that in India, as in Brazil, instant payments via domestic networks are the most popular form of payments, far exceeding credit cards.

In India, a subset of fintech firms operate in a category called “business payment solution providers” (BPSPs), enabling payments to merchants that do not accept card payments for a fee. The targeted companies appear to all be fintechs that are not in compliance with India’s payment regulations.  

Searching for an Explanation

So far, the RBI has declined to explain why it has placed these restrictions, reportedly withholding information even from the affected companies. “Visa received a communication from the RBI on February 8, in what appears to be an industry-wide request for information on the role of business payment solution providers (BPSPs) in commercial and business payments,” a Visa India spokesperson said in a statement.

Some news sources are asserting that the RBI is primarily concerned about money flowing through merchants without strong KYC protocols. Indian news channel NDTV obtained a document from the RBI alleging that one of the card networks had created an arrangement with intermediaries to create an unauthorized payment system. The intermediary would accept card payments for commercial payments and then route the funds via digital payments to non-card-accepting recipients.

“The primary institutions that should take note of this are financial institutions or card schemes that sponsor fintechs via banking-as-a-service plays and BIN [Banking Identification Number] sponsorships,” said Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research. “KYC is a big problem in these scenarios, because the fintechs add another link in the chain and decrease visibility, but the sponsoring entity still has full responsibility for KYC policy.”

The post India Stops Some B2B Payments, and Many Ask Why appeared first on PaymentsJournal.

Embedded payments have been a mainstay for consumers for several years due to the rise of digital payments via smartphones and mobile apps. As consumers continue to enjoy the speed, convenience, and security of such payments, the business-to-business (B2B) space has been lagging behind.

That is not to say that many businesses are content with this; on the contrary, more businesses would like to see embedded payments featured highly within the B2B payments space so they, too, can benefit from the speed, convenience, and cost efficiency.

During a recent PaymentsJournal podcast, Daniel Artin, VP of Strategic Partnerships at Boost Payment Solutions, and Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research, discussed what embedded payments look like within the B2B ecosystem, why they are growing, the market opportunities available, and how to select the right payments partner to begin incorporating embedded B2B payments.

Defining Embedded B2B Payments

Embedded payments originally centered on such use cases as consumers hailing a ride using the Uber app or ordering groceries via the Instacart app. Both platforms offer fast and convenient ways to pay for products and services with a simple tap on an iPhone, with no need for entering credit card information.

Within the B2B payments arena, businesses are demanding the same perks that come from embedded payments, including enhancing the customer payment experience, automating the processing of payments, and providing protection against fraud.

“When you talk about embedded B2B payments, it’s always within the context of embedded finance, which as we know has become sort of the buzzword, the flavor of the month within the payments and finance sphere,” Artin said.

“So for those nascent audience members listening, we define embedded finance as the integration of financial services and tools primarily to non-financial software platforms. Think of this as incorporating banking, lending, sometimes even insurance into various (software-as-a-service) providers and platforms.

“I’ll be focusing on embedded payments, particularly in the context of B2B payments, which I believe is the edge case of embedded finance.”

Said Bodine: “I see in my research that embedded finance, open banking, it’s really going to be the major disruptor to the legacy banking system. Certainly, things like correspondent banking and getting away from the notion that you have to go through your bank in order to make a payment.

“These are very important, interesting times for the world of B2B payments.”

Embedded B2B Payments on the Rise

As businesses continue their expansion across the world, large multinationals as well as small and mid-market companies are taking their enterprises to a global level. As they move toward a more digital ecosystem, the complexities amplify, especially for back-office processes.

“And of course, we can’t forget to mention the impact of COVID,” Artin said. “I really believe consumer (tendencies) begets B2B. What we saw during those three years was almost a fast forward in the mind of the retail and the regular consumer of wanting simplicity, wanting digitization, wanting a seamless experience and businesses also caught that wildfire.

“What we’re seeing is businesses starting to have a desire and almost demand to move away from an analog swivel chair process into more of a seamless digital experience from a holistic level.”

Even with businesses ready to digitize B2B payments, there are still some businesses that happily embrace the old ways of operating. Bodine recounted a conversation he had with a wholesale restaurant provider.

“We got into the subject of payments, and I said, ‘What does your daily payments file look like? Are you sending a batch file?’” Bodine said. “He went into his drawer and took out a stack of checks about that thick, and I said, ‘Do you mean to tell me that you’re still receiving checks as a primary mode of payments?’

“He said, ‘Absolutely. It’s 90% of how we are paid.’

“It might be that particular industry, but it reminds me of a statistic that still 33% of payments made globally are made by paper check, which every time it comes out of my mouth, it just boggles my mind.”

Artin attributes business’ use of legacy processes to inertia. Businesses that have been writing checks, fulfilling procurement orders, and paying invoices in the same manner for decades seem to have embraced the status quo and feel no urgency to make changes.

The Market Opportunity for Embedded B2B Payments

As B2B payments become more digitized, the opportunities for embedded payments will grow significantly as companies seek a more seamless payments experience.

“In the U.S., depending on which report you’re reading, it’s anywhere between 25 to 27 trillion (dollars) in total addressable market for B2B payments,” Artin said. “What we’re seeing right now is that embedded payments make up roughly 5% of that, so about 2.6 trillion.

“And over the course of the next five to six years, we see that growing considerably upward of $7 trillion, a 170% increase.”

For those SaaS companies debating on whether to incorporate payments into their platform, Artin contends there’s a “first-mover advantage to be gained.”

Companies that adopt payments stand to boost customer lifetime value. Plus, it’s an effective strategy to diversify revenue streams, not only from subscription-based models but also from a basis-points viewpoint. Through the integration of payments, the transaction volume alone will give valuable insights to the sales team, equipping it with a valuable toolkit to help land more clients.

Where Adoption Is Happening

As much as businesses would love to have embedded B2B payments mirror the consumer side, a long road looms ahead. For one thing, B2B transactions are significantly more complex. There are so many moving parts within the B2B space, including invoicing, reconciliation, handling multiple parties, and risk management. Moreover, the amount of money being processed is also considerably higher within the B2B realm.

“While the demand is high, it’s a slow-moving train,” Artin said. “I think one of the narratives that’s being pushed out there is that you’re going to see in the B2B world, at least in the near term, exactly what we saw in the consumer world, which is almost invisible payments.

“If you think about getting into and out of an Uber or booking a payment on an Airbnb, or buying groceries on an Instacart, it’s going to be a long time for us to mirror that type of engagement and automation in B2B.”  

Adoption of embedded payments is happening within the accounts receivable space, where previously the focus was on collections and deductions. Businesses are now implementing a “mosaic” of accounts receivable modules. Artin explained that the order to a cash system can now be featured on the tech stack.

He also mentioned adoption within the freight and logistics space, as well as in healthcare. Manufacturing and health insurance claims are also seeing an increase in adoption.

Selecting The Right Payments Partner

Naturally, the B2B space has its own nuances and complexities. Therefore, partnering with a solutions provider that has expertise in the B2B space is a must. Solutions that have served the business-to-consumer (B2C) space will simply be the wrong fit.

“Incorporating a payment facilitator model is a best suggested route here—partnering with an established B2B payment facilitator,” Artin said.

“Here’s a few selection criteria that I would consider. The first: Do they have a track record of playing in this playground, playing in the B2B space? Do they have a developer software layer? Do they have a streamlined onboarding process?

“Once you get customers bought in, are they going to be waiting 2 1/2 weeks to get a congratulations letter that they’re now part participating in the program? Do they have a reliable and accessible customer support?

“Are you going to be resorted to a 1-800 number or a generic listserv or are you going to have real folks in there that can handle issues that are inevitable about coming up? Is there a robust compliance management system?”

Artin said working with a flexible and nimble partner is paramount. Businesses must ask whether their partner can conform to any shifting conditions.

In addition, partners must be able to take into account that all businesses have their own accounting systems and their preferred methods of settling funds into their accounts, whether it be gross settling or net settling. Are they able to offer seamless reporting?

“The good news is that the fintechs that are still out there are really healthy,” Bodine said. “Most of them, because they’ve had to apply austerity measures, they are profitable. They’re actually really good acquisition targets for that reason.”

“Right now, more than ever, I think it’s an ideal opportunity for any forward-thinking SaaS platforms that are out there to consider embedding payments into their platform,” Artin said.

“It’s not an encouragement. It’s a must, and if you’re looking for that sort of expertise, there are folks out there that can help guide and coach you to make sure you’re making the most educated decision.”

The post Embedded B2B Payments: A Forward-Thinking Strategy for Long-Term Growth appeared first on PaymentsJournal.

Effective financial management is a critical factor for small businesses seeking growth. Tailored and automated tools, data insights, and guidance from accounting firms have become keys to scaling operations as businesses expand their footprint.

Intuit QuickBooks is at the foundation of small business growth. From accounting to payroll and payments, access to capital and acquiring customers, the QuickBooks platform helps owners better manage their business finances while also enabling accounting firms to deliver actionable advice that spurs client growth. To that end, the QuickBooks Connect conference, held this month in Las Vegas, presented several advancements to the QuickBooks platform that help accounting firms manage their client roster more efficiently.

A New QuickBooks Online Solution for Accountants

One significant announcement was the introduction of QuickBooks Ledger, a new low-cost, subscription product designed exclusively for accounting professionals to help them serve all their clients on one standardized platform, including those with basic accounting needs, such as year-end tax filing. 

For clients who don’t need frequent, ongoing support from an accountant, QuickBooks Ledger offers automated bank feeds, bank reconciliation, financial statements, 1099 tracking, and a seamless transition to tax preparation.

The sweet spot for QuickBooks Ledger is small businesses looking for an accounting solution that will grow along with them. The product is fully integrated and accessible through QuickBooks Online Accountant, allowing accountants to manage end-to-end workflows for their clients from a single place.

The days of manual data entry and reconciliation are also long gone. QuickBooks Ledger allows for financial transactions to be seamlessly synced. With a connection to the client’s bank account, business bank transactions can be flowed into the solution automatically, saving time and greatly reducing the chance of entry errors. And because automation is leveraged, and the tedious act of manually inputting the data is no longer necessary, accountants can now work on higher-end value services.

QuickBooks is looking to ensure that businesses are equipped with the right tools, regardless of whether they’re just starting out or scaling up. In fact, if a business’s growth requires an upgrade in accounting software and services, an accounting firm can easily transition their QuickBooks Ledger client to a more robust QuickBooks Online solution to meet their more complex, ongoing needs. 

Scaling Up

QuickBooks also announced several additional enhancements that support accounting firms who serve larger, more complex businesses. 

As businesses scale their operations, they need features that address their more complex needs. QuickBooks is rolling out new advanced roles and permissions for small businesses and the accountants who serve them to provide more granular and customizable access to sensitive financial data. For accounting firms, they will be able to manage what their teams can see and do within their own firm’s books and on behalf of clients, choosing a role that limits access or views to banking, sales, or expense data.

As a business grows and hires more employees, they also need to have more control over who has permission to perform sensitive tasks and have access to confidential data and information. QuickBooks Online Advanced, designed to serve more complex, growing businesses, will include controls for who can view, create, edit, or delete transactions and access accounting features like reconciliation, registers, and journal entries. Soon access controls will also apply to reports, managing who can view or customize different financial reports, sales reports, receivable reports, payroll reports, helping to avoid unnecessary mistakes and exposure.

Accountants serve businesses at various stages of maturity, and the tools they leverage should meet the unique needs of each of their clients. Having a robust solution that addresses the evolving needs of day-to-day business tasks and operations helps save time and drive greater efficiency for accountants. QuickBooks works alongside accountants to ensure its ongoing innovations continue to provide a solution that scales with the needs of their clients.

The post How Intuit QuickBooks is Providing Tools for More Effective Financial Management at Every Stage of Small Business Growth appeared first on PaymentsJournal.

Business-to-business (B2B) buyers get just as frustrated about the purchasing experience as consumer-to-business buyers do. In the end, everyone just wants a seamless journey before, during, and after the payment has been made.

A new study by TreviPay, a global B2B payments and invoicing network, revealed that B2B buyers seek the trifecta when it comes to the perfect customer experience: choice, convenience, and customization.

Key Payment Preferences

In its findings, 72% of B2B buyers said they’re loyal to businesses that offer their preferred payment method.

When it comes to making larger purchases, trade credit or invoice terms is their preferred payment method. Interestingly, 85% of respondents said they would buy more if given this option, and that’s because of the transaction limits associated with using credit cards.

B2B buyers also want merchants to move beyond manual processes and instead integrate with an enterprise resource planning. Some 80% of respondents said that it was at least “very important” that merchants offer this.

Finally, 78% of B2B buyers expressed their desire to customize the purchasing experience, including setting up spending limits, limiting purchases to preapproved SKUs, or including required PO numbers.

“As is often the case, consumer experiences set the tone for what happens in the B2B world,” said Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research. “Enterprises are starting to demand consumer-like payments experiences that are frictionless, expeditious and error-free. And they want to be able to execute payments without the intervention of the legacy banking system.”

“More and more we will see open banking strategies that embed financial tools into platforms more focused on user interface and user experience than they are on ledgers and accounting,” he said. “Stay tuned as well as instant payments start to gain momentum and payments, even very large payments, start to be transacted from the palms of people’s hands.”

On the Road to B2B Payments Modernization

As consumer payment modernization continues to mature and adoption of faster payments increases, B2B payments modernization is still in its infancy. Many businesses within the B2B space are still using paper checks and invoices, making the transition out of these legacy systems more difficult.

But the tides are changing, an RPMG survey reported last year that more than 90% of suppliers preferred digital payments and invoice information instead of traditional paper checks.

By adopting a more digital B2B payments ecosystem, businesses have a more comprehensive view on their funds movement. And within this new framework, businesses will be better equipped to mitigate payment fraud.

The demand for faster payments and the increased costs of manual processing will inevitably drive more businesses to modernize their current B2B payments infrastructure in time.

The post B2B Payments Should Emulate the Customer Payments Experience appeared first on PaymentsJournal.

As business travel continues its long road back to pre-pandemic spending volume, businesses are increasingly pivoting from corporate credit cards to virtual credit cards. With the ongoing digitalization of business-to-business (B2B) payments, virtual card products can be embedded within an organization’s travel software, enterprise resource planning software, and B2B payment platforms.

That said, physical cards are not obsolete. In fact, travel-and-expense (T&E) corporate cards are expected to see general growth. Procurement cards will see the weakest area of growth among corporate cards.

In the report, International Commercial Credit Cards: Market Review and Forecast, 2022-2027, Ben Danner, Senior Analyst of Credit & Commercial at Javelin Strategy & Research, delves into the latest trends in commercial credit card spending on an international level, why virtual cards are growing in popularity, and the latest innovations affecting the commercial credit card industry.

Latest International Trends on Commercial Credit Card Spending

Several factors informed Danner’s findings, such as business travel spending, the gross domestic product of the various regions covered, and conversations with industry stakeholders.

The Western Europe (including the EU and the UK) and Asia-Pacific regions have seen corporate cards drive much of the spending. Due to increased digitalization, the highest growth will be seen in virtual card use, beginning with Western Europe, followed by the Asia-Pacific region.

Instant payments could pose a threat to commercial cards in the future, Danner believes, particularly when instant payments systems become connected in a true cross border payments scenario.

Corporate cards have been a steady fixture in the Latin American and Caribbean (LATAC) region and that continues to make up the majority of spending, followed by purchase cards. Virtual cards make up the smallest portion, with a lack of supplier acceptance remaining a problem.

Danner noted that for last year’s report, the estimated overall commercial card spending growth rate for Central and Eastern Europe, the Middle East, and Africa was 15.3%. However, that was lowered to 10.1% overall from 2022 to 2027. This can be tied to the ongoing conflicts: between Russia and Ukraine, in Sudan, and in the Middle East between Israel and Hamas. These conflicts will directly affect business travel to those areas of the world and subsequently card spending.

Although overall virtual card growth rates are high in Eastern Europe and the Middle East, the volume is still lower than in other regions. This was also the case with the LATAC region.

In contrast, virtual card growth rates in Asia Pacific and Western Europe were estimated to be lower than other regions, however, these regions hold most of the virtual card volume.

The growth in virtual cards, Danner explains, can be attributed to growth in online B2B marketplaces, trends in digitalization, and fraud prevention capabilities.

Why Virtual Cards?

Why are more businesses adopting the use of virtual cards? Virtual cards offer businesses more security, more control over spending, and a seamless integration within their accounting and expense management systems.

“Virtual cards are not a copy of a physical card. They create their own unique virtual number, and so the card is something that only exists for whatever parameters you set it for,” Danner said.

“If I’m a program administrator, sending out five employees to the UK, I can set their virtual cards to have a certain spend limit, and the card itself will just turn off in a day. I could even set it to only function with certain merchants.”

This, Danner says, can also mitigate against internal fraud.

Although virtual cards provide the ultimate in spending management card controls, the reality is that many suppliers are not equipped to accept this form of payment. The cost and complication of setting up virtual cards for suppliers can be extensive.

With virtual cards allowing businesses to control and manage business spending, coupled with an increasingly digitalized B2B payment ecosystem, we should expect the adoption of virtual cards to grow.

The Latest Innovations Affecting the Commercial Credit Card Industry

Convenience and security continue to be the driving forces behind the adoption of the latest in B2B innovations. One of the most prevalent trends is the uploading of corporate travel cards into employees’ mobile wallets. Without having to worry about losing a physical credit card, employees can travel with ease and simply tap their phones at checkout, saving time and without a hassle.

Finally, with card tokenization embedded in mobile wallets, employees can rest assured that fraudsters will not steal their credit card information through traditional card skimmers.

Given these and other perks of usage, Danner believes that this trend will only continue to grow internationally.

The post Virtual Cards Are Gaining Ground in B2B Payments appeared first on PaymentsJournal.

More businesses are seeking commercial strategies that can help them strategically engage with fintechs. The key to success lies in understanding their own risk profiles, leveraging available resources, and staying attuned to the evolving capital markets.

Last week, Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research, spoke at the CPI Global Summit about the strategies businesses should explore. PaymentsJournal recently sat down with Bodine to discuss the current state of the space and get a glimpse into an upcoming report.

What was the impetus for the presentation at CPI Global and the upcoming research paper, “Commercial Payments Growth and Fintechs: Partner, Buy, or Go Organic?”

Well, the impetus is the $120 trillion of payments and transfers that occurred between businesses globally in 2022. On each one of those transactions, somebody is collecting fees. So organizations are trying to figure out—as it continues to grow beyond that point—how to get more in that game.

It’s the most asked question by my corporate clients, and that’s how we got to the subject matter. We’re also on the cusp of getting to cross-continent instant payments, which could make the upward trajectory even steeper.

Do you find yourself recommending more partnering, purchasing, or building something internally?

My answer is always either “it depends” or “I don’t know,” and so that brings up the next set of questions for me, which relate to risk profile, operational resources, and capital sources.

First, are you a risk-averse organization or do you operate more like a private equity or venture capital firm? They’re two vastly different things. I typically find that banks are more risk-averse and not necessarily because they want to be risk-averse—it’s because they’re in the most extreme regulatory environment.

With operational resources, what kind of resources do you have internally? Do you have a skeleton staff that is really focused on maintaining existing systems and infrastructure, or do you have capacity that allows you to pursue additional things?

And then, finally, as we all know, capital markets have been pretty tight lately. So it depends on whether you’re having to do some type of borrowing.

There has been a slowdown in funding for startups over the past year. How has that affected commercial payments fintechs?

It has affected it in a very good way, and the reason being is that money is not free anymore like it was during COVID-19, when the base rates were almost at zero. People were easily able to access capital. VCs and private equity were practically throwing capital at fintechs.

The fintechs that don’t have financial acumen have either been flushed out of the market or are about to be flushed out of the market.

I would also say that valuations have become far more accurate, and that’s not great for investors that were in seed rounds during COVID times; the cap tables may have been adjusted. The value of what they hold may not be as great as it was, but I think overall it’s a very good thing. Certainly, if you’re shopping for a fintech, now is a really good time to look if you have the capital because the valuations are far more accurate.

What have you been suggesting to corporate clients relative to acquisitions?

It’s really easy to buy something, and it’s really hard to integrate it. I had some very eye-opening experiences being on the integration side of M&A. And that can be very difficult if sharp due diligence is not done on the front end. We’ve all experienced the scenario where somebody goes to one of the bigger conferences and they come back and I say, “We have to partner with this fintech or  we have to look into buying this fintech.”

I got to the point of saying, “Well, that’s fantastic. Here’s some homework for you, including a list of questions or some due diligence.” My suggestion would be that you have very tight plans around how you assess either partnering or acquiring or whatever approach you’re going to take, and don’t stray from it because the ad-hoc scenarios are rarely successful.

You’ve covered a lot thus far. Any final thoughts?

Whether you’re looking to partner, buy, or go organic, understand why you’re doing it on the front end. There is a vast difference between doing something to remain relevant and doing something because it’s a nice shiny toy.

An example is, you go and pursue a fintech in a new market because your competitor is doing it. Well, the fact that your competitor is doing it doesn’t mean maybe operationally that you’re suited to doing it or perhaps or even culturally suited to doing it. That’s different than, for example, if you are a bank that does not have at least receive capability for either FedNow or RTP right now. In that case, I would say you’re at risk of not being relevant pretty soon. So that’s the difference. It’s a very big difference between shiny toys and relevance.

At the end of the day, well-documented plans. Don’t stray from those plans. Ad-hoc scenarios rarely work, and if you don’t have the resources internally to do this type of thing, then surround yourself with experts that do this kind of thing for a living.

The post Tailoring Commercial Strategies in Evolving Capital Markets appeared first on PaymentsJournal.

Fintechs are celebrated for offering sleek payments solutions, yet they often cling to outdated manual processes for back-office tasks. The primary offender: Excel spreadsheets.

Because of the manual nature of data entry, relying on spreadsheets can have serious negative consequences, including costly mistakes. Manual processes also don’t scale up well to take advantage of the new wealth of data available.

Automation is the key to addressing these issues and ushering in an era of efficient reconciliations and reporting within the payments industry. Automated systems can process vast amounts of data and generate reports and dashboards in real time, thus reducing operational risk. By shifting the focus away from manual data manipulation, teams can dedicate more time to understanding and analyzing data and inspiring more informed business decisions.

In a recent PaymentsJournal podcast, Marc McCarthy, Chief Commercial Officer at Kani Payments, and Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research, discussed the benefits of automating back-office processes and how automation not only ensures data accuracy and compliance but also unlocks valuable insights and cost-saving opportunities.

The State of Reconciliations and Reporting

Payments reconciliation is a complex task in the payments industry, with the need to match countless transactions across various platforms and networks. The process is essential to ensuring the accuracy of financial records, complying with regulatory requirements, and detecting discrepancies or fraud.

Traditionally, companies have relied heavily on spreadsheets and internal systems to handle these tasks. However, the sheer volume and diversity of data—often coming from multiple sources—make manual reconciliation error-prone.

“Approximately 25% of spreadsheets globally contain errors,” McCarthy said. “From a management perspective, the accuracy of the data I receive as a C-suite member is crucial for making decisions that shape the company’s direction. My daily choices heavily rely on the reports I receive, so if I lack confidence in their accuracy, it distorts my understanding of the company’s path forward.”

Spreadsheets are the original backbone for many companies, and as a result, some organizations are reluctant to move away from them.

“It kind of works, so why fix it? We come across that sort of that sort of approach a lot,” McCarthy said. “My rebuttal to that would be: ‘Why do you think a process that you set up 30 years ago is fit for purpose today?’”

There’s also a perennial problem with legacy technologies: When they break, there’s no one left who knows how to fix them. “Trying to find the programmer who put this Excel sheet together is the same kind of challenge as finding a COBOL programmer to fix my legacy code,” Riley said. “It’s like speaking Latin or Greek. It’s archaic language, undocumented, and not a way to run a business, that’s for sure.

“A major U.S. network is being fined by the CFPB for inaccuracies in interchange processing over a seven-year period. When things go wrong, do you want to present outdated, untraceable Excel code to the lead regulator of the jurisdiction? Using an industrial-strength, proven system is a much better way to face off with a regulator in any region.”

Today, organizations are no longer equipped to fully lean on manual reconciliations, especially when they are handling a plethora of data.

“Digital payments are expected to reach nearly $15 trillion by 2027,” McCarthy said. “With the volume of payments that we’re going to see over the next decade or so, it’s just impossible to assume that a spreadsheet is the right way to go.”

Automating the Back Office

Many third-party companies, including Kani, help organizations automate their reconciliation and reporting. Although current systems are primarily rules-based, artificial intelligence and machine learning capabilities will soon become standard, drastically improving accuracy and efficiency in reconciliation.

For midsized financial institutions, the conversion process can take as little as a few weeks.

Reconciliation may sound like a one-time process, but according to McCarthy, it’s more than that. It takes data, validates it, and places it into a common data model, making information from various sources consistent.

“This allows us to view data from different sources like Visa, Mastercard, FIS, and others in the same way, making it easy to create reports and perform analytics,” McCarthy said.

Kani offers 35 different reports for different teams, including accounting, management, and compliance—all tailored to the teams’ needs. “The real value of Kani lies in its user-friendly interface, making it easy for users to find whatever information they need. We can send reports automatically by email, all within one platform,” McCarthy said. “If you were to replicate all these functionalities yourself, it would take a long time.”

Savings from Automation

For many business owners, the return on investment for automating back-office processes may not be clear. But that’s because the resources spent on maintaining and repurposing are greater than most think.

“In the UK, our surveys found that around 700,000 hours per week are spent on reconciliations. A medium-sized business typically spends about 3.6 hours on this task, which I think is very conservative,” McCarthy said.

“I recently spoke to a large bank about their QMR reports, and they initially mentioned that only two or three people were involved. However, when we had our first meeting to discuss their requirements, a staggering 20 people showed up. This illustrates the hidden cost of these processes and the fact that there are far more people involved than we initially realize.”

Many companies feel that they should automate internal processes in-house. But according to McCarthy, this is a tedious and needlessly expensive process.

“If you attempt to build an in-house solution, it would take at least six months and require a minimum of three skilled engineers,” McCarthy said. “They would be developing something already available off the shelf from Kani that costs less than developing it in-house.”

Conclusion

The payments industry is undergoing a transformative shift toward automation and efficiency in reconciliation and reporting. Manual methods are increasingly obsolete, unable to keep up with the rapid growth in digital payments.

Working with a fintech reporting and reconciliation firm like Kani Payments can help businesses not only streamline their operations but also harness the power of data for better decision-making and forecasting.

The Kani team will be at Money20/20 in Vegas from Oct. 22-25!

Come and chat with the Kani team at Money20/20 in Vegas—they’ll be at booth 13520. If you’d like a demo of the platform, you can book one here:

The post Modernizing Reconciliations and Payments: The Urgent Need for Automation appeared first on PaymentsJournal.

With more than 100 countries mandating some form of e-invoicing, the move to streamline tax collection and improve overall economic efficiency is well underway. Navigating the changing landscape, however, isn’t simple. The lack of standardization around e-invoicing makes it a challenge for international businesses.

In a recent PaymentsJournal podcast, Marco Eeman, Managing Director at Billtrust, and Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research, explored how much e-invoicing has changed and how businesses can best adapt to mandates and new requirements.

The Rise of Government Mandates and Standardization Efforts

A turning point for e-invoicing occurred when governments began mandating it. Compliance with local legislation became non-negotiable for businesses seeking to operate in countries that imposed such standards. Governments found that e-invoicing regulations not only facilitated tax collection but also promoted greater economic transparency and growth.

In 2014, the European Union initiated a directive with the aim of establishing a unified pan-European standard for e-invoicing, known as the OpenPEPPOL (Pan-European Public Procurement Online) project. The directive set a deadline for all EU member states to implement the use of this technology by the end of 2018, affecting more than 100,000 public administrations and agencies throughout Europe.

However, the directive left each country to determine its own approach to building an e-invoicing solution. As a result, companies trading with government and public sector agencies in different countries had to implement their own solutions to comply with the new regulations and maintain efficient operations.

Collaborations between governments and e-invoicing service providers have resulted in some level of standardization, simplifying invoicing for businesses that operate within the EU. However, achieving a single global standard remains a challenge due to diverse tax laws and regulatory frameworks.

“Electronic invoicing and the regulations related to it are all about taxes,” Eeman said. “Different countries have different tax laws, and they may compete to attract businesses with lower or more favorable tax rates.”

Countries as varied as Singapore, Japan, Australia, and New Zealand have joined the global e-invoicing movement, adopting models akin to the European standard. As the number of mandates increases, so will the market for e-invoicing service providers. However, the growth of electronic invoicing is driven not only by government regulations but also by the relationships between suppliers and buyers.

“Large buyers in industries like retail, oil and gas, and utilities have significant purchasing power and influence,” Eeman said. “They often require their suppliers to follow specific invoicing methods, which may include using certain portals or digital formats.”

The Importance of Quality Data and Collaboration

To achieve a clear understanding of invoicing across different parties, the adoption of widely used standards such as Universal Business Language (UBL) is essential. UBL ensures that specific terms have consistent meanings, facilitating the importing and processing for businesses. The focus on sending and receiving high-quality data results in more efficient processes, especially the handling of accounts receivable on the suppliers’ side.

“In the world of business-to-business (B2B) transactions, the focus is on making the invoicing and payment process frictionless and data-driven,” Bodine said. “The goal is to reduce manual efforts, ensure quick payments for suppliers, and enhance overall efficiency. This approach is particularly crucial for B2B interactions.”

The complexity of achieving a universal standard underscores the need for collaboration with knowledgeable partners that can navigate the variations and provide valuable insights and solutions.

An invoicing service provider such as Billtrust can play a crucial role in enabling efficient data transmission between businesses. By complying with various standards set by governments and buyers, invoicing providers can facilitate smooth transactions, reduce manual efforts, and enhance overall efficiency in the B2B realm.

“Even with the idea of having a standard, the reality is that different industries and regions have various implementations of standards,” Bodine said. “For example, the ISO 20022 standard has 40 different implementations worldwide, making it challenging to establish a single universal standard. This complexity highlights the importance of partnering with experts in the field who can navigate these intricacies.”

E-invoicing Helps Reduce Tax Fraud

In some countries, tax avoidance is rampant—and e-invoicing can help. Certain countries have taken a proactive approach by implementing the “clearance model” or “continuous transaction controls” for e-invoicing. Suppliers submit invoices to the government, which then forwards them to the buyers after recording the applicable taxes. This approach grants governments greater control over tax collection and offers insights into buyer-supplier relationships.

E-invoicing leaves a digital “paper trail” for transactions, which can be used for tracking and making sure everyone is accountable. Those looking to avoid taxes commonly use cash for payment, but by mandating e-invoicing, governments can—in theory—put a damper on that.

“Italy was one of the early adopters of electronic invoicing in Europe,” Eeman said. “Italy realized that in some industries, collecting taxes could be challenging, especially when cash was commonly used. So they decided to implement electronic invoicing to close the VAT (value-added tax) gap and make their economy more efficient.”

Brazil and Mexico soon followed suit.

“These countries used electronic invoicing along with faster payment methods to make their business processes much more effective and streamlined,” Eeman said.

Conclusion

The global e-invoicing landscape is evolving rapidly, with an increasing number of countries mandating electronic invoicing. While a single global standard remains challenging, adopting best practices and collaborating with stakeholders is key. Rather than seeking separate solutions for each country, businesses should seek a unified global solution to effectively streamline their invoicing processes.

The post Lack of Standardization Proves a Challenge for E-invoicing appeared first on PaymentsJournal.

As businesses continue to rely on large vehicles for transportation and distribution purposes, fueling costs have become a major concern. With the price of fuel constantly fluctuating, fleet managers must find ways to ensure efficient fuel consumption while maintaining optimal performance. This involves careful budget planning, regular maintenance checks, and utilizing technology such as GPS tracking systems to monitor fuel usage. In addition, alternative fuel options such as propane, electricity, and hydrogen fuel cells may offer long-term cost savings.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Javelin Strategy & Research’s Report: Fleet Cards in 2023: An Industry in the Fast Lane

Annual Cost of Fueling at Retail Diesel Pricing per Vehicle

• $58,853 – Transit bus
• $52,179 – Class 8 truck
• $44,545 – Refuse truck
• $18,353 – Paratransit shuttle
• $8,553 – School bus

About Report

This report analyzes the market trends and developments in the commercial fleet space, with an emphasis on closed-loop” and open-loop fleet card products as well as cardless solutions. The report examines the current market offerings and how fleet card companies are addressing the needs of the modern fleet customer. It examines trends in diesel fueling, the most common method used for fueling larger vehicles, and trends in alternative fueling, including payment acceptance. Fleet electrification trends as well as public and private charging stations are also explored, and the report details our expectations for the future of fleet operations.

The post Top 5 Fueling Costs for Large Vehicles appeared first on PaymentsJournal.

It’s a mistake for financial institutions to not offer commercial and small-business card programs. If businesses don’t obtain the desired card program from their current institution, they’ll seek it elsewhere—and this not only jeopardizes the immediate relationship but also opens the door for competitors to capitalize on the opportunity.

During a recent PaymentsJournal podcast, Bob Zeena, Head of U.S. Credit Solutions at FIS, and Albert Bodine, Head of Commercial and Enterprise Payments at Javelin Strategy & Research, discussed how offering commercial and small-business card programs as part of a financial institution’s comprehensive service offerings can lead to new business and increased profits.

Strategies for Offering Business Card Programs

When card programs are offered, it’s important to have a dedicated strategy that considers a company’s customers and how to best serve them.

“If your customers primarily consist of small businesses, you should consider a card program that is similar to consumer cards,” Zeena said. “This could include rewards-based features that allow smaller businesses to make transactions easily, whether it’s in-person (card present) at places like Home Depot or online (card not present) at platforms like Amazon.”

However, for larger or midsize businesses—such as commercial enterprises—the approach is different. According to Zeena, organizations will need to provide compelling reasons for their customers to choose their card program over alternatives.

“Consider the three R’s for commercial and small-business cards: rewards, rebates, and reporting,” Zeena said. “You may offer all three or a combination of them to make your program attractive.”

Business Cards Offer an Attractive, Longer Payment Cycle

Small businesses value having a longer period to pay their bills rather than instant payments that take money out of their accounts in just a few seconds. It’s important for financial institutions to remember this, especially as they develop strategies for the SME sector.

“Working capital is a key concern for small businesses,” Bodine said. “They want to manage their cash flow effectively, which means having the flexibility of extended payment terms.”

Although instant payments may be popular, working capital is a vital component for small and larger businesses.

“Card programs can be a great solution because they typically offer a pay-in-full option within a 30-day window,” Zeena said. “However, for smaller small businesses, a revolving credit product may be more suitable. It’s essential to consider working capital as a crucial factor in your offerings because that’s what your customers will be looking for.”

Measuring the Success of Card Programs

Once a card program is established, businesses will want to measure its success, and a few factors bear consideration.

Because financial institutions benefit from the revenue generated through interchange fees, they can measure success by focusing on purchase volume. However, as Zeena notes, it’s important to go beyond revenue.

“Implementing a card program opens up opportunities to expand the overall payments strategy of the institution,” Zeena said. “One option is to offer an integrated payables product, which combines various payment methods like ACH, checks, and wire transfers, all supported by a file feed system.”

By presenting these additional payment solutions to business clients, the institution increases its value proposition and customer retention. The more payment options available, the stronger the relationship with customers and the less likely they are to switch to a competitor.

“Customers today seek choices in payment methods, and the entire payables ecosystem is expanding,” Bodine said. “Offering ACH, wire transfers, and other payment options alongside a card program doesn’t necessarily mean cannibalizing the card business. Instead, we’re observing growth in all payment instruments as customer preferences diversify.”

When it comes to the payments spectrum, financial institutions earn the most revenue from card transactions. However, although card payments are prioritized due to their revenue potential, it’s crucial to acknowledge that not everything can be transitioned to cards, Zeena said.

“ACH and check payments still have their place and are widely used by many businesses,” he said.

A well-rounded strategy considers all payment methods and allows for smart supplier enablement efforts to drive spending in the desired direction. Ultimately, card payments take the lead in terms of revenue for financial institutions.

Looking Ahead

Many financial institutions haven’t fully embraced small-business or commercial card programs. Small businesses are a great entry point for financial institutions, and even consumer banks have many small-business customers. Commercial programs are more complex, but larger institutions are recognizing their importance and either considering or already implementing them.

“The key message is not to let another financial institution or third party take away your customers by not offering a simple yet effective tool for managing their business expenses,” Zeena said.

It’s surprising to see how little penetration there is in this area, but it’s a significant growth opportunity.

“There are partners, such as branding and processing partners, as well as consultants who can assist with credit underwriting and other aspects,” Bodine said. “Don’t be afraid of it, but instead, consider the potential revenue and the competitive advantage it brings to your institution.”

The post FIs Should Offer Business Card Programs or Risk Losing Business appeared first on PaymentsJournal.

Mastercard is aiming to make virtual card transactions more efficient, safe, and economical to process through its new Mastercard Receivables Manager solution.  

“We’re bridging the gap between buyers’ virtual card preferences and suppliers’ acceptance challenges by automating manual processes and transforming the way accounts receivable teams operate,” said Chad Wallace, Global Head of Commercial Solutions at Mastercard in a prepared statement.  

Mastercard Receivables Manager is powered by Billtrust, a B2B order-to-cash software and digital payments provider that helps suppliers receive virtual card payments more easily, with minimal implementation effort. Suppliers will also be able to accept virtual cards at scale, while businesses will also get to boost their card spend.  

Through Mastercard Receivables Manager, it’s no longer necessary for suppliers to manually capture and enter virtual card information to reconcile the substantial number of digital payments received. Instead, the new solution combines the card payments from all issuers so that the remittance information can be matched automatically to open invoices. Then they are formatted and delivered for their Enterprise Resource Planning (ERP) systems. This enables suppliers to reconcile invoices both accurately and efficiently. 

Currently, the solution is only available to U.S.-based customers, but Mastercard hopes to expand to more markets later this year. 

A More Digital Payment Future 

According to RPMG Research Corporation’s Virtual Card Benchmark Survey results for 2022, more than 90% of suppliers reported that they preferred to receive a digital payment and the invoice information associated with it, instead of checks.  

We previously detailed how B2B digital payments are the future of the payments industry. Physical checks have long been a hassle for business, mostly because they take longer to process, they’re more expensive, and they have a higher propensity for both fraud and errors.  

Conversely, digital payments are faster, more efficient, with greater security, lower fees, and easier for record keeping.  

The post Mastercard Launches Solution for More Seamless, Digital-First B2B Payments  appeared first on PaymentsJournal.

Kraft Heinz is now offering its products directly to merchants on Anheuser-Busch InBev’s online marketplace, BEES, in an effort to grow its business across emerging markets in Latin America.

BEES is a digital platform that connects small retailers and hospitality businesses with AB InBev’s products. Recently, BEES expanded beyond beer to include other consumer packaged goods (CPG) companies, such as Kraft Heinz, within its marketplace, opening new sources of revenue.

“Emerging markets are key to our growth strategy, and we’re leaning into smart partnerships and smart investments to drive this forward,” said Rafa Oliveira, EVP and President, International Markets at The Kraft Heinz Company said in a press release. “BEES is the perfect partner because it offers the reliability and credibility of AB InBev’s distribution network, particularly in countries where we have huge potential to grow, while also allowing us to customize our approach on a market-by-market basis serving the needs of regional retailers. To be successful in countries like Mexico, we have to use technology to increase sales force impact, and we believe BEES is poised to be a game-changer for us.”

Via the online marketplace, businesses in Latin America—whether it’s grocery store chains, small businesses or anywhere in between—will be able to browse and order Kraft Heinz products digitally. They’ll also have access to real-time pricing and promotions, as well as tools  for inventory management, sales tracking, and payment processing.

The Buzz About B2B Platforms

BEES was launched by AB InBev in 2019 and has since expanded to several countries, including the United States, Brazil, Mexico, and South Africa. The online marketplace is part of AB InBev’s broader efforts to digitize its operations and streamline the ordering process for retailers.

The BEES platform has been a significant driver of AB InBev’s revenue growth, accounting for approximately 63% of the company’s revenue.

One of the key benefits of a platform such as BEES is increased efficiency. By eliminating intermediaries and allowing businesses to transact directly, B2B platforms are reducing transaction costs and speeding up the procurement process. This is particularly valuable for small and medium-sized enterprises which often struggle to navigate complex supply chains.

Another major advantage of online B2B platforms is their ability to connect businesses with global markets. These platforms make it easier for businesses to find new customers and partners around the world, expanding their reach and increasing their growth potential. Indeed, Heinz is using this as a way of driving product adoption in Latin America, particularly in Mexico, Colombia, and Peru.

The post Kraft Heinz Expands Presence in Latin America Via B2B Marketplace appeared first on PaymentsJournal.

Monite, a startup based in Berlin, has followed a $5 million round of seed money, announced in February 2022, with another $5 million for its embedded business-to-business (B2B) payments platform.

The latest round of funding was initially reported by TechCrunch.

The startup’s offering handles invoicing and supplier management through an API that is embedded into existing interfaces. The idea is to open up revenue channels by streamlining costs through automation.

Who’s Backing Monite

The most recent seeding round was led by Third Prime of New York, with participation from S16, Audeo Ventures, and Long Run Capital. The previous $5 million round was led by Point72 Ventures.

In a statement put out by Monite, CEO and co-founder Ivan Maryasin pointed toward the opportunity his company sees: “Only 5-10% of SMBs (small businesses) use a modern finance stack, while 79% of them still do their accounts payable manually. … Digitalizing finance workflows through existing SaaS players is a game-changer, and we allow our clients to become an all-in-one OS for their industry.”

Monite said it has about 10 clients, based in Europe and the United States, with more deals expected to close in the coming months.

Finding Investment in a Tough Environment

The successful seeding round is all the more impressive because it was realized at a time when access to capital has grown tight.

Christopher Miller, Javelin Strategy & Research Lead Analyst for Emerging Payments, explored this environment in a recent report, Fintech Investment in a Changing Market: 5 Things to Know for 2023. Miller noted that untested, unproven startups would face tougher sledding, with investors putting their emphasis on products that could come out of the chutes ready to hit the market and drive profit.

Michael Kim, a partner at Third Prime, the lead investor in the most recent round of fundraising, said Monite fits that bill. “From a demand perspective, there’s a real gap for Monite to fill,” he said, according to the TechCrunch article. “Monite’s innovative approach to B2B payments automation through better contextual distribution has the potential to revolutionize a market that has been historically resistant to innovation by streamlining payment processes and eliminating the headaches of manual processing.”

The post German Startup Monite Adds Another $5 Million Seeding Round appeared first on PaymentsJournal.

The global adoption of digital payments is increasing, and commercial payments are no exception.

During a recent PaymentsJournal webinar, Dean Leavitt, Founder and CEO of Boost Payment Solutions, and Steve Murphy, Director of Commercial Payments at Javelin Strategy & Research, discussed how corporates can modernize and transform operations, particularly commercial enterprise payments. They also highlighted four important strategic factors: cost mitigation, working capital, flexibility in rules implementation, and risk management.

Targeting these factors will help businesses keep abreast of trends in IT and help them focus resources in the face of economic instability.

Mitigating Hidden Costs in Payments Processing

Chief financial officers focus on cost control, but some costs are more obvious than others. “CFOs don’t necessarily focus on the cost of the cost, meaning what does it cost to make or receive a payment,” Leavitt said.

“According to data we collected, it can require 11 hours to manage a single invoice. And up to 15 people can be involved in managing that same single invoice. Roughly 3% of a business’ revenues are spent on managing B2B payments. So while the focus is appropriately on the cost of business items, there needs to be much more of a focus on the actual cost of making or receiving payments.”

In the B2B payments space, companies can mitigate costs by choosing payment methods that minimize transaction fees and exchange rate charges. To help optimize the acceptance of various payment methods, Leavitt suggests a list of questions companies should consider:

• Do you currently offer an early pay discount?
• What are your current payment terms?
• When are you actually getting paid?
• What are your labor costs to receive and process payments?
• If you’re accepting commercial cards as a form of payment, are you optimizing the way you’re receiving these payments?

Commercial credit cards can be highly advantageous for corporates, but they often induce negative reactions in the suppliers they pay. Suppliers typically bear the cost when accepting credit cards, so they have traditionally preferred direct deposit or ACH. When businesses ask some of the questions above and initiate a conversation with a supplier, it’s possible to reach creative and cost-effective solutions.

“Suppliers may be able to actually trade in, let’s say, a 2% early pay discount for card acceptance, to get paid at the same early timeframe at leass than a 2% discount,” Leavitt said. “So questions are obviously critical when you’re trying to develop a solution.”

Paying a fee for commercial credit card acceptance may cost less than the staff necessary to process a payment manually. “In the past year, we did some research on receivables, and about 75% of respondents—financial professionals and receivables folks—actually provide receivables or utilize receivables financing,” Murphy said. “When you consider card acceptance versus 75% doing receivables financing, it’s important to make sure that they know what they’re paying for because the cost of capital is going up.”

There’s also a broad misconception among financial professionals about the actual cost of accepting commercial cards, Leavitt said. “Historically, the costs might have been significantly higher,” he said. “But as the card networks have begun to address the needs of enterprise-level businesses, the cost of acceptance has come down significantly.”

Virtual Cards Can Improve Working Capital

In the B2B payments space, efficient payment processes can positively affect a company’s working capital by reducing the time between payment and receipt of funds. Central to increasing working capital is the use of virtual commercial cards.

According to Murphy, the use of virtual cards grew over the past five years and will continue to grow for good reason. Virtual commercial cards present a win-win. They can improve cash flow for buyers by increasing days payable outstanding (DPO), which is the number of days it takes to pay a supplier, and they improve cash flow for suppliers by reducing days sales outstanding (DSO), the number of days it takes to receive payment.

For a further breakdown, it helps to compare a virtual card payment to an ACH.

“Let’s say an ACH payment is due in 45 days,” Leavitt said. “The ACH is initiated on day 43, and the payee receives the funds on day 45. So you have a DPO of 43 days, and you have that 45 Day DSO.

“What we do is introduce a card product into the mix, to extend the grace period. If we reduce the payment date down to day 20, this reduces the DSO for the supplier from 45 down to 21. Because if you initiate the card transaction on day 20, the actual funds will be good and in the supplier’s account on day 21. But that initiates a grace period.”

“Assuming an end-of-month, plus-25-day cycle, you can extend your DPO out an additional five days from 45 to 50 days. So in this particular case, introducing card into the mix reduces the supplier’s DSO by 25 days and expands the DSO by five days for a true win-win scenario.”

Crafting a Data Strategy

The commercial payments industry is in the process of initiating payments and moving data from analog to digital. Although the payments infrastructure gets much of the press, the overall management of data is just as important.

“The No. 1 challenge when managing non-payroll spending relates to data errors,” Leavitt said. “This is because these processes are often HR-intensive and therefore introduce the possibility for error. Roughly 50% of businesses cite that data management costs are a key barrier to their ability to innovate. That’s incredible. Half the businesses out there have recognized this fact, and nearly half have reported receiving unusable information or remittance data.”

According to Murphy, poor data quality is responsible for part of the exorbitant cost of cross-border payments. “Missing data or incorrect data gets exacerbated in cross-border, because of different sovereign formats and regulations,” he said. “So it just multiplies cost by a factor of 1.5.”

Similar to sniffing out hidden costs in processing payments, the first step to improving data quality in corporate payments is asking the right questions and setting up a plan. This could also involve using a “data map” to get the right data to the right people, instead of having an employee do it manually. This map is a set of rules protocols, which are followed automatically by an IT system in assigning the right data correctly. “Most companies don’t have available to them significant resources right now to put towards operational efforts to change data flow,” Leavitt said.

Each industry has its own data-related particulars in the way it does payments, and it requires customized solutions. “There’s often a disparity between what a supplier or a buyer has in their respective accounting or ERP systems,” Leavitt said. “The version of the account number, it could be truncated or it could be just completely inaccurate because it’s less mission-critical for them to have the exact account number in their system versus the version that’s actually sitting on the biller’s system.

“In those cases, we’ll provide an account translation bridge to make sure that whatever payment is passed to that biller is received in their full and complete version of that account number. If you’re going to be digitizing their payment processes, you have to accommodate for those idiosyncrasies.”

Rampant Fraud Can Be Mitigated by the Right Payment Methods

Managing risk will be a top priority in 2023, particularly in reducing fraud.  

“In 2021, nearly $2.5 billion was lost due to email-related compromises that resulted in a fraudulent payment,” Leavitt said. “And 75% of large corporations were victims of payment fraud and data hacks. Fraud is on the rise because the bad guys are getting better at what they do.”

Some kinds of payments are more susceptible to fraud than others, according to Leavitt. Checks, wire transfers, and ACH debits are considered high-risk, whereas virtual cards have the lowest level of fraud because their “straight-through” processing technology makes them inherently difficult to attack.

“With straight-through processing of virtual cards, neither the buyer nor the supplier receiving the payment have access to that card data,” Leavitt said. “It’s processed straight through without human intervention.” That’s what makes cards worth considering for CFOs focused on fraud reduction.

During the pandemic, companies were pushed to improve their digital operations, often partnering with fintechs like Boost. Fintechs can do not only things that corporates don’t have the resources for but also can develop new ideas and present possibilities to companies that financial institutions haven’t considered.

“A lot of what we do on a regular basis is educational,” Leavitt said. “It’s introducing enterprise-level buyers and suppliers to the tools that are available to them to expand working capital on both sides of the equation to reduce fraud and other types of risks associated with payments to introduce operational automation in ways that they didn’t previously envision, thereby reducing or allowing them to redeploy personnel in other more productive areas.

“The world has changed dramatically on so many different levels over the last couple of years. But as it relates to B2B payments, it’s an incredibly exciting time for both buyers and suppliers and those of us that serve them in the community of fintechs.”

The post Optimizing Commercial Payments in the Digital Age appeared first on PaymentsJournal.

Business travel has been drastically impacted during the pandemic. The pandemic caused borders to be shut down, planes grounded and conferences canceled, preventing business travel from happening in certain countries. With the need for social distancing, the pandemic meant that companies had to rely more on remote meetings and virtual workshops. Although not ideal, this shift has enabled more organizational bonding because employees from all over the world can connect virtually. As we move towards a post-pandemic future, it will be interesting to see how organizations reimagine how business travel works so that it is focused on bringing more value and connection within teams.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Javelin Strategy & Research’s Report: International Commercial Credit Cards: Market Review and Forecast, 2021-2026

Business Travel on the Upswing

In April 2022, the change in booking during the past month show:

• 7% decreased business travel bookings
• 5% had the same level of business travel bookings
• 88% increased the booking for business travel

About Report

The pandemic has taken a toll on the commercial credit card industry during the past two years, especially in regions outside of North America where business travel spending is the predominant source of revenue for the issuing participants. Improvements occurred during 2021 as domestic travel picked up and certain international routes also began to open, situations that continue into the first half of 2022. As such, a general spending recovery is expected by 2024, and potentially sooner depending upon the actual updated travel policies enacted and budgets approved by corporations across the globe.

This research report from Javelin Strategy & Research, International Commercial Credit Cards: Market Review and Forecast, 2021-2026, reviews the current situation and outlook as the industry continues to recover and business travel improves. This is Mercator Advisory Group’s annual review of the commercial credit card industry in markets outside of North America (NA). This research report includes overviews and estimated commercial credit card spending for mid-to-large corporates in Western Europe (WE), Asia Pacific (APAC), Latin America and Caribbean (LATAC), and Central and Eastern Europe, Middle East, and Africa (CEEMEA).

The post Data shows business travel on the upswing appeared first on PaymentsJournal.

Profitable and effective businesses require seamless, organized, and efficient payment operations. However, the current panorama of most back-office operations reveals a concerning trend.

Instead of employing the latest software that’s easily adaptable and ready to handle real-time payments (RTP), most companies use legacy back-office systems that are slow and outdated, causing a considerable bottleneck in processing payments. This means increased costs and a loss in revenue.

Payment Operations Generate More Cost Than Profit

The back-office role is to support transaction reconciliation, settlement processing, and the movement of funds. Additionally, it handles disputes and the assessment of transaction-based fees.

A poorly run back office can be the source of significant revenue loss, and payment processing organizations currently lack viable and adaptable solutions to boost profitability.

The Pressure to Provide RTP

Real-time payments can clear and settle instantly with the use of a payment rail. The benefits of RTP are that funds are available immediately, the settlement is final with an instant confirmation, and workflows are integrated. RTP solutions can be used by consumers, merchants, and financial institutions to pay customers or bills, or to transfer money.

Worldwide RTP networks have been developed for nearly a decade, and RTP payments continue to see a surge in growth.

Today, financial services organizations face the formidable challenge of facilitating RTP along with traditional methods of payment. The only way to thrive in this new payment environment is to revamp the payments back office, offering faster money movement and value-added services for customers.

Payment’s Back Office as a Processing Bottleneck

Unlike back-office payment systems, front-end payment systems have easily adapted to RTP. The payments are processed instantly; however, legacy back-office payment processing systems are not suitable for such payments. In traditional processes, transactions are typically batched and processed at scheduled times. As most back-office systems are equipped to handle only batch-oriented payments, a system bottleneck has inevitably developed.

But these aren’t the only obstructions faced by companies with inefficient back-office systems.

Before companies can effectively address and enhance their current payment systems, they must overcome three roadblocks.

Legacy Batch Systems

Legacy batch systems are typically outdated software suites that many companies still use to process payments. Often, these systems are decades old and are ill-equipped to handle modern, 24/7 RTP demands. Although a company can initially process faster payments, thanks to the fast-processing speeds on the front end, a bottleneck inevitably occurs during the “last mile” once the payment hits the back-office stage and the attendant slower processing speed.

Spaghetti IT

Far too many payment organizations are operating with spaghetti IT systems, which are essentially numerous software environments cobbled together. These disconnected batch systems are not only outdated but also lack interoperability. Just to perform standard back-office functions, payments organizations must wade through labor-intensive, manual processes.

Frankenstein Systems

Let’s face it: Software can be costly, and it is little wonder that payment organizations try to make do with what they have. This usually means organizations will piece together their own system, adding and removing parts as they go. Before long, they have an inefficient and slow-moving hodgepodge system that, over time, can end up costing much more than an effective external solution.

If companies don’t make the necessary changes to improve their current back-office system, they could run into problems with scalability, preventing them from expanding their enterprise and sustaining future growth.

The Takeaway

Payments organizations don’t have to look far for the right solution. It comes down to needs. A company considering a revamp of its back-office payment systems should consider the following:

• Look for a solution that supports all payment types and data sources.
• Find a solution that has a continuous processing, API-driven architecture to eliminate bottlenecks.
• Seek a solution that has a configurable workflow engine that liberates company leaders to focus on profit-building tasks.
• Seek a rules-based, configurable system to avoid costly software code changes.

To remain competitive and gain market share, companies need a modern back-office system that’s fast, resilient, and agile. Employing the right back-office payment solution allows companies not only the ability to accommodate faster payment methods but also to be better positioned to adapt in an ever-evolving landscape.

The good news is that recent technology and software advances are providing more options for payments back office modernization.  In fact, companies are finding ways to transform their back office from a cost center to a profit center.  You can learn more in this recent thought leadership paper from BHMI, a leading software solution provider specializing in the back-office processing of digital payment transactions.

The post Back-Office Operations Need Serious Revamping appeared first on PaymentsJournal.

Business-to-business (B2B) payments are one of the world’s most used financial services, and estimates predict global transactions will surpass $111 trillion by 2027, up from $88 trillion in 2022.[1] Where does B2B BNPL fit in?

Current State of BNPL

Business-to-consumer (B2C) BNPL was riding high during 2020 to 2021 as millions of shoppers worldwide used it to finance purchases conveniently. As a result, BNPL accounted for 2.1% of all global e-commerce transactions or $97 billion in 2020, according to a Q3 2021 report from Worldpay.[2]

However, B2C BNPL now faces regulatory scrutiny to protect consumers from debt bubble entanglement. The U.S. and Europe are mulling regulatory oversight to rein in B2C BNPL. Moreover, rising interest rates make credit costs pricey for providers, stagnating the growth of firms heavily focused on B2C BNPL as margins erode.

We saw in the first half of 2022, several B2C BNPL firms had reported considerable losses resulting in steep market capitalization declines. For instance, stock prices fell 93% for Affirm—the loan company that allows consumers to pay off purchases in fixed monthly payments.[3] And analysts slashed the valuation of Klarna, a Swedish fintech with a similar model, by a startling 85%.[4]

Conversely, the B2B BNPL model appears poised for 2023 growth because it facilitates third-party credit and risk-management tools that improve cash-flow flexibility for businesses by accelerating credit approval while mitigating repayment risk.

The total value of the B2B market in Western Europe alone is estimated at over $12 trillion, which is the total addressable market (TAM) for B2B BNPL service providers. And only 6% of this is from digital payments (less than $700 billion).[5]

If you extrapolate this data on a global scale, it identifies a massive market opportunity. As B2B digital payments grow, we expect the B2B BNPL TAM to increase accordingly. Moreover, B2B BNPL profit opportunities are significantly higher than business-to-consumer BNPL because the value of B2B transactions far outweighs low-value B2C transactions.

Benefits of B2B BNPL

B2B BNPL is on the rise based on its potential to scale and its advantages for buyers and sellers. So, what’s driving the benefits? First, buyers can conveniently repay in installments exceeding standard terms, while sellers receive payment upfront, which previously might have taken 30 to 90 days. And second, BNPL increases sellers’ average order value and improves sales conversion rates. Seller risk also goes down because third parties handle credit evaluation.

Historically, the BNPL market has been advantageous for incumbents, but now new-age players are catching up.

Traditional banks have regulatory expertise and access to low-cost capital. Additionally, they have customer data that can simplify credit evaluation. Yet fintechs can streamline onboarding, underwriting, and payment complexities for businesses. The result? Fintechs now hold a 10-15% share of the supply chain finance market.[6] And bolstered by open banking and investor funding, they can leverage data to extend B2B-focused loans at lower rates than incumbents.

For example, San Francisco-based Plastiq— a service that lets individuals and businesses use debit or credit cards to pay vendors that don’t otherwise accept those payment methods—deploys risk models to determine payback periods. They also provide embedded finance options at the point-of-sale.

Further, small- and medium-sized businesses (SMBs) show high potential for BNPL because this segment’s typical 40% financing rejection rate has sparked a pent-up need for alternative solutions. The short-term credit industry remains dominated by incumbents. However, we expect several more fintechs will turn to B2B payments to improve their unit economics. Moreover, with 70% of SMEs accelerating digital technologies after COVID-19, B2B BNPL solutions promise real-time credit. In addition, SMEs can recycle working capital, easing their liquidity crunch.

Banks realize they must offer B2B BNPL products to stay in the game. Therefore, incumbents and fintechs are partnering to leverage all aspects of the B2B BNPL trend.

For instance, Deutsche Bank and Credi2, an Austrian provider of and operator of digital financing solutions, launched a white-label BNPL solution for e-commerce merchants in Germany. Similarly, Berlin-based Raisin Bank, a savings and investment marketplace that connects retail customers with firms looking to expand deposit reach, collaborated with German B2B payment fintech Mondu. In early 2023, Santander CIB launched its B2B BNPL for corporates.[7]

The most significant benefit for banks stemming from B2B BNPL is that it successfully drives low-cost business-client acquisition and generates retention and loyalty by enabling superior customer experience. Firms should be cautious and monitor and mitigate risks. They need to underwrite various businesses and identity theft, which requires more effective risk management and fraud analysis tools than those in the consumer market. Not many countries have strict regulatory frameworks for B2B payments yet, meaning that B2B BNPL will continue to ride the growth wave in 2023 and beyond.

[1]    Juniper Research, “B2B PAYMENTS TO EXCEED $111 TRILLION TRANSACTIONS GLOBALLY IN 2027, AS BUSINESSES ACCELERATE PAYMENTS AUTOMATION TO REDUCE COSTS;” October 31, 2022.

[2]    CNBC, “How buy now, pay later became a $100 billion industry;” September 21, 2021

[3]    Forbes, “Stock Down 93%, Affirm’s BNPL Model Suffers As Funding Costs Rise;” June 22, 2022.

[4]    Ibid.

[5]    Business Wire, “Fintech Hokodo Raises $12.5 Million in Series A Funding, Enabling B2B Merchants to Offer     Instant Payment Terms and Scale With Confidence;” June 10, 2021.

[6]    Finextra, “B2B BNPL: Embedding Banks Within The Supply Chain;” September 15, 2022.

[7]    The Paypers, “Santander CIB, Allianz Trade, Two to offer B2B BNPL solution;” January 10, 2023.

The post B2B BNPL Offers a High-Potential New Chapter in Payments appeared first on PaymentsJournal.

According to an article on Forbes, the time is now to modernize B2B payments for the next generation of B2B buyers and procurement professionals. Driven by digital payment experiences, Gen Z are expecting their business payments to be parallel with their consumer payments experiences. Yet, many business-to business payment technologies lag behind consumer payments.

The article points to three major categories that will affect the future of B2B payments: reduction of paper checks, digital B2B payments networks, and credit and virtual card acceptance.

Paper Checks Will Continue to Decline

As much as we proclaim the death of checks in the consumer space, paper checks still make up a large share of B2B transactions. Although dropping 9% from 2019, paper checks still comprised 33% of B2B payments in 2022. We agree with the author that checks will continue to decline for consumers, but we will add that checks will likely continue to decline in B2B payments as more finance teams switch to digital payment methods.

The Trend Towards Digital B2B

Digital payments in B2B were exacerbated by the pandemic as employees stayed home, in-person events and meetings were cancelled, and employers began shifting their spending inward towards improving their AP/AR processes and improving payments infrastructure. Suppliers that previously only accepted checks and wire began experimenting with technology such as mobile payments and app-based payments.

It’s likely that Gen Z will drive demand for similar mobile payments capabilities as well as instant payments features from their favorite peer-to-peer (P2P) platforms such as Zelle, Venmo, and PayPal. We agree that these technologies will certainly create expectations for quick settlement transactions, and, to some extent, this technology is already here. Developments in real-time payments and faster payments will enable instant and near-instant payment transfer. 

Credit Cards and Virtual Cards

Credit card acceptance is table stakes for a supplier, but virtual cards are still gaining momentum. We agree with the author, who argues for suppliers needing to prepare for card acceptance, passing Level II/Level III payment data, as well as a payment platform that integrates with ERP systems. All these features are becoming important drivers for business payments, especially among corporate finance teams who are going to desire deeper insights into their spending and spend management capabilities.

Overview by Ben Danner, Research Analyst at Mercator Advisory Group.

The post Gen Z Are the Next Generation of B2B Payments Professionals appeared first on PaymentsJournal.

Often business-to-business (B2B) payments technology lags behind its consumer-to-business (C2B) equivalent. While sending a payment over a service such as PayPal or Venmo is near instantaneous, sending the same payment between companies, or from a company to a customer, can take days or even weeks. There are many good reasons for this delay, primarily to ensure that all parties are protected. But for merchants having to hold back payments to their suppliers—while their own customers delay payments because their accounting department only sends payments on the 15th of every month and it’s the 16th—can be hugely frustrating.

A majority of companies experience late payments, and despite average expected terms of 27 days, most payments take on average 34 days. More worryingly, the average merchant writes off 1.5% of its receivables—1.5% of everything they stand to make simply vanishes, and this can be enough to make or break businesses when so many operate on razor-thin margins.

Late payments and razor-thin margins that businesses work under are part of many factors contributing to sluggish growth in numerous developed economies, alongside supply chain problems, labor issues, the ongoing fallout of the COVID-19 pandemic and spiraling inflation. If businesses had that extra 1.5% to reinvest or simply to keep their heads above water—and if they could be paid on time rather than waiting months—then they could start to put themselves, and the economy at large, on a path to recovery.

Bringing C2B ideas into a B2B payments environment

An accounting or payments professional dealing with late and failed payments might order a new television on their phone during their lunch break with terms that suit them, thanks to financing options embedded in many major e-commerce sites. There are two entirely different worlds when it comes to payments, and a great deal of the innovation that B2B payments needs is happening in the C2B space and not crossing over.

The B2B payments space was worth a staggering $49 trillion in 2021 and is predicted to be worth $54 trillion in 2023. Although this 10% growth may seem to be good news, in context it reflects a “slow recovery in business activity following the impact of the COVID-19 pandemic.” Meanwhile, we have seen new payment innovations in the form of Buy Now, Pay Later (BNPL) and virtual cards. Real-time payments have been a standard in C2B and C2C payments for over a decade.

Let’s take a look at some of the key technologies that can drive this change and how they could operate in a B2B environment:

Tackling Cash Flow Challenges

Cash flow is any company’s lifeblood. Without it, everything shuts down.

Despite the importance of cash flow, the systems that bring cash into and out of businesses aren’t built to optimize cash flow. Aside from the significant delays in payments being actioned, acquirers can hold funds for multiple days before releasing them—sometimes longer if weekends and public holidays are a factor. Of course, there are many reasons why acquirers hold funds for a few days before releasing them, but it can still cause cash flow problems when a company has to wait three or more working days to pay a supplier, who in turn has to wait to three or more working days to pay their suppliers, and so on.

What’s needed is an ability to access incoming funds immediately, without the need to wait for settlements.

Virtual Cards

The global value of virtual card transactions alone is expected to soar from $1.9 trillion in 2021 to $6.8 trillion by 2026. This will be fueled by an urgent need for companies to optimize their back-office processes; currently too much time and money is spent on the complex processes described above.

Virtual cards change this. Say Company X needs to pay Company Y for their goods. They could either go through the standard payments process, which can take months, or create a virtual credit card with the amount that they need to pay, with which they can pay their invoice immediately. To create that virtual card, you either need to prepay or get approved for a line of credit.

These payments are also much more secure than their analogue counterparts. Even if the virtual card is compromised, it will only contain the funds needed for its intended purpose, and they can be reclaimed through chargeback procedures. Virtual credit cards also allow for much greater transparency and centralized control that can inform payments decisions and prevent losses.

The Ease of C2B in B2B Payments

There are many providers of virtual cards, but until recently there was no provider that could connect two traditionally separate payment functions and de-risk the payment process while unlocking new benefits. Virtual card providers allow companies to immediately access the incoming funds that are being paid to them. Instant access to incoming funds allows companies to immediately make supplier payments and fulfill transactions in real time.

The post Will Consumer-to-Business Payment Trends Drive B2B Global Growth in 2023? appeared first on PaymentsJournal.

Cryptocurrencies have moved from a speculative asset to a practical one. One area in which crypto can serve and improve is the current business-to-business (B2B) payments space.

In a recent PaymentsJournal podcast, Daniel Artin, Vice President of Strategic Partnerships at Boost, and Elly Aiala, Chief Compliance Officer at Boost, joined Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator, to discuss how businesses should consider adopting blockchain technology, and specifically, stablecoins, to ensure transparency, traceability, and security in their B2B payments.

Current State of B2B Payments

First, let’s set the current state of B2B payments. Even with all the innovation that the payments space has witnessed in the last few years, B2B payments are still fraught with problems.

“This niche of payments in the market is littered with pain points,” said Artin, “primarily due to costly fees, late payments, poor management of data, inaccurate data entries, and oftentimes lack of education in the marketplace around innovations to solve these problems. Buyers and suppliers are used to delayed payments [and] frequent disputes amongst one another, and there is a status quo of distrust that occurs amongst commercial trading partners. Since the B2B payments space is a trillion-dollar addressable market, we believe this a large ramp for digitization.”

Artin blamed inertia for the lag in adopting new ways of accepting B2B payments. Many businesses continue to use legacy systems implemented decades ago despite their inefficiencies.

And organization leaders are not keen on taking a leap into the unknown. “A lot of CFOs and treasurers looking to optimize payments are risk-averse and naturally so,” added Artin. “You’re taking systems, processes, and workflows that have worked for 60 to 70 years and now asking [business leaders] to migrate that to a new digital form that you may not fully understand or know.”

Cryptocurrencies are still shrouded in mystery, which is why they need to be unpacked to reveal how they actually work and to discuss successful use-cases.

But before diving in, let’s tackle the challenges surrounding cryptocurrencies today.

U.S. Regulation: A Stumbling Block to Adoption

You cannot begin a conversation about cryptocurrency without mentioning regulation. Regulation has been ever-present since the popularization and growing adoption of cryptocurrency began.

“Our [U.S.] approach to cryptocurrencies and other technologies in this space has been picking up speed,” said Aiala. “But it is very much in development and exists primarily as a combination of both enforcement and draft legislation and frameworks. This impacts institutional adoption. In order to know why the U.S. regulation is where it is today, you need to know what cryptocurrency and blockchain technology is doing to the existing financial infrastructure.”

Aiala used the analogy of gathering the world’s best soccer players to play a game without rules or compliance. The result is that the game will not function safely or efficiently. The current referees, or two regulatory parties, competing to earn the position of top regulator for cryptocurrencies are the Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC).

Aiala asserted that without historical knowledge and experience using crypto and blockchain technologies, it is difficult for policy makers to create regulations that will endure the test of time. Technology, as well as its use cases, is never static but always changing.

The way around all the fear, mistrust, and misinformation is for leaders in the crypto space to stay diligent in educating policy makers, informing them so that the appropriate regulatory frameworks can be developed. It’s not only about growth and innovation in the crypto space, it is also about ensuring that end users are safe in using this technology.

Although change is coming and more policy makers and consumers are being introduced to this new financial technology, the current lack of official rules keeps many institutions from adopting crypto.

Why Replace Legacy Systems with Blockchain Technology

There are many benefits for companies to incorporate and replace their current infrastructures with blockchain technology. These include transparency and traceability, consensus mechanisms, security and audit, and smart contracts.

With transparency and traceability, businesses would have the advantage of having all participants within the network see the data as they are updated in real time.

Also known as consensus protocols, consensus mechanisms would allow businesses to verify transactions and ensure the security of the blockchain or protocol.

Blockchain is incredibly secure, making accounting and auditing a breeze and eliminating human error. Blockchain also ensures the integrity of its records. Another important factor is that the ledger is immutable. No one can change a transaction after it has been submitted. This includes record owners.

Smart contracts are programmatic rules that can be carried out automatically within the blockchain after certain rules are met.

“We live in a world where buyers and suppliers have established pre-negotiated commercial trading terms,” added Artin. “Aside from contract penalties, early-pay discounts, [or] trade financing, there’s no way to enforce these rules blindly by buyers and suppliers. Hence the disputes. But with smart contracts, these conditions and terms can be programmed, and automatically fulfill those obligations across both parties on their behalf automatically. It’s touchless, it’s automatic, and it instills a newfound level of trust among parties that otherwise [was] not there.”

One significant use case concerns Walmart Canada, whose shipping fleet of 2,500 produces a whopping seven billion invoice permutations annually, and of which 70% of freight contracts resulted in disputes. When Walmart Canada implemented blockchain, invoice disputes dropped to below 2%.

“Our research goes back five to six years, and one of the earliest use-cases we identified for blockchain was international and domestic trade,” Murphy said. “It’s [blockchains] really getting rolled out quickly. International trade and the use of smart contracts is a bright use-case.”

Looking Ahead for B2B Payments

The use and adoption of cryptocurrency are still at an early stage. And businesses are certainly not clamoring for adoption either. What we do know is that blockchain has the mechanics and infrastructure necessary for businesses to vastly improve the current state of B2B payments.

The post Crypto as a Practical Solution to B2B Payments appeared first on PaymentsJournal.

In a recent article from the Trade Finance Global, there’s a discussion of cross-border B2B payments challenges. As readers will likely know, cross-border is a highly visible topic these days. Many initiatives are underway across the globe. These aim to improve the experience and cost associated with these transactions among all use cases. The solution mentioned in this particular case is Visa B2B Connect. We discuss this in our newly released report on B2B cross-border payments. In the report, we discussed some of the same things as is in this article.

Level of Complication in B2B Payments

We mention, as a challenge, the level of complication presented by B2B cross-border payments. These occur across multiple markets with various regulations, disparate business practices and the ever-differentiating need for data. This data accompany—and must match—the payment-related documents involved (POs, invoices, remittance data). Ben Ellis, Global Head of Visa B2B Connect, who was interviewed in the piece, mentions some recent Visa research that suggests up to 70% of businesses surveyed have cross-border payment pain points. These include payment predictability, value clarity, and visibility (tracking where and when).

Need for Flexibility

Visa built the B2B Connect solution as a multilateral network (transfers can occur between any two banks in the network). It has the de-facto new global messaging standard ISO 20022, as well as being API native. However, feedback from the banking community indicated that readiness for these features was not yet widespread. So Visa included MT (message types) and standard file transfers as part of the build to accommodate the need for flexibility as a bridge to the future. The network can also be connected to directly by financial institutions or through PSPs.

As far as the future is concerned, the expectation is for continued innovation between all parties in the chain of transaction flows (network, PSPs, banks) to continue with a collaborative approach and reduce the pain points over time. As we stated in our previously mentioned report, as well as in various postings on these pages, this is a space that is undergoing continuous improvement.  

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post B2B Payments Space Is Undergoing Continuous Improvements appeared first on PaymentsJournal.

We’ve covered supply chain finance (SCF) both on these pages, as well as in member research. It’s once again a topic of conversation with ongoing discussions about disruptions to supply chains. It also includes the need for working capital options among SMEs. Across the globe, there will be ongoing scrutiny as to the reach of such solutions.  

Deep-Tier Supply Chain Finance

In this particular briefing article posted in Trade Finance Global the author explores what is referred to as “deep-tier” SCF. It means opening up further access to multinational corporates (MNC) and balance sheet lending deeper into the smaller tiers of supply chains. This is where SMEs reside. The author begins by relating to a tragic factory building collapse in Bangladesh a decade back. That incident shined some unwanted light on the MNCs role in creating supply chain pressures that ostensibly bypass ESG concerns. Multinationals in effect form anchors for the broader global supply chain and can influence further supplier investments in safer delivery of goods and services. 

We will keep our comments limited to the SCF-related portions of the piece, which are certainly in line with what we have advised in the past. In effect the piece advocates pushing access to reverse factoring further into the long tail of corporate supplier spending. We see the frequently mentioned Asian Development Bank reference to the SCF gap for SMEs, which if readers follow an article link they can read further on that part, which is in the $1.5 to $2 trillion range according to ADB.   

Reverse Factoring

Reverse factoring is the issuing of short-term financial support for receivables based on the buyer credit rating, not the supplier. This form of financing provides liquidity to suppliers by receiving payments faster, albeit at discounted to invoice levels, typically negotiated beforehand. This is less dear than factoring, which can be expensive, especially on a sliding scale related to business size. The author’s point is that this is not new stuff, with SCF having grown substantially since the early 2000s. However, the advancing technologies of the past decade (blockchain, APIs, AI, etc.) are extending the availability and applicability of different types of financing to the often ignored business segments.  

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post Supply Chain Finance as an Influencer  appeared first on PaymentsJournal.

The theme of working capital improvement is now one of the primary concerns of businesses across the globe. It is a concern as we face economic slowdowns, supply chain disruptions, ongoing geopolitical conflicts, rising interest rates, and so forth.  How will this affect financial operations?

This is an especially critical issue as one moves down the scale of business sizes. This is where access to reasonable credit costs becomes more of a struggle. This article posted in Smartstream discusses one of the key types of solutions within financial operations. It can help to manage the cash cycle for businesses. The piece is written by a chief revenue officer of a fintech that provides solutions for improved payables and receivables. In this case it refers to electronic invoice payment and presentment (EIPP). EIPP has been around for a couple of decades but gained renewed focus during the pandemic. 

Electronic Invoices

We have written about the criticality of electronic invoices in member research. Electronic invoices are often a key step to improving both collections and payables processes. It provides the immediate impact of increasing matches between, purchase orders, invoices and payments. The convergence of the cash cycle operations is part of an end-to-end organizational review that allows for more optimal enterprise efficiency. 

Cloud Delivery

As we have also stated in other research, the use of cloud delivery (SaaS and PaaS models) has contributed to the acceleration of more modern technology, which can be launched and updated more easily than in the old installed models. Connectivity has also improved through the use of APIs to integrate between internal and external systems and partners.

Mobile Devices for Financial Operations

The author goes on to discuss the next phase of the B2B payments evolution to modern times, spurred on by B2C payments and usage of mobile devices. Although B2B is more complex than typical consumer payments, the technology exists to make the experience flow through mobile devices more easily with the proper review and approval workflow. This is part of the benefit of digitization, which allows for greater use of artificial intelligence (AI) to automatically increase accuracy and speed. Worth a quick read for those in the discovery phase.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post Improving Financial Operations Through Digital and Mobile appeared first on PaymentsJournal.

Working capital is a top priority these days given the multi-directional assault on balance sheets from inflation, rising weighted average cost of capital (WACC), and ongoing supply chain disruptions. This is particularly dear to SMEs, which have a more challenging time accessing credit to temporarily fight off short-term difficulties.   

We have written about working capital for members and posted here consistently about the issue.  We are looking at the referred announcement at GTR (Global Trade Review). The European Bank for Reconstruction and Development (EBRD) is collaborating with a subsidiary of Santander Bank Poland. They are offering a creative new framework to provide supply chain finance access to a ubiquitous franchiser in Poland.  

The firm, called Zabka, operates thousands of franchised convenience stores around Poland. Customers pay Zabka suppliers faster “supported by the EBRD’s unfunded risk participation worth up to PLN 225mn (€47mn)” using the program framework. Since most of Zabka’s suppliers are SMEs, this fits into a dire market need.   

Zabka has broader ambitions to expand its market presence and range of services.  The EBRD seems to be testing this framework for broader potential application for creditworthy businesses across the range of markets that it services in central and eastern Europe.   

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post More Working Capital Resources on the Way in Poland  appeared first on PaymentsJournal.

It’s clear that the pandemic accelerated digital transformation among global businesses. Among these developments was a re-evaluation of how businesses pay their suppliers. This has presented an opportunity for B2B payments providers and AP automation vendors to deliver easy-to-use, seamless, unified experiences.

One area of significant digitalization was in the business travel and corporate events space. Corporate preferences have begun to align with everyday consumer payments experiences. It is in this space that we saw developments in web and mobile payments. These include significant interest in virtual payments and expense management platforms.

American Express Partners with Cvent

With this background, it comes to no surprise that American Express recently announced a partnership with Cvent, a corporate meetings, events, and hospitality provider, to further expand virtual payment capabilities within Cvent’s Event Marketing & Management platform.

Included in the announcement were results from the American Express Meeting & Events Trendex survey conducted in September of this year. The survey found that 81% of corporate event & meeting planners are using an automated payments process and 82% expect further automation of these processes within the next six months.

Expense Management Platform Experience

Furthermore, the top ranked feature that planners were looking for in an expense management platform was a simple user experience (50%) followed by enhanced security (48%). Mercator conducted a study on expense management platforms, similarly, finding that ease-of-use and security were important factors to corporate stakeholders.

As corporate buyers, and suppliers come to alignment on the important features of virtual payments, we expect continued expansion of this novel payment’s method.

Overview by Ben Danner, Research Analyst at Mercator Advisory Group.

The post Expense Management and Virtual Payments Continue to Expand with American Express and Cvent Partnership appeared first on PaymentsJournal.

Business-to-business (B2B) eCommerce is the online selling of goods and services between businesses. Unlike business-to-consumer (B2C) eCommerce, sales between businesses make up B2B eCommerce. This can include everything from manufacturers selling to retailers, to businesses selling to other businesses. Because B2B transactions are often more complex than B2C transactions, it often requires more sophisticated business tools and processes.

In an interesting summary of a recent eCommerce survey among B2B buyers, as buyer experiences improve B2B eCommerce should grow as a piece from Bakersfield.com illustrates.

Balance, the 2020 startup out of Tel Aviv with a U.S. base in San Francisco, partnered on the survey with MRM Commerce, the eCommerce practice of MRM based in the UK. Balance provides a digital payments platform designed to optimize the B2B online purchasing experience.  

Some of the conclusions drawn are as follows:

• Loyalty in B2B eCommerce is strongly tied to ease of checkout
• Half of respondents polled cite friction from slow payment terms and lack of digital invoicing
• 73% likely to abandon the purchase with an experience containing friction
• Payment options that contain preferred methods are necessary

The report also has some industry vertical segmentation for potential readers. We have covered the growth and potential of B2B e-commerce in member research as well. 

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post B2B eCommerce Poised for Growth appeared first on PaymentsJournal.

Digitization of financial processes was the overriding theme at two recent conferences we attended (CPI Global and AFP 22). These conferences primarily addressed B2B use cases, although the sessions ran across various associated topics. How can digital capabilities change things?

In this particular release, we look at Ramp, a New York City-based startup that formed only 3 years ago. Ramp is expanding its product offerings reach to the international space. The company has solutions from corporate cards and expense management to bill payments and accounting integrations. These solutions are designed to save businesses time and money with each use. It increases the global digital capabilities for businesses.

Ramp has features for bill payments, short-term bill financing, and employee reimbursement products. Ramp clients can now consolidate several items. This includes international and domestic spend, pay international vendors, and reimbursing international employees for out-of-pocket expenses in their local currency.

The piece suggests that a strong dollar is making U.S. based companies conduct more cross-border transactions. The company places a high priority on the middle market, where, according to a referenced study within the piece, strong business growth continues in the post-pandemic business paradigm. 

Getting working capital under control and efficient management of expenses is rising to the top of corporate expectations, especially in the competitive labor market. Another consideration is providing a simpler employee experience in their daily travel and other work efforts. It’s yet another example of why fintechs are innovating in this space, as cross-border payments and processes are an important part of corporate future growth plans.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post Ramp(ing) Up Global Digital Capabilities appeared first on PaymentsJournal.

Bank of America today announced that it has enhanced its accounts receivables matching solution. The solution is Bank of America Intelligent Receivables™. It offers additional reporting and new forecasting capabilities. It also provides clients with insights based on historical trends and their customers’ behaviors. The bank also announced that it has completed the global roll out of Intelligent Receivables. This is with the product’s launch in Brazil.

Intelligent Receivables uses artificial intelligence (AI) and advanced data capture technology. It brings together payment information and associated remittance detail from various payment channels, whether electronic or paper based. It has the ability to grab data from multiple sources (including emails and attachments). Intelligent Receivables will seek to match payments to outstanding invoices. It helps to meaningfully reduce the costs normally associated with manual processing. It also speeds up the posting of revenue.

AR Forecasting Capabilities

“The new capabilities are a natural extension of a tool that constantly interacts with data,” said Liba Saiovici, head of Global Receivables in Global Transaction Services (GTS) at Bank of America. “The new dashboards give clients a more comprehensive view into their total collections and outstanding receivables from which they can dig further to better understand their customer’s behavior around timeliness and preferred mode(s) of payment.”

Around the world, Intelligent Receivables is increasingly being used by large and medium sized companies in nearly all industries. Bank of America has made continual improvements to the tool since it was launched in 2017. Last year they added new language processing capabilities, including Simplified Chinese, Traditional Chinese, Korean and Thai. Portuguese is also available to support clients in Brazil.

As an indicator of client engagement, Intelligent Receivables last year processed ~43 million invoices. This is a ~50% increase from the year earlier. “The growth in adoption of Intelligent Receivables is a testament to the tool’s impact on a company’s bottom line,” said Fernando Iraola, co-head of Global Corporate Sales GTS and head of Latin America GTS at Bank of America. “We’re confident that clients will see even greater value from using the tool with its new reporting and receivables forecasting capabilities.”

Bank of America

Bank of America is one of the world’s leading financial institutions. They serve individual consumers, small and middle-market businesses and large corporations. These corporations have a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 68 million consumer and small business clients with approximately 3,900 retail financial centers, approximately

16,000 ATMs and award-winning digital banking with approximately 56 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

“Bank of America” is the marketing name used by certain Global Banking and Global Markets businesses of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. © 2022 Bank of America Corporation. All rights reserved.

For more Bank of America news, including dividend announcements and other important information, visit the Bank of America newsroom and register for news email alerts.

www.bankofamerica.com

###

Reporters May Contact:
Louise Hennessy, Bank of America
Phone: 1.646.858.6471
louise.hennessy@bofa.com

The post Bank of America Intelligent Receivables Upgraded With AR Forecasting Capabilities And Enhanced Reporting appeared first on PaymentsJournal.

One of the critical needs of corporates as the lagging supply chain effects of the pandemic continue to impact global movement of goods and services, as well as the payments associated with these transactions, is the ability to access working capital. 

This is especially true of the SME space and various industry verticals as well. This article from Finextra announces a new capability from HSBC in collaboration with Trade Ledger, a 2016 startup out of London, that has a corporate lending platform that supports many lending categories including invoice funding, supply chain financing and debtor financing. 

In member research we have covered the need for innovative solutions in working capital and many other spaces.

As stated in the piece, HSBC now indicates that the approval process for potential receivables finance clients has been reduced to two days versus a previous wait time of up to two months. They call the solution Digital RF and applicants can utilize APIs to communicate from their ERP to the platform during the online process. Using a rules-based decisioning engine, Digital RF sends a survey and report to underwriters within hours, with follow-on status available to the applicants to keep them apprised of loan progress. This all concludes within two days as stated in the piece. Digitization moves on across the cash cycle.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post Faster Access to Working Capital appeared first on PaymentsJournal.

As the world increasingly moves online, so too do opportunities for fraud. Business-to-business (B2B) fraud is a growing problem, as organizations are increasingly making payments electronically. Commercial payments fraud can take many forms, from false invoicing to account takeover. In order to prevent B2B fraud, organizations need to take a proactive approach.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: The Cost of Fraud: B2B Payments Experience 10% Increase During the Pandemic

5 B2B Payment Methods Subject to Commercial Payments Fraud:

• 66% – Checks
• 39% – Wire transfers
• 34% – ACH Debits
• 24% – Corporate/commercial credit cards
• 19% – ACH Credits

About Report

Mercator Advisory Group released a report covering fraud in commercial payments titled The Cost of Fraud: B2B Payments Experience 10% Increase During the Pandemic. The research explores the impact of fraud with particular emphasis on the B2B payments space. Through an analysis of internal and external fraud, one can gain a deeper understanding of the most common types of schemes, what payment types are subject to the most payments fraud, and how the industry is fighting back. The report also explores the rise in business email compromise (BEC) fraud and new ways that fraudsters are targeting organizations.

Fraud is an unfortunate reality that businesses cannot ignore. In this report, we cover the trends in B2B payments fraud affecting large to mid-size organizations and the strategies they are using to fight back. Although fraud is inevitable, organizations that stay current with fraud prevention strategies can mitigate damages and reduce losses.

The post What Payment Methods are most subject to Commercial Payments Fraud? appeared first on PaymentsJournal.

We’ve commented on cross-border developments in the B2B space before and expect ongoing developments. This latest collaboration features JPMorgan and Visa, who have separate blockchain networks for cross-border payments and will now integrate the two. 

The Visa B2B Connect network has been live for about three years and reaches dozens of global markets. It has a blockchain foundation and facilitates settlement in fiat currency. JPMorgan’s Liink is part of its Onyx initiative and is also a blockchain-based network designed for wholesale cross-border payments. One of its main assets is Confirm, to which Visa Connect has completed integration work, and it validates account information prior to payment initiation. Bringing together the two will expand market access for participating banks. The release indicates that Confirm can verify 2 billion accounts at 3,500 banks.

There is speculation as to whether the new partnership will have an impact on SWIFT, and we would expect that it will eventually be a viable alternative. It would seem obvious, however, that establishing modern networks for B2B cross-border transactions is something that is in demand. 

Meanwhile, Ravi Menon, Managing Director of the Monetary Authority of Singapore, gave a keynote speech where he mentioned that the current state of cross-border payments is “slow, costly, opaque, and inefficient, relying on an archaic network of correspondent banks.”

He believes the development of “private sector blockchain-based payment networks” could be the solution to resolve this problem.

The partnership between Visa and JPMorgan could be a strategic one that will prove beneficial in the ongoing efforts to effectively manage and facilitate cross-border payments.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post JPMorgan and Visa Integrate B2B Cross-Border Networks appeared first on PaymentsJournal.

In our various member research, the largest growth trajectory for commercial card product usage is in the virtual card space. The bulk of the volume growth is in the accounts payable space. And now increasingly, we see further use cases also growing, including non-frequent employee travel, contract staff, and work from home (WFH).

Virtual cards offer many advantages for companies. When integrated with a spend management software, it can curb corporate overspending.

Virtual cards are naturally safer than distributed plastics, as they cannot be lost or stolen. You can also apply spend limits to your virtual cards, thereby controlling how much can be spent on each transaction or card. Exceeding an established limit stops transactions from occurring with an automatic notification to the company program administrator. 

When used in conjunction with spend management solutions, there are additional features such as more advanced analytics for optimizing spend. The speed of information improves to the point of potentially instantaneous (real-time) decisioning on charge attempts. The advantages are applicable across all business sizes.  

A spend management software also provides valuable insights, highlighting where your business can be more cost-efficient.

Implementing virtual cards may be a valuable strategy as it can reduce your spending, boost your payment processing speed, and offer meaningful analytics to make better cost decisions.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post The Many Advantages of Virtual Cards appeared first on PaymentsJournal.

The use of checks in B2B payables has been a mainstay in North America through the decades, despite the existence of multiple electronic payment types as alternatives. There are multiple reasons for this, but we suspect that most frequently inertia has been the culprit. 

There has been a somewhat slow but steady decline in check usage over time and most readers have consistently heard that this decline should have accelerated during the pandemic—given the risk, lack of speed, and general inefficiencies associated with check processing. 

Based on a recently released survey by the Association of Financial Professionals (AFP), this acceleration is indeed occurring. 

The survey finds that B2B check usage is now down to 33% of NA respondents, an all-time low since the early 2004 survey version. More than half (54%) of respondents also cited speed as the number one factor for adopting digital payments. This makes sense given the lingering global supply chain issues and the need for tighter working capital management by businesses of all sizes. What’s more, 75% of respondents reported that faster payments have impacted their organizations in a positive way.

The financial operations modernization effort continues, and although it may still seem a bit slower than what one might expect, it is at least moving steadily towards the tipping point, which has essentially already happened in consumer payments.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post B2B Checks on the Decline appeared first on PaymentsJournal.

The U.S. — and much of the world — is facing an inflationary environment not seen in more than 40 years. Persistent, high inflation is proving to be stubborn and shows no sign of slowing down. This greatly affects businesses buying goods and services because it increases their prices and makes running their business more costly. On the supplier side, any delay in receiving payment for a product from a business means that money is worth less when they receive it than when they submitted an invoice. The typical method of paper check in business-to-business (B2B) payments is less effective for all parties involved during times of inflation. These reasons are why commercial credit card payments are rising in popularity.

In September, PaymentsJournal sat with John Weinrich, Head of U.S. Sales at Boost Payment Solutions, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

Fast-Rising Inflation

Weinrich noted that not only is inflation very high, but it has risen very quickly, leaving many unprepared to deal with its consequences.

“Twelve to fourteen months ago, inflation was virtually nonexistent,” he observed. “Now we are dealing with the fastest-rising inflation in 50 years.”

This means that waiting for invoices to be paid by check can have devastating consequences for businesses — especially small businesses with limited working capital.

“When you have a DSO [Days Sales Outstanding, which is the number of days a company waits to get paid for a sale] of 90 days or so, that dollar is worth far less when you receive the payment than when you made the sale,” said Weinrich.

With borrowing costs high due to increasing interest rates, many companies cannot afford to take out a loan to covers costs while waiting to get paid. This makes getting paid on time vital to staying in business during tough economic times.

Commercial Credit Card Upswing

These factors are making businesses rethink their stance on accepting commercial credit cards for payments. By and large, businesses have resisted accepting credit cards for B2B payments due to the perceived expense of doing so and the technical cost associated with upgrading infrastructure to accept them. Historically, credit cards have typically been seen as a consumer payments mechanism, and large-scale B2B payments were not usually contemplated.

However, this is beginning to change.

“I keep hearing over the past couple of years since the pandemic that card acceptance has accelerated among businesses,” Murphy noted.

While acknowledging that widespread commercial credit card acceptance “still has a way to go,” Weinrich agreed that it is increasing in the B2B space. Typically, the cost of card acceptance was thought to outweigh the benefits, added Weinrich, but companies such as Boost that provide a technology platform that seamlessly enables commercial credit card payments are creating an environment where accepting credit card payments is more viable in the B2B environment.

One major benefit is straight-through processing (STP), which enables suppliers to get paid quickly and eliminates manual input and human involvement on both ends. The Boost STP platform, for example, automates the entire onboarding, credit card transaction, and reconciliation process for buyers and suppliers, thereby eliminating what is typically a cumbersome and manual process, Weinrich said.

“This guarantees timely, accurate payments and helps both the supplier and buyer manage their cash flows in this high inflationary environment we are in,” he added.

Boost also helps businesses manage regulatory costs and burden by eliminating the need for PCI reporting as this automated solution eliminates exposure to PCI data for the supplier.

Murphy also noted the decreased risk of attempted fraud associated with commercial credit card payments as opposed to check payments.

“I believe it is less than three percent,” he added.

Weinrich agreed, and noted that figure is low compared with other forms of payments. He cited data from the Association for Financial Professionals showing that attempted fraud activity for checks is at 66%, and 37% for ACH debits.

Increasing Awareness

Probably the biggest hurdle in commercial credit card acceptance in the B2B space is changing the long-held mentality around commercial credit cards.

“We’re asking businesses to try something new,” Weinrich said. “So, we in the payments space really need to put on our educator hat and tell them about the benefits. All businesses are looking to innovate and grow and reach their potential.”

Murphy noted that one trend that could help with the increase of acceptance of commercial credit cards is an increasing desire for both suppliers and buyers to use new payment methods. For buyers, this gives them flexibility in how to pay. And for suppliers, it helps reduce risk as well as attract new partners since they are offering multiple, flexible payment options.

“Right now is the perfect time for businesses to rethink their stance on card acceptance,” said Weinrich.

The post Rethinking Commercial Credit Cards in a High Inflation Environment appeared first on PaymentsJournal.

The initial vision of Amazon as a bookseller is in the rearview mirror, as the company made it to the top of electronic commerce. My first purchase at Amazon was the kid’s classic, “Goodnight Moon,” which dates back to March 2003, and since then, my purchasing has included everything from auto accessories to pool filters and window dressings. While the book shows signs of passing through the grubby hands of children, and the original recipient is far past her college graduation, it remains a reminder of Amazon’s early days. Indeed, Amazon has gone beyond its objective to be the “everything store.” What is the Amazon payment strategy?

Amazon Payment Trends

While most of my Amazon purchases stem from the Chase Amazon Visa card, which rewards me with a whopping 5% cash-back, Amazon is involved in an array of payment options that extend into central bank digital purchases, installment lending, and business procurement. It is quite a distance from the original mission, and if your household is like mine, you found Amazon as a critical resource during COVID. Amazon delivery trucks are on my street twice a day, even now.

But payments drive commerce, and Amazon is deep into the mix on important long-range topics. While Amazon One is cool and interesting, the current impact in face-to-face sales is somewhat anecdotal.  While the payment form may gain traction in years ahead, Amazon is hyper-focused on three important payment trends today:  digital currencies, installment lending options (BNPL), and B2B procurement.

Central Bank Digital Currencies (CBDC) Will Soon Rule the World

While crypto-currencies can bring the creeps to conservative bankers because of limited audit trails and unstable values, when you put a central bank behind the process, there is an entirely different value proposition. While the U.S. Federal Reserve is in its early stages on this matter, the European Central Bank (ECB) is actively testing CBDCs with Amazon at the forefront of online commerce. The ECB approaches the topic from multiple angles, including Amazon. Other companies include “Nexi and Worldline, Spain’s CaixaBank (CABK), and the European Payments Initiative, a consortium of euro-area banks,” according to Coinbase. According to the article, a digital euro “could be issued in 2026.”

Amazon Payments and Installment Lending/BNPL

BNPL take-up took an interesting course from the Scandinavian region to Australia, then Europe, and the rest of the world. The idea was not novel—companies like Household Finance and GECC built their business around merchant financing options. What BNPL did, though, was to invert the payments focus from a consumer enabled with a credit card to a merchant enabled with a payment option. Amazon recently aligned with Affirm for this option and is using the functionality in the U.S. While Affirm certainly has had some bumps in the road, the firm has solid footing, understands capital markets, and is in payments to stay, unlike many traditional BNPL firms.

B2B Procurement

While Shopify and Amazon toil about whether it should be Shop Pay or Buy With Prime, the bigger picture is that business procurement is a massive space for payments, which Amazon discusses in their 2022 State of Procurement Report.

As Amazon leaped beyond Margaret Brown’s classic book—and the credit card I used to buy it 20 years ago—there is certainly more ahead, and Amazon will be there, A to Z.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group.

The post Amazon & Payments: Taking Positions in Three Important Industry Topics appeared first on PaymentsJournal.

In the business world, fintech is revolutionizing the way that companies manage their spending. In the past, businesses had to rely on paper invoices and manual tracking of expenditures. This was time-consuming and inefficient, often leading to late payments and missed discounts. Thanks to spend management tools, businesses can now track their spending in real-time, ensuring that they always get the best prices for their purchases. In addition, spend management tools can help businesses to negotiate better payment terms with suppliers, resulting in significant savings. As fintech continue to evolve, businesses that adopt these tools will be well-positioned to stay ahead of the competition.

Today, London-based spend management platform Payhawk announced it is coming to the U.S. market. The company will join a competitive market of expense management platforms and commercial card providers.

Here is how the spend management company describes the offering:

“Alongside its unique global footprint, Payhawk differentiates itself through its strong enterprise focus. It offers market-leading native integrations with multiple enterprise ERP systems for real-time reconciliation, spending policy features to help finance leaders implement governance and control at scale, and the ability to manage multiple international entities in a single platform. To date, Payhawk already serves scaleups and enterprises in 32 countries.”

Hristo Borisov, co-founder and CEO, Payhawk, described the value proposition as follows: 

“A significant proportion of scaling companies in Europe have US operations, and before today, they were forced to use multiple credit card issuers, making the controlling and reconciliation process for finance teams a nightmare. The same is true for US companies with European operations where the number of currencies and payment systems can be daunting.”

There is currently a waitlist for an October launch date and early adopters of their U.S. Visa credit card are being rewarded with a 1.5% cashback offering. The company reports that 10% of its customer base has already subscribed to the waitlist.

For more information on this topic, Mercator Advisory Group recently released a report on the North American commercial credit market as well as a study on expense management platforms.  

Overview by Ben Danner, Research Analyst at Mercator Advisory Group.

The post Payhawk Announces Its Entry To The U.S. Spend Management Market appeared first on PaymentsJournal.

Cash flow is the lifeblood of any business, and B2B payments are a critical part of cash flow management. When payments are delayed, it can have a ripple effect on cash flow, leading to late payments to suppliers, delays in payroll, and other financial problems.

This article was dropped in Financial Review and sponsored by a fintech in the working capital/payments automation space.  Given the post-pandemic (and somewhat ongoing COVID) scenarios being faced across the globe with trailing supply chain vapors, recessionary trends and increasing cost of money, it would seem timely that companies figure out their best methods of dealing with cash flow flexibility.  We have covered this topic in various member research on an ongoing basis.

‘This is because the needs of business are fundamentally more complex…Rather than end-to-end consumption – a relatively simple concept in terms of digitisation – cash flow, which is the lifeblood of businesses, is a complex equation of money in, money out and, above all, time….Until now, there has been little for businesses that need a real-time on-demand tech-based solution to the issue of cash flow. As Jamie Osborn, CEO at credit and payment platform Shift, explains, what was previously on offer was clunky and slow.’

From what we can tell from a quick website review, in addition to some standard facility through overdraft, the firm also offers a trade account, which allows the placement of invoices into a portal and have suppliers get paid within a day, and then the buyer can select the terms by which they will pay the fintech.  It is not clear if the fintech is providing the lending capital or the assets are passed into a marketplace for additional ‘funders’ to bid on certain assets.  Either way, this is the reverse factoring model whereby the buyer’s credit is used to repay suppliers faster.  It is one of the more popular supply chain finance vehicles.

“If you actually totalled up all those receivables, the SMEs themselves are the fifth largest bank in the country. Their core competency isn’t underwriting, it’s not sizing limits, it’s not collecting payments….“It’s none of those things and yet they’re forced into this market through no fault of their own.”…Shift has already found a strong and loyal following in the building sector where Mike LoRicco, general manager, membership, for HBT, a buying group for independent hardware and building supplies, works with Shift to give his members access to more flexible trade and payment solutions…..“Trade-based stores are often having cashflow problems because the builders are stretching payments out,” LoRicco says. “I heard about Shift from some of our members who said it had freed up their cash flows and decided to pursue it.”

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post B2B Payments and Cash Flow appeared first on PaymentsJournal.

August 18, 2022 – New York, NY – Did you know charge volume on virtual cards is expected to grow from $1.9 trillion to $6.8 trillion by 2026? But perhaps more surprising is that B2B spend will make up 71% of that volume. For the last several years we’ve seen the signs of this coming, as neobanks like Brex, Ramp and Divvy have proven that businesses are hungry for modern payment solutions, including virtual cards. And with these new corporate cards came all new spend management features, making it easier for businesses to manage their spending.

However, despite the allure of these new payment experiences, not all businesses are willing to risk leaving their trusted bank partner for a startup bank. As more companies search for digital solutions, 75% of executives believe modernizing payments needs to be a priority. This is where TSYS comes in. In conjunction with its newest partner in innovation, Extend, TSYS is focused on helping bank partners deliver the solutions their customers want by transitioning to a more agile and resilient infrastructure to support the future of payments.

In comes out-of-the-box spend management innovation

After initially working with TSYS to enable mobile wallet tokenization, Extend now brings the first issuer-agnostic virtual card and spend management platform to TSYS. To make things even easier, Extend is already integrated with TSYS’ Virtual Payment Precept (VPP) solution, which enables the generation of secure, virtual card numbers in real-time with more control over usage and transaction parameters.

For banks, this means they can now offer their business customers a new virtual card and spend management solution along with their existing commercial credit card offerings—with zero technical implementation required. A product that would have taken years to bring to market via in-house development, can now be launched in weeks!

“The payment technology space is becoming increasingly fragmented, but now more than ever banks need a coordinated payments architecture where innovation can thrive,” said Brian Greehan, Head of B2B Solutions at TSYS. “With Extend as a fintech partner, TSYS is prioritizing payment modernization and fostering a more connected financial services ecosystem for our bank customers.”

Business-tested, TSYS approved

Extend’s core offerings include a sleek virtual card and spend management web and mobile app, as well as virtual card APIs for custom integrations. But the best part for businesses is that they can access these services with their existing corporate credit cards.

It’s easy to get started; the company card holder simply registers their card in Extend and can immediately start creating virtual cards on demand and send them to team members or even directly to vendors. Robust card controls allow users to update virtual card details at any time and turn cards on and off as needed. Additional features, such as receipts and attachments, custom reference tags, and expense integrations also help streamline bookkeeping processes and simplify reconciliation.

And while virtual cards mean better control and security for the business, for banks it also means reduced costs and risk exposure compared to issuing plastic.

“The mission of Extend has always boiled down to one goal: to make payment innovation accessible,” shared Andrew Jamison, CEO of Extend. “Together with TSYS, we can achieve this for the industry as a whole—businesses get the solutions they’re looking for while keeping their trusted bank partner and their existing credit cards, and banks can offer competitive payment services without any changes to their tech stack or lengthy vendor onboarding.”

All in the family

This partnership will foster new opportunities for TSYS and Extend to build out additional services and capabilities for our bank partners. While third-party solutions enter the market every day, Extend is the only provider looking to make existing payments infrastructure more connected and more competitive. With Extend, TSYS is reaffirming our commitment to serving issuers and their customers.

The post TSYS Partners with Extend: The virtual card app for virtually everyone appeared first on PaymentsJournal.

Digital innovation has transformed payments for businesses and consumers in recent years. One area that has lagged, however, is accounts receivable (AR). Many businesses still rely on manual, time-consuming, and costly processes when it comes to AR.

But that’s beginning to change. Advanced technologies such as cloud computing, artificial intelligence, and machine learning are starting to transform and automate AR processes, saving businesses time and money.

To find out how, PaymentsJournal sat down with Alex Hoffmann, EVP of Payments for Versapay, the industry’s first Collaborative AR Network, and Steve Murphy, Director of the Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

Innovation in Accounts Receivable Payments

Innovation in accounts receivable has been slower than in other areas of business where teams enjoy cloud-based platforms like Salesforce and Asana, but Hoffmann noted that is starting to change.

“We believe we are at the onset of a cloud-based revolution that is combining payments with accounts receivable,” he said.

Murphy agreed, noting that receivables has not been an area where most companies invest in new technology, especially compared with accounts payables.

“But that has started to change the last few years, even before the pandemic,” he said. “Now companies are looking at their end-to-end processes and looking to connect payables and receivables.”

Hoffmann detailed several primary ways AR payments have been processed in the past, all of which have their flaws.

First, there has been a lack of adoption for the integrated customer portals that many manufacturers and wholesalers have introduced. Second, while many clients choose to pay their invoices with virtual cards, this creates headaches for their suppliers. Finally, there is still a substantial reconciliation challenge to process due to the fact that 30% of B2B payments are still received via paper checks.

Lack of Adoption with Customer Portals

Regarding customer portals, Hoffmann said that many companies have set these up to accept payments from their smaller clients. The problem, however, is a lack of adoption.

Typically, many manufacturers and wholesalers have a “long tail” of small business clients, said Hoffmann, and they try to streamline payments from these clients using payments portals. However, this has not proved to be a great solution, as many clients simply don’t use the portal.

“The problem is a lack of adoption,” he added. “The worst thing you can [do] is invest in software that your customer doesn’t use.”

That’s why Versapay developed a different approach. Their Collaborative AR Network provides complete payment data, actions, requests, collaboration history, payment predictions, and actionable insights to facilitate delightful customer experiences.  It has a cloud-based collaboration portal that connects AR teams with their customers. It makes data transparent and combines powerful invoicing, collections, and payments automation.

“It intermediates the dialog between buyer and seller. For the seller, issues get resolved quickly and easily, and relationships are built, not broken. The Buyer experience is improved by not missing invoices, and the ability to easily apply credits and eliminate delinquency calls happen more efficiently, thus increasing a better a customer experience,” said Hoffmann. “This enables invoices to be resolved quicker and businesses to get paid faster.” Versapay also has an Intelligent Invoice, which was redesigned so the invoice data is tracked to provide complete remittance data throughout the entire AR lifecycle.  

“So smaller customers have a very easy way to make payments the way that they want and an easy way to communicate with the supplier,” said Hoffman. “It’s why Versapay clients enjoy an 80% customer portal adoption rate while other leading providers only see around 20%”

Virtual Cards: Convenience for Payer, Hassle for Payee

Many large businesses, on the other hand, prefer to make their payments to suppliers with virtual cards. These are generally very convenient for the payer, but often are a challenge for AR departments, Hoffmann opined.

“Typically, [AR departments] will receive an email that contains a card number, then click [on] a link to obtain the card number, and then manually input the card number into a virtual terminal somewhere,” Hoffmann explained. “Then the remittance data must be input manually, and the payment needs to be reconciled with the ERP [enterprise resource planning] system.”This causes a lot of manual work for accounts receivable receivable departments, which not only take up a hefty amount of employees’ time but can also lead to human error.

Automation, however, can remove much of this headache. For example, Versapay has partnered with American Express to automate AmEx virtual card payments that are made to suppliers in order to increase efficiency and accelerate cash flow. The solution includes Versapay’s ePayment Delivery Service (ePDS), which eliminates email-based payment delivery and automates the processing and reconciling of virtual card payments. ePayment Delivery Service ingests, transforms, and delivers remittance data directly to suppliers. With available straight-through-processing, ePDS can fully automate virtual card acceptance. 

The benefits to AR departments are many by implementing this kind of virtual card automation. They get paid faster and their employees are freed up to focus on more strategic work.

Checks: Still a Predominant Payment Method

While much of the world has largely ditched checks, checks are still widely used in America.

This poses an obvious problem for businesses, as checks are a costly, inefficient, paper-based way to process payments. Typically, businesses receive a check along with some form of remittance file and then must match the service or product to the payment.

“Despite the digital transformation taking place across the industry, checks are a time-intensive and complicated process to deal with,” Hoffmann said.

By implementing AI-based cash application solutions, companies can avoid this hassle. Earlier this year, Versapay recognized that this was a major issue in the AR department and acquired DadeSystems, a leading cash application software that uses AI and machine learning to automate one of the most challenging parts of AR by streamlining the receipt, matching, and reconciliation of payments no matter how they are received. By adding DadePay solutions to Versapay’s Collaborative AR Network, enterprises can digitize and automate all their customer payments, including checks, bank-to-bank transfers, credit cards, and mobile payments.  

Accelerating over Hurdles

When it comes to upgrading accounts receivable systems, the biggest hurdle for most companies is inertia, Murphy noted. It can be hard to get buy-in from internal stakeholders or prove the ROI for upgrading systems. However, cloud-based systems that automate accounts receivable processes make the case easy, he said. There is no need for significant IT investment and there are no long implementation times.

Furthermore, automating AR processes will enable businesses to operate more efficiently and take better advantage of all the data they possess, Murphy said.

“As you automate systems and processes, you will be gathering a lot more useful data,” he said.

In tough economic times and in a rising interest rate environment, automating accounts receivables also provides a significant benefit because it enables companies to get paid faster as cash becomes more expensive, said Hoffmann.

“We see this as the moment of acceleration for AR innovation,” he said.

The post How Payments Integration Can Revolutionize Accounts Receivable appeared first on PaymentsJournal.

In the business world, timely payments are essential to keeping cash flow moving and preventing delays in production or deliveries. However, making payments can be a complex and time-consuming process, especially when businesses are dealing with multiple suppliers. This is where B2B payments come in. B2B payments refer to the electronic transfer of funds between businesses, typically via bank-to-bank transactions. By streamlining the payment process, B2B payments can help businesses save time and reduce errors.

Global Payments completed a series of strategic moves today to bolster their business-to-business focused strategy. Fintech Rêv along with private equity firm Seachlight announced the acquisition of Netspend’s consumer prepaid business bringing to a close the parent company’s search for a buyer of the consumer focused assets. The move for Rêv adds additional consumer focused depth to their operations:

“The acquisition brings back Netspend’s founders, Roy and Bertrand Sosa, who also founded Rêv. The Sosa brothers look to leverage the strategic assets of the two entities to build a global, high growth company that delivers on a mission of financial empowerment and product innovation.

Christopher Cruz, Partner, Searchlight, added ‘The characteristics of this investment are rare to find. Combining an industry leading operation in Netspend’s consumer business with modern platform technology and digitally native solutions from Rêv unlocks great growth potential by meeting the needs of a significant and sizable market. We look forward to partnering with Roy, Bertrand, and the Rêv team as they continue their mission to financially empower underserved consumers through fintech innovation.’”

Global payments had announced their intentions to divest Netspend in February, as covered in Payments Journal because of the inherent strategic desire to offload the consumer facing assets, which did not overlap and complement Global Payment’s traditional client base. With this move Global Payments receives an infusion of $1 Billion in cash and can move forward with its B2B core, including their simultaneous announcement of the purchase of EVO, a finetch focused on aiding B2B payments, with a core customer base in Europe. Reuters has additional details on the EVO acquisition:

“The deal would give Georgia-based Global Payments access to new markets including Poland, Germany, Chile and Greece and also help scale-up its business in existing markets such as the United States and Canada, the company said.

EVO has a sizable presence in Europe which accounted for nearly 40% of its revenue in the first three months this year.”

These moves highlight the importance of strategic fit in the payments space. Evo brings Global Payments a desired international presence and increased B2B footprint while Netspend adds a positive strategic prepaid market to Rêv’s portfolio.

Overview by Jordan Hirschfield, Director, Prepaid Advisory Service at Mercator Advisory Group

The post Global Payments Announces M&A Activity to Firm Up B2B Strategy appeared first on PaymentsJournal.

Those of us tuned in to the business-to-business (B2B) payments market heard interesting stories about the chaos the pandemic brought to the industry: finance teams venturing into the office after hours to collect and process paper invoices, late-night, at-home drop offs so company officers could sign paper checks, and so forth. The pandemic upended non-digital elements of day-to-day business, highlighting the over-reliance on antiquated, manual processes and the resulting inefficiencies – and even breakdowns – that threatened business continuity and the bottom line.

Because of the pandemic, there’s now greater awareness of the need to digitize and automate B2B payments, as well as the significant opportunity digitization represents for businesses that are actively seeking efficiency gains and cost reductions. An estimated 50% of B2B payments are still made via check. 

Digitization also represents a significant opportunity for payment technology providers, which recognize that this market is massive and underserved. Total B2B payment volume is estimated to be over $125 trillion — four times the volume of consumer-to-business payments.

Good enough isn’t good enough anymore

Today, many companies default to a state of “stable inefficiency” because their manual B2B payment processes work well enough. Looking forward, however, several factors are converging to make the status quo untenable. Digitizing B2B payments is clearly not simple – if it was, businesses would have transitioned years ago – but work from home trends, labor shortages, the desire to cut costs and the increased frustration from old B2B payment pain points together may be the catalysts that motivate companies to make the switch. 

Digitizing B2B payments – including accounts payable, accounts receivable, vendor payments, payment acceptance, expense reimbursement and employee-initiated spending – offers speed, security, convenience and rich data for buyers and suppliers. And don’t forget a boost to the bottom line thanks to cost reductions. Processing a single paper invoice costs between $4 and $8, according to one estimate used by the Fed. 

As we transition into a post-pandemic “new normal” of hybrid work models for finance teams, the question is shifting from whether businesses should implement a digital payments strategy, to: What digital system should we adopt – and how quickly can we make the move?

Ensuring digitization lives up to the hype

White papers are often written about specific features that businesses need when digitizing their B2B payments (ERP integration factors are important). However, as important as those details are to ensure new systems function smoothly, companies are better served starting with broader questions – about moving to the cloud, enrollment processes and innovation – to ensure they start their modernization journey with the right overarching strategy and outcomes in mind. Getting the vision right on the front end multiplies positive results on the back end. 

Upgrade to a cloud native platform

Cloud-based software solutions can automate every step in the accounts receivable and payable process, wrapping a rich array of value-added, data-driven capabilities around payment flows, from analytics to reporting and reconciliation. This provides greater real-time insight, reducing the need for suppliers to spend precious time calling buyers to chase payments or for buyers to wait for confirmation of payment, for example. Because cloud-native and API-enabled solutions are fully modern and extensible, they can also be tailored to address customers’ data and analytics needs and integrated with ERPs to sync invoice and payment data, providing one financial system of record. And, it goes without saying, you can access them from anywhere. 

Adopt an enrollment process your team can handle

Enrolling new suppliers and setting up payment agreements is a top barrier to digitizing B2B payments because companies often underestimate the amount of time and resources this process takes. To ease the burden, many in-house AP departments turn to automated solutions that include a managed services option. In these cases, a third-party technology provider enrolls suppliers and executes payments. This not only alleviates pain points and removes barriers when implementing digital solutions, but it reduces the risk of mishandling sensitive payment details, missing a step in the process or making other errors that stem from burdensome workloads on in-house teams. These benefits also accrue to AR teams that work with a managed services provider to help digitize incoming payments process, enroll customers and accelerate receivables. 

To keep pace with constantly changing regulatory issues, maintain the highest levels of compliance and control, and maintain tight security, businesses should consider incorporating a managed service element to their digital B2B payments ecosystem. 

Ensure your new system can adapt to innovation

The world of cross-border payments is a complex web of multiple accounts held at banks with high transaction fees and slow execution. Stablecoin crypto or central bank digital currency solutions could reduce reliance on banks in these transfers and drive material cost savings for payers and recipients. But whether these solutions find their footing or others emerge, businesses should adopt digital systems that can evolve to take advantage of trends that could further reduce costs and increase efficiencies. 

As we move beyond the pandemic, but continue to grapple with ongoing disruptions to global commerce, the digitization of B2B payments keeps gaining traction and the tipping point away from checks and manual payments is here. Now is the time for businesses to transition from paper-based payments to a seamless, digital connection of all the steps in the business payments cycle. By creating a digital B2B payments ecosystem, businesses have more visibility into how funds are moving. They also gain the transparency and control needed to reduce errors, mitigate payment-related fraud and optimize cash flow to fuel growth – no matter where employees are working. 

The post Digitization Is Coming to B2B Payments appeared first on PaymentsJournal.

This piece is posted in HPC Wire and discusses the hot topic of digital payments, but in the high speed processing environment that increasingly presents itself to companies in modern times.  We have consistently been covering this topical area for readers and members and its mostly about a real-time environment.  The posting is sponsored by the two organizations mentioned in the title and it basically goes through the need for speed these days, along with capabilities that can handle processing complexities in real time as well.

‘Traditional B2B transactions were processed by banks sending customer payment transactions through the automated clearing house computer service which could take up to three days to clear and be processed. When a customer uses a credit card, merchants must pay fees, and it can take anywhere from 24 hours to three days to show up in the merchant account. Card-not-present payments, such as those made online or over the phone, are costly for merchants, requiring manual entry and approval. All of these payment methods have disadvantages for the customer, financial institution, or merchant.…Digital disruption in the financial services industry is a having major impact on both payment systems and customer expectations. The swift rise in technologies such as mobile banking apps, online payment systems, and non-traditional FinTech companies has changed what customers expect. Financial institutions and merchants want to speed up the payment process to meet customer expectations.’

The piece goes on to cite some data around real-time payments, mobile, e-commerce and how the recognition is there for moving to these types of digital payments capabilities asap.  The article also focuses on what is necessary to complement a faster payments environment in terms of associated decision making to reduce errors, combat fraud and so forth, all of which are enhanced (or perhaps require) machine learning and a cloud environment.  The case is being made for GPU based (graphics processing unit) cloud computing, the latest generation solution set that adds brain power to servers.  Worth a browse through for readers wishing to stay current or in the market for more payments excellence in the new world.

‘Many banks still use batch processing and older mainframe systems which can be complicated to update and maintain. Moving to the Microsoft Azure cloud solution provides financial institutions with a complete set of computing, networking, and storage resources integrated with workload orchestration services to aid in integrating a real-time processing solution. Microsoft Azure allows developers to build and train new AI models faster with automated machine learning, autoscaling cloud compute, and built-in DevOps….Microsoft solutions provide fast and affordable payment processing. For example, Clearent provides global credit card processing services for merchants of all sizes and wanted a data solution that could meet its ever-increasing demand. Clearent chose the Microsoft Azure SQL Database hyperscale service tier to support its workload of dozens of microservices, manage real-time data ingestion, and process millions of credit card transaction records every month. Clearent integrates data from dozens of different sources into an operational data store and enterprise data warehouse within Azure before it analyzes the information using Microsoft Power BI.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Digital Payments and High Speed Processing appeared first on PaymentsJournal.

Digital technology is enabling more industries to expand outside of traditional borders to reach more customers and take advantage of new sales opportunities. However, some industries are still establishing the infrastructure they need to benefit from cross-border sales.

Business-to-business transactions are one such area with a lot of growth potential. But to realize the full benefits of selling internationally, B2B businesses need to address the challenges of cross-border payments to get the best ROI.

Why Are B2B Payments Going Cross-Border?

Like with other industries, this is an ongoing shift in how business is being conducted. It is projected that 95% of all purchases will be online by 2040, which makes selling internationally much easier. In fact, this comes with a projected $250 trillion value for all cross-border payments by 2027.

Much of this is driven by the adoption of new tech and software. The possibilities offered by blockchain technology and artificial intelligence allows businesses to automate more of their transactions, in addition to alleviating many of the complications that come with cross-border commerce.

Trends Reshaping Cross-Border Payments

The companies successfully expanding into new international markets understand the challenges and are taking specific steps to ensure their success. We’ve identified three trends from B2B sellers that are growing their cross-border payments:

• Accepting Additional Payment Methods: When we looked at customers who received invoices from B2B organizations, we found they’re increasingly using more modern payment types, specifically:

• 21% of payments are taken by credit card
  • 12% of payments are by local bank transfer or ACH
  • 13% of payments are by wire transfers

A majority of B2B sellers have recognized this evolution, as, according to a B2B Progressing Payments Report, 53% of them reportedly want to accept more electronic payment methods, which can include local payment methods such as digital wallets and virtual cards.

• Emulating a B2C Style for Transactions: While many B2B businesses are still being paid via legacy methods, B2B buyers are increasingly expecting a digital experience that mirrors the ease of B2C transactions. On average, 23% of B2B customers are required to pay in-person and 22% pay over the phone, compared to only 31% of customers who are able to pay online or via a mobile app. Those suppliers who want to compete for international business need to provide modern, convenient digital transactions through embedded payments or Payfac-as-a-Service capabilities.

• Employing Accounts Receivable (AR) Automation: Businesses are integrating AR automation for good reason, and those that rely on outdated, legacy and often manual technology are damaging their cash flow. According to the payments report, 29% of businesses were not able to process paper check payments because no one was in the office, and 39% were significantly delayed in processing check payments because of mail delivery. Those businesses that automate their AR process are better able to complete transactions, cross-border or otherwise.
  

To navigate the complex nature of cross-border payments, businesses must be willing to invest in the technology needed to overhaul their legacy systems and outdated payment methods. Of the B2B executives we surveyed, 95% agree their organization should be investing more in AR automation and digital payment technologies.

Future Outlook

Expanding into cross-border payments is more than just conducting business-as-usual with new technology. A majority of businesses, 68% by BlueSnap’s estimate, only process payments where they’re headquartered instead of through a local entity where their customers are located. These businesses are also likely to continue using payment processing services localized within their home country or rely upon only a few select banks to process their transactions.

Why is that a problem? Without local card acquiring, these businesses are less likely to successfully process cross-border payments. Of those companies surveyed for BlueSnap’s Cross-Border Digital Payments report, 40% had a payment authorization rate of just 70% or less. That’s more than lost revenue — it’s an inconvenience for buyers and an impediment to growth.

To succeed, B2B cross-border payments need to employ modern invoicing and billing solutions in combination with local card acquiring and support for local payments. Those businesses that ally with the right global payment partner and can efficiently provide these services will be the ones to successfully compete and grow.

The post B2B Cross-Border Payments Are Growing — Here’s Why appeared first on PaymentsJournal.

This announcement is posted at Global Newswire and advises of new capabilities available through Aliaswire, the Massachusetts-based fintech that provides payments processing services to banks and businesses. The new additions are within the company’s DirectBiller solution, a B2B bill pay platform offered through banks for businesses of all sizes. The release suggests strong transaction growth in certain segments during the past year. 

Aliaswire, a provider of bill payment and credit solutions for businesses and banks, today announced the general availability of new invoicing and payment capabilities for manufacturers and distributors in its DirectBiller^® platform. The advanced features address the unique requirements of business-to-business (B2B) customer relationships and transactions in manufacturing and distribution…

The announcement comes as Aliaswire builds on strong momentum in the segment. The company saw a 228% increase in dollar volume processed by manufacturers and distributors on its DirectBiller platform over the last 12 months.’

B2B Bill Pay

Bill payment is an entirely different animal in the B2B space versus servicing consumer experiences, given the much more complex processing scenarios and custom needs of certain industry segments. In the post-pandemic environment, many companies, especially those with more likely issues around cash flow (i.e. SMEs) and seeking more digital financial operations. Bill payment is certainly an area for upgrade in moving away from analog processes into digital automation, with all the attendant data available for analysis and ongoing improvements. The release goes through a few of these complexities. The piece also provides some of the features and functions available in the platform, for those readers interested, but does not specify which are existing versus the announced new capabilities, but seems directed towards the manufacturing and distribution segment.

“Having your customer pay an invoice is one thing but reconciling that payment in a timely manner to reflect an accurate balance that takes into account things like credit memos, returns, and disputes, is entirely another,” said Jed Rice, CEO at Aliaswire. “DirectBiller helps manufacturers and distributors automate what is now a very messy and time-consuming process. As a result, they get paid faster, improve client satisfaction and reduce their cost of getting paid.”

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Aliaswire Adds New B2B Bill Pay Capabilities appeared first on PaymentsJournal.

Business-to-business (B2B) payments refer to the transfer of funds between two commercial entities. Typically, B2B payments are made in the form of invoices, and they can be processed online or through traditional methods such as checks or wire transfers. In recent years, fintech companies have begun to develop new ways to process B2B payments, which has led to a transformation of the financial operations of many businesses. These new fintech solutions often offer faster payment processing times, lower costs, and greater transparency than traditional methods.

This piece appears in The Paypers and discusses a theme that we have been covering for many years, one that has accelerated during the past two-plus years; that is the increasing reliance upon fintechs by FIs in terms of modernizing capabilities to meet the growing corporate (and government) demand for better financial operations. A big part of that collaboration is of course payments, which incorporate both the payables and receivables aspects of company systems and processes, then expands beyond those into procurement and financing options as well. 

‘Over the past decade, there has been an increasing digitalisation of B2B payments and processes, and fintechs have significantly contributed to this digital transformation. Even though paper cheques are still widely used for B2B payments in some markets like the US, there has been a strong shift towards more innovative and, most importantly, digital solutions facilitating B2B processes and payments…

Fintechs have targeted specific pain points to create innovative and digital value propositions that bring significant benefits to both SMEs and corporates. This article analyses how fintechs are changing B2B payments across different use cases and have become key enablers to boost B2B payment growth.’

The author goes on to point out some of the shortcomings associated with non-digital systems and processes, which remain emblematic in large pockets of U.S. corporate financial operations, as evidenced by the continuing reliance upon paper checks for B2B payments (in the general range of 40-45%). The piece then goes on to discuss certain use case categories and instruments where fintechs have continued to grow capabilities, some directed towards corporate adoption and many in concert with banks seeking faster to market solutions for key constituencies. As we have pointed out many times, the early days of fintech were more or less dedicated to consumer propositions since the path to revenue was quicker, but as more and more entrepreneurs became familiar with corporate uses, that effort has widely grown into B2B solutions.

‘Fintechs have understood the pain points of SMEs and corporates and how they can provide specific solutions to address particular needs. This will be further amplified by the development of open banking provided by fintechs such as Bottomline, Trustlayer, Volt, and Yappily to facilitate cash management and initiation of payments…

By simplifying and digitalising B2B processes and payments, EDC expects fintechs to continue developing relevant value propositions and addressing the very needs of both SMEs and corporates. Fintechs have contributed – and will continue to contribute – to the growth of B2B payments.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Fintechs Offer Crucial Support for Modern B2B Payments appeared first on PaymentsJournal.

Over the last two years, companies have made enormous strides integrating technology into their businesses. Although a deep dive into new technology was not necessarily on their to-do lists at the beginning of 2020, companies across the economy, faced with the constraints and challenges of the pandemic, rose to the occasion. They adopted video-conferencing to keep their teams together, inventory-control software to reimagine their supply chains, and project management tools to track and coordinate distributed activities.

This was a big lift, but the vast majority felt these strategies paid off, a sentiment supported by Capital One’s most recent survey of 400 middle-market financial and technology leaders. Because of this success, more than 80% now expect to see a positive return from new technology initiatives within a few months to a year of their investment.

And thanks to their firsthand experience with the transformative potential of technology, 70% now see technology investment not simply as a hedge against COVID-19 and other disruptions, but as a source of growth, competitiveness and sustainability as the economy moves forward.

B2B Payments Can Make a Real Difference

A critical technology priority for small- and mid-sized companies during the pandemic was around business payments. More than half of our respondents reported their companies upgraded or implemented new payments technologies in the past year. Among other choices, they adopted invoice and accounts payable automation, virtual card, electronic payments, digital account reconciliation and unified payment platforms.

The benefits were compelling. Efficient customer- and supplier-facing payments technologies, for instance, seemed purposely created for the work-from-home economy and continue to drive value as many head back to the office. By enabling clients and suppliers to make or receive payments at any time or from any place, they helped ensure that their company generated a steady stream of revenue and efficiently stayed on top of their bills.

There were other advantages as well. Payment technologies give companies better control of their cash flow, providing insights to accelerate their receivables and simplify their payables. And payments technologies allow more associates to focus on work they consider meaningful, rather than repetitive tasks like writing or processing checks.

Implementing business payments solutions may seem daunting, and it can sometimes come with initial pain points. Respondents pointed to such issues as security and fraud, friction across systems and workforce training. These insights underscore the importance of implementing easy-to-use solutions that prioritize automation and simplicity, enabling higher rates of adoption. That is likely why more than a third (36 percent) of decision makers said they are heavily investing in automated, real-time, or fully integrated payables systems, underscoring the importance they are placing on streamlined and straightforward solutions.

The Right Technology Partner Is as Important as the Right Technology

Fortunately, there are a number of strategies that businesses can adopt to mitigate the pain of technology adoption. The first is to plan ahead by identifying existing challenges, documenting the hard and soft costs of implementation, onboarding key stakeholder groups, and defining metrics for success. Robust, transparent communication is another prerequisite for successful implementation.

But most important is engaging an external partner who understands how to help businesses blend the new payments technology with its current systems, creating streamlined processes that meet the needs of their customers and employees alike. This partner should offer compelling technology and have the skills to serve as a change agent, iterating prototypes and accommodating feedback as it zeros in on customized solutions that are appropriate for small- and mid-sized companies.

For something as complex as B2B payments, there is no point in doing it alone. Having a responsive partner can help you make better decisions and implement payments solutions that will provide durable value over the long term.

The post Realizing the Potential of Payments Technology appeared first on PaymentsJournal.

This article is posted in Smart Business and discusses aspects of the product solution space called integrated payables. The author discusses the product space with a bank exec at a U.S. regional who has a specialty in the middle market, where payments automation has been a higher priority since the onset of the pandemic. We recently released some member research on trends in the middle market. So, readers who may have interest in this timely payments subject may want to browse through a relatively quick piece. There are likely a few varied levels of understanding as it relates to the term integrated payables and the article provides one.

‘Integrated payables is a portal through which businesses can issue and reconcile payments. The interface allows users to automatically load payment files from their accounting software along with payment instructions from the portal’s vendor records so that payments are made through the vendor’s preferred method — ACH, virtual card, etc. It streamlines a process that, in the past, required different payment files or potentially different systems…

Those new to integrated payables receive training as well as help with the supplier enablement campaign through which the bank will reach out to a business’s vendors to determine their preferred method of payment and attempt to convert them to an electronic payment format.’

The piece goes into some of the benefits associated with integrated payables, including more automation and less reliance upon paper payments processing. Check fraud remains one of the risks to analog payments, as readers of the AFP Payments Fraud survey will know. One of the alternative types of e-payments that can be easily facilitated with payments automation is the use of virtual cards, which have an extremely low rate of fraud given the encrypted data and one-time usage features. Other types of payment controls and easier reconciliation methods are also benefits to be counted. Companies should be thinking about the subject in broad, end-to-end financial process terms, not as a single plug-in fix. Implementation typically solves for both buyer and supplier shortcomings, resulting in better relationships.

‘In addition to getting payment faster, suppliers typically receive detailed invoice data with electronic payments, making reconciliation much faster. Some systems even allow the reconciliation data to be integrated directly with a supplier’s receivables system…

Explore the options in the market to automate the payables processes because bringing a solution such as integrated payables onboard creates efficiencies that allow companies to focus more resources on their business and less on banking and payments.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Integrated Payables: What, Why, & How appeared first on PaymentsJournal.

This release is found in Business Wire and discusses a new capability from the California-based fintech Paystand, which uses blockchain and cloud technology in a PaaS model across the cash cycle, including receivables processing. In this particular release, the company is announcing additional features to existing capabilities found in their NetSuite AR solution. Once again, many readers will already know about the general rush to digital processes for financial operations during the pandemic timeframe as cash flow rose to the top of priority lists, and that has particular emphasis within the corporate middle market space.

‘The new Paystand features for NetSuite AR provide advanced functionality for accepting minimum deposits for Quotes & Estimates and automatic conversion of quotes to sales orders upon payment receipt. Paystand also allows instant cash sales for sales orders and efficient auto-payment at shipment, receipt or fulfillment completion…

“Mid-size businesses are struggling to grow in the current inflationary environment, rife with economic and political uncertainty, and supply and cash constraints,” said Jeremy Almond, CEO, Paystand. “In order to thrive, they need a paradigm shift from human-centric AR processes to the next generation, self-driving AR that delivers instant and automated payments. The new solution for NetSuite builds on our core business payments network and allows AR teams to scale using automation, rather than adding to the size of their organization.”’

We cover this space consistently and certainly find the increasing use of cloud models to be evident in the B2B financial services space, although discretionary approaches are also emphasized by certain industry observers. In any event, while in past years the investment dial was clearly more in the payables side of the operations, the accounts receivable asset ledger has gained a greater mindshare as of late, and companies are looking at payments as more of an end-to-end financial flow as opposed to traditionally siloed approaches. The new features mentioned are highlighted below and readers should link out to view the full description.

New features for NetSuite AR

• Quickly win business with Advance Deposits for Quotes & Estimates

• Serve new customers with Cash Sales for Sales Orders

• Receive payments efficiently with AutoPay Upon Fulfillment

Paystand’s launch of the first NetSuite self-driving AR solution enables customers to achieve fast, efficient and profitable payments. The launch is yet another milestone in Paystand’s journey to promote commercial payments that are instant, self-driving, cashless, feeless, and open and programmable.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Paystand Adds New Features to Accounts Receivable Solution appeared first on PaymentsJournal.

This posting in The Times of India is both about the general trend of card networks expanding beyond traditional product boundaries, which has been underway now for many years, but also specifically about moves that one of the major networks is making in India, one of the high potential growth markets for credit-related payments products. The piece gets into the movement away from distributed plastics and into more embedded usage of the card scheme in different mobile formats. This move holds true for consumers as well as the more complicated B2B use scenarios.

‘ “India is one of the focus,  priority, strategic markets for Visa worldwide because of the sheer potential for hyper-growth. But many things have to be in place for us to realise the full potential”, group country manager Sandeep Ghosh told TOI. The biggest opportunity that Visa sees in India is to provide value-added payment services to businesses which are now increasingly moving to online platforms for transactions with suppliers and distributors.  The company is also working on enabling card payments using the existing QR code network for low-value payments.  The move comes even as it pushes for developing contactless or NFC-based payment systems.’

Some readers will be aware that India has instituted strict local data management requirements on payment networks, and has temporarily banned one of the major card schemes from issuing new accounts until compliance is fully approved. Visa is not currently under such constraints and is actively moving to create further opportunity in that market. As e-commerce grows across both C2B and B2B uses, the ability to create ease of acceptance in card-based payments becomes a major advantage. As readers have seen in China (and other markets), QR codes have been used to great advantage with the super apps and so that is a large preference into which Visa is moving.

‘According to Ghosh, contactless payments did get a boost during the pandemic, but card control regulations require contactless to be explicitly enabled by the cardholder. Despite having been launched in India six years ago, contactless payments in India are still at 16%.  Whereas globally in countries such as Singapore, Australia, the UK and Hong Kong, contactless transactions have moved to well over 85%, driven by the use of cards in public transport.  “We are working with partners to enable cards to be an option while scanning a QR code to make payments. This will enable them to use the card to make the payment directly without first using the card to load your wallet and make it a two-step process,” said Ghosh. Currently, credit cards can be used to make payments scanning Bharat QR codes.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Card Networks Expanding into Embedded B2B Use Cases appeared first on PaymentsJournal.

To build an e-commerce experience that will attract and retain B2B buyers, it is imperative that merchants make sure the experience dovetails with all sales channels and that they provide their customers with as much choice as possible at checkout. B2B sellers who offer more payment flexibility increase the probability of receiving a larger share of wallet from their buyers.  

One of the growing alternative payment options for consumers is Buy Now, Pay Later (BNPL), also known as trade credit, which is the original BNPL for businesses. Now, more than ever, B2B buyers are looking for the same type of efficient and convenient online transactions with payment terms. But while the original concept of BNPL is the same – purchasing with the intent to pay in installments or on credit – there are a few key differences in the business world. 

To learn more about the similarities and differences between BNPL for consumers and businesses, and why offering payment options is critical to meet B2B buyer expectations and open additional revenue options, PaymentsJournal sat down with Brandon Spear, CEO of TreviPay, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The current state of business BNPL 

Online B2B sales are here to stay. According to McKinsey, B2B businesses are no longer just testing the waters when it comes to their e-commerce offerings. 32% of respondents now rank e-commerce as the single most effective purchasing channel, compared with in-person transactions at 23%.  

More than one-third of manufacturers project growth of at least 25% in B2B e-commerce sales over 2021-2022, according to data in “The State of International E-Commerce in Manufacturing” report by e-commerce research and technology firms Copperberg, Intershop, and Evident.   

However, the introduction of BNPL into the B2B world is not a straight path. “As with a lot of new financial products and services, there’s a lag of some variable length before adoption expands into B2B,” said Murphy. There are multiple reasons: 

1. Lack of experience with B2B use cases among programming and entrepreneurial populations 

2. Extended B2B sales cycle times – for consumers these can be instant, but for businesses it can take months, if not years 

3. Increased risk that comes with greater size and scale compared to consumers 

“The common factor is complexity,” explained Murphy. “A B2B purchase is predominantly multi-step versus a consumer purchase, and business financial health is more difficult to assess for a business than a consumer.” If it is harder to gauge how reliably a business can pay off its loans, then it is harder to introduce a BNPL option. 

Complications for providing frictionless BNPL experiences to businesses 

The concept of BNPL is not exactly new in business, even if the BNPL label is. Trade credit has been used in business long before it had a name; it is the modern way for businesses to deal with IOUs. The classic trade credit example is known as “2/10 net 30,” meaning a buyer will receive a 2% discount on the net amount if they pay the invoice in full within the first 10 days of the invoice date, otherwise the buyer will owe the full amount in 30 days. BNPL is a simplified version of that arrangement, whereby you might pay 25% down and owe the rest over three months.  

“The next logical expansion area for BNPL is in small business, which is what we’re starting to see now,” noted Murphy, since small business might behave similarly to a single consumer. “As you move up in the business size into the middle market, where demand will be more vertically targeted, the experience will need to be flexible. It’s going to need to be mobile, and it’s going to need to be fast.” Suppliers will want to make the BNPL financing choice on the part of buyers an easy and frictionless one. 

The move to B2B adoption can be tricky, though. Businesses do not have a “credit score” to assure they are good for the loan the way consumers do, and gathering information is a much more sprawling process since there are so many individuals and components within businesses. “Increasingly common is this idea of business identity theft,” Spear added. “We’re seeing a very significant rise in businesses for bad actors to pretend to be either part of a real business or actually trying to take over the email addresses or hack elements of that company’s infrastructure to apply for lines of credit.” The increasing shift to e-commerce makes this type of fraud all the more common. 

Additionally, the sheer dollar magnitude of B2B purchases is materially different from that of consumers. “Obviously, the suppliers love it because the average order value is much higher than what they might typically see,” Spear pointed out. “But there’s a lot more inherent risk in trying to validate whether that’s a fraudulent application.” Multi-factor authentication (MFA) is much more challenging when there are multiple people who are authorized to make purchases on behalf of a company’s credit line. On top of that, the use cases are generally narrower, applicable mostly for capital purchases (e.g., computers in bulk) but unlikely to replace traditional trade credits.  

What BNPL implementation looks like for businesses 

Despite the inherent obstacles, there are solid ways to introduce BNPL into the B2B world. “There is access to more data than there ever has been in the past,” emphasized Spear. “More and more data repositories are accessible via APIs, which is one of the key things that has basically powered the rise of Buy Now, Pay Later for consumers… those sorts of interconnections exist and are available for a B2B-type transaction.” The infrastructure for such a transaction already existed for trade credits, and the process is not so different. Procurement might be one area of opportunity going forward. 

Executives exploring financing options will need to assess the viability of business BNPL. The fees tend to be 1.5-2x larger than with a credit card, so they will need to determine if the expected increase in order value is worth the cost. “The purchasing process has many different stakeholders,” added Spear. There is the person making the purchase, the subject matter expert, the budget controller; for a smaller business, these might all be the same person. “I would expect BNPL for business adoption to happen first in the SMB customer base,” Spear continued.  

As BNPL companies change, they will use market models to try to target new segments or customer use cases, and potentially uncover categories where BNPL fits well. “You have to do the analysis first and validate and confirm exactly which segments of your customer base you’re going to target this to,” clarified Spear. “Once you do that analysis, then there are really good technology choices and service providers that can help you execute against those strategies.” E-commerce setup, for example, is much easier than dealing with physical points-of-sale, so e-commerce tends to be prioritized.  

Finally, it will be worth watching interest rates over the next two years. “It’s going to be ‘prime rate plus’,” Murphy predicted. Paying in installments becomes a riskier venture when interest rates are higher. “The customer segment that’s likely to get squeezed the most is going to be the small business,” concluded Spear. “As a consequence of that, I think there’s going to be more and more demand from that category of buyer to have more choices, more optionality, and be able to spread the payments out more.” 

The post BNPL for B2B: Exploring Business Financing Options   appeared first on PaymentsJournal.

This posting in The Paypers is about what is mostly now a familiar topic, especially for those who follow the payments industry and financial operations in general. We have been covering the longer term trend in B2B payments now for many years, and that is directional towards digital processes in the cash cycle being interconnected. That longer term trend has been underway for more than a decade, but of course the onset of the pandemic (now almost 2.5 years) and policies that shut down businesses and industries for variable timeframes have resulted in many things poised to be further automated and more quickly, to overcome cash management issues. So the author goes through a list of things that are worth considering for this eventual transformation.

‘SMEs are changing how their payments operate. According to a 2020 Mastercard survey, 82% of SMEs surveyed had implemented a change in the way they receive and send payments, and 67% explained those changes were caused by the COVID-19 pandemic. Interviews led by EDC among large corporates also revealed the pandemic had a strong impact and acted as a catalyst to start new projects or accelerate existing projects related to digital B2B processes and payments for both AP (accounts payable) and AR (accounts receivable).

Overall, COVID-19 has accelerated the awareness towards digital B2B processes and payments, and it has created momentum to implement projects related to digital B2B.’ 

Part of the unfolding scenario is related to a more complete view of financial operations, which can be encapsulated with the term “payments” but involves a number of systems and processes that incorporate the full flow of cash cycle operations. This flow is increasingly being viewed as an interconnected operation that starts with a buying decision and ends with reconciliation, and then gets continuously replicated/enhanced through automation and latest gen tech tools (ML, etc). The author points out some of these so worth a quick review to keep you on top of where things are going.

‘B2B payment industry providers have tackled these issues over time, allowing the B2B value chain to be constantly reshaped by new technologies and ideas. For instance, it was estimated more than 80% of small US businesses were still manually processing and settling invoices by cheque in 2018. Companies could generate significant benefits by using digital processes, with automating invoice management reducing processing costs by 81%…

Each step of AP and AR done manually incurs high costs and significantly increases the risks of cyber fraud, human errors, delays, and overall inefficiency in the value chain. For instance, The Institute of Finance and Management quantified that the annual volume of losses from payments made to fraudsters because of business email compromises reached USD 3 billion in 2017.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post B2B Digitalization Trend: If You Don’t Know, Now You Know appeared first on PaymentsJournal.

This piece is posted in Finextra and announces a seed funding round for CoreChain Technologies, which we had mentioned on these pages last year (after a pre-seed round) as a Connecticut-based startup that uses blockchain to modernize payments processes. As most readers who follow our commentary about ongoing PR releases, the B2B payments space is in the midst of a generational transformation that has been fueling billions in VC, PE, M&A, and bank investment activity now for several years. The interest level picked up after the previous frenzy around consumer models migrated into the more complicated but massively larger corporate payment space. We would expect this overall investment trend will naturally flatten out as the multiple players either find clients or don’t. The overall FSI need for infrastructure overhaul will continue to be an opportunity for innovative and scalable models, but real-world success is fundamental, so those that show growth will continue to be around in ten years.

‘Since its launch in September 2020, CoreChain has processed over $1 billion in B2B payments for enterprise buyers, including channel customer transactions. In October 2021, the company announced a partnership with Scanco Software, the leader in warehouse, manufacturing and supply-chain management solutions for Sage, to co-develop an integration of the CoreChain payments network with Scanco’s software products.’

One of the things that we have been consistently pointing out in member research is the indirect value of digitalizing cash cycle systems and processes vis-à-vis utilizing captured transactional data for greater efficiency and effectiveness in tactical working capital decisions. This is one area in the CoreChain vision that fits directly into that area of opportunity for treasury operations across the corporate spectrum. 

‘“The Seed funding will allow us to greatly accelerate all areas of the business – from product development to sales and marketing – and continue to grow our payments volume,” said Chris Aguas, CoreChain Founder and CEO. “Our time is now as the opportunity is great. Supply chains and cash flows have been disrupted and access to working capital can be difficult to source. Streamlining modern payment and lending processes and adapting to the future of finance is more important than ever.”’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post CoreChain’s B2B Blockchain Payments Network Gets More Funding appeared first on PaymentsJournal.

This brief article is posted in Forbes and written by the CEO and co-founder of Extend, a New York-based fintech that provides a digital commercial card platform that is compatible with networks and issuer bases and designed to modernize payments management. The author discusses the growth of embedded payments in peoples’ personal lives through apps and e-commerce sites (this has a much deeper adoption rate in markets across APAC) and that a similar trend is developing in B2B payments, where banks could and should be playing a more prominent role.

‘There’s been an influx in financial technology solutions geared toward businesses of all sizes: neobanks offering modern finance solutions, expense management platforms focusing on seamless integrations and financial institutions racing to compete with fintechs focused on solving niche industry challenges…

However, when it comes to further streamlining internal, back-end payment processes, why shouldn’t a finance manager have the same level of efficiency in their business tools that they do in their consumer lives? Now, that might be a bit of an exaggeration considering the complexity of managing corporate finances compared to your personal spending—but there’s certainly room for improvement.’

We cover these sorts of trends, such as embedded payments, in ongoing member research and agree that such experiences are ripe for transformation. In the U.S., the open banking adoption trend is growing as non-regulatory, market-driven demands increase for easier experiences, and that includes not only employee travel, but across CFO, treasury, and FP&A. So, the general lagging bank infrastructure capabilities for modern payment experiences need to be augmented by collaboration with more flexible and agile fintech development cycles, and that comes with embracing further cloud delivery options and API integration. Readers will see increasing examples of BaaS and PaaS models on a weekly basis, which continues to pick up steam as a necessary evolution in corporate banking.

‘For banks, the opportunity isn’t to partner with every fintech, but rather to build an ecosystem conducive to collaboration. Creating flexible APIs for clients and third parties to easily access as many of your services as possible means banks don’t have to build and market every new solution or user experience, but anyone looking to build a custom payment solution can do so with the institution. Exposing APIs might sound the compliance alarms, but this is where those strategic fintech partnerships can come into play. Look for a partner to serve as an aggregator or gateway to your services and that can mitigate your onboarding efforts and associated risk concerns…

The embedded payments industry is growing at a rapid pace, with revenues expected to grow from $43 billion in 2021 to $138 billion in 2026. As financial institutions are rethinking legacy systems and focusing on digital transformation, we’re seeing a broader range of embedded payment technologies becoming available to organizations of all sizes, opening the door for banks to offer new digital products to the small- and mid-market, as well as the enterprise.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Embedded Payments Are Growing in the B2B Space appeared first on PaymentsJournal.

This piece is posted in Finextra and announces a partnership between National Institutional Facilitation Technologies, a bank-led organization and the foremost payments operator in Pakistan, and the 2019 Silicon Valley startup M10 Networks, which provides a platform for digital currency management. Pakistan is catching up to the modernization trend, and in some ways this effort is similar to their neighbor India’s efforts over the past decade to further digitize commerce across the national spectrum. This is a B2B effort and recognizes the growing potential influence of cryptos (especially CBDCs and stablecoins) in trade preferences during the 5-10 year coming window.

‘The partnership between M10 and NIFT was developed in response to the 2021 overhaul of tax laws by Pakistan’s Federal Board of Revenue, which requires companies to make digital payments for expenditures of more than Rs250,000…

Under the agreement, NIFT will act as the local operator of the M10 platform and use the M10 shared hierarchical ledger and digital authorisation technology to authorize digital payments. NIFT will settle digital payments using its existing settlement mechanisms and in compliance with local regulations. Subject to regulatory approval, M10 and NIFT will work together, along with nine local participating banks, to enable the authorization of commercial payments between commercial entities in Pakistan.’

While we have not received a briefing and thus have no real details as to the underlying tenor, etc., the M10 platform is a CBDC and stablecoin enabler, and as far as we can tell is not promoting its own digital coin (we don’t know how or whether there is any connection with global football star Mesut Ozil). The effort is at this point is perhaps similar to other distributed ledger networks, which have been to some extent fueling innovation in cross-border transactions.

‘“M10’s turnkey solution offers central banks and participating commercial banks everywhere the ability to quickly realize the benefits of digital payments in full compliance with today’s regulation and without disruption to their conventional systems,” says Marten Nelson, CEO and Co-founder, M10 Networks. “Our shared, hierarchical ledger technology supports secure, low-cost B2B and cross-border payments and can process up to one million transactions per second. With NIFT acting as a local operator, the M10 platform will contribute significantly to the modernization of Pakistan’s payment infrastructure and enable participating local banks to easily comply with the country’s new tax regulations.”’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post NIFT and M10 Partner on B2B Payments Automation appeared first on PaymentsJournal.

This piece is in Tech Crunch and the focus is on the expanding players in spend management, which can be applied more broadly across corporate procurement, but is also often associated with card-related spend programs for T&E as well as the growing e-commerce space. Most readers will have picked up on the huge global B2B expenditures for goods and services, widely estimated to be over $100 trillion based on domestic and international trade values. We recently released member research on the card spend management space, where modern experiences are increasingly in demand. The author goes through a few of the recent developments.

‘If it feels like we’ve been over-indexing on expense/spend management news, it’s because there has just been so darn much of it….

Last week, I covered Brex’s big push into software, which means that its revenue generation will be more diversified as it will now be making money off of interchange fees and recurring revenue from subscriptions to its software. It also said it is placing greater emphasis on moving upmarket to serve larger customers…

As evidence of that, Brex revealed that DoorDash — a $36 billion in market cap company — was one of the first customers who’d taken a bet on its new spend management software product, Empower…

Coincidentally, the same day, Emburse — a nearly $200 million-in-ARR expense software company — announced it was doing the exact opposite. That company said it is making a big push into the SMB space and going head-to-head with fast-growing startups like Brex and Ramp…

The number of players in this space just keeps expanding, and one founder I spoke with — Zact CEO John Thomas — considers the sheer size of the B2B payments space to be the driving factor. The market is $25 trillion in the U.S. alone, with corporate cards making up 4%, or $1 trillion, of that total.’

The author goes on to discuss other various new entrants in the space, as well as the expansion into mid-market form the typical startup concentration on small businesses. To an extent, both have been underserved by traditional players, but that is changing as more fintechs wake up to the size of the revenue pool in the middle market firms and increase their capabilities for API-based integration with existing accounting and other critical internal systems, allowing interaction with broader spending channels. Many names are mentioned in the piece, but there are also lots of existing players in place, although many will have been more traditionally focused on larger market, so we’ll see where this goes.

‘While most of the players I talk to claim this is not a winner-takes-all space, it sure does feel like there is a lot of mud-slinging going on…

Meanwhile, London.-based Capital on Tap — a company that describes itself as a competitor to Ramp — told me that it has closed on a $200 million funding facility so that it can continue to fund SMBs. It has opened a new office in Atlanta to fuel its “explosive” U.S. growth. Capital on Tap says it has provided access to more than $5 billion of funding for more than 125,000 small and medium businesses across the U.S. and U.K…

So, let’s add one more to the list. Or shall I say, ring.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Spend Management Attracts Growing Attention appeared first on PaymentsJournal.

Payments are transactional by nature. The industry operates in close proximity to the process of money changing hands, requiring at least two parties. All businesses, whether in the payments industry or not, exist necessarily within a network of customers, collaborators, and competitors. All that is to say: no payments firm can exist in a vacuum, and it is neither desirable nor practical to develop business operations in a silo.

Nevertheless, there are payments firms – particularly those with an emphasis on Fintech – that may believe developing back-office architecture in-house offers a simpler and cheaper solution that is more attuned to their firm’s specific needs. But that is not always the case; one need only reexamine the interdependence of payments themselves to see that there is value in seeking outside support.

To learn more about how payments firms should rethink their back-office architecture, and how vendor partnerships can help build better reconciliation systems, PaymentsJournal sat down with Marc McCarthy, SVP of Sales and Reconciliations SME at AutoRek, and Steve Murphy, Director of Commercial and Enterprise Payments at Mercator Advisory Group.

They discussed key topics, such as:

The back-end fallacy

The payments process is at the heart of payment firms’ platforms. Part of the payments process is ensuring that payments have been transacted properly and that settlement takes place correctly. These are often referred to as “middle / back-office” functions, occurring behind the scenes and out of the sight of customers. In a non-payments industry, these accounting functions are generally deprioritized because they are not viewed as “core” to the business – but that is a fallacious stance to take.

As companies grow, business functions naturally separate out and become fragmented. “Back-office functions are seen as perfunctory, and therefore less attention is paid to them,” said McCarthy. “As time moves on, companies will obviously react to the pressures from their customer base, and more often than not, that is front-end rather than back-end focused. So, what we see is a mixture of capabilities for middle and back-office.”

Therein lies the issue. Conventional wisdom might seem to say that the best way to execute one’s business vision is to rely on a single team of engineers to build operations from end-to-end. This would include both back-end and front-facing operations. But solutions that are originally developed in-house are not necessarily designed to support the complexity of business growth, and this leads to manual workarounds for outdated systems, which in turn increases operational risk.

Life moves fast in the digital world

There is an old idiom that goes: If you want something done right, do it yourself. This individualist creed, while comforting to the self-confident and nitpicky alike, does not hold water when it comes to running a business. “Of course, every business specializes in their own niches,” explained McCarthy. “Therefore, it is a knee jerk reaction to say, I understand my base best, so I’ll build everything out from my own viewpoint.” The reality is that life tends to explode quickly, especially in the payments space, and any kind of sudden and massive expansion is bound to overwhelm companies.

Moreover, certain back-office business functions are similar across multiple industries. Vendors and consultancies exist for this very reason: to offer deep expertise in a specific area of business that is widely applicable across different fields. Companies should expend in-house time and energy on functions that are unique to business functions which are typically customer-facing. After all, it doesn’t make sense for a company to get bogged down in back-office problems that are easily outsourceable to a reliable expert vendor.

“I’m really surprised that so many companies are attempting to build in-house, given the solutions that are available [and the digitalization that has occurred over the last four to five years],” Murphy remarked. Whether out of ignorance or ego, there will always be proprietary companies that want to build everything themselves.

McCarthy offered an analogy: “Volvo has had their own proprietary voice activation software for years. But they’ve just now come to the realization that major companies like Google have much better voice recognition software than they as a car company will ever be able to build.” To avoid diverting attention from the core product, the smart move is to accept outside help.

Why back office architecture is a problem for payments firms right now

If we’ve said it once, we’ve said it a hundred times, and we will likely keep saying it: the world is undergoing an absolute explosion of payments at the moment. Embedded payments, IoT payments, micropayments, P2P payments, and more payment types are all increasing. “The proliferation of payment processing means that scalability becomes an increasingly important factor,” McCarthy pointed out. “And with scalability comes then the need for maintenance.”

There are three areas of risk for payment processors that payments firms should watch out for:

1. Higher volumes have highlighted some of the underlying limitations of the in-house builds. If, say, less than 1% of transactions require a team to resolve some exception, and the total transaction volume reaches the tens of millions, unnecessary teams might be built that could be better served by technology that intelligently interprets or routs  issues.
2. Payments are now more global than ever, resulting in scenarios that include multiple currencies, a spread of banks, and local payment laws that need to be observed. There will be a need for greater regulation around data transparency, data protection, data control, chargebacks, settlement risk, and more.
3. The U.S. government has realized that the current fragmented state regulation of Fintechs is no longer fit for purpose and that federal regulations are required.
   1. There has been only minor movement so far, with the SEC interacting with European regulators to learn best practices. The U.K. Financial Conduct Authority (FCA), for example, uses a sandbox where Fintechs can test products against regulations, both so regulators understand the technology and companies can be reassured their ideas won’t face regulatory friction.

Beneficial differences of engaging with vendors

At bottom, the reason to utilize vendors is the flexibility and expertise they can bring. There is a big difference between something that is built in-house at a single point in time and is inflexible to accommodate changes, and something that has been consistently built and upgrade over decades of collaboration with other financial organizations. “More often than not, it doesn’t matter if a vendor has worked in investment management, or in banking, or insurance – the problems are still the same,” McCarthy clarified. No matter where they go, vendors can bring best in breed products and services,  often at a lower cost than one might expect.

High quality and malleability are also crucial assets, particularly because things can change very quickly in reconciliations. . If a data vendor makes a change to the format of a company’s bank statement, that company is not going to want to wait for an engineer to come and reprogram the back-office architecture to process new information. “What you want is a piece of software where you can very, very quickly make changes yourself,” McCarthy emphasized. Vendors can provide that kind of best-in-class software. “It is essentially to have the ability to react quickly to changes as and when they occur with the right level of expertise and confidence,” McCarthy continued, “and to make sure that those risks are mitigated as quickly as possible.”

One final key differentiator is that vendors are highly competitive with each other. “We all want to be at the forefront of innovation in these spaces,” said McCarthy. While payments firms are certainly going to compete with each other for customers’ business, that competition is around front-facing customer experience. For vendors, back-office architecture is their customer experience, so that is where vendors will devote time and energy.

Overall, the key is to be partnered to the vendor, rather than just a customer. “This allows for a good communication flow and ensures a better understanding of the data model,” McCarthy concluded. “It is hugely important to ensure that you pick the right vendor that is really going to tick all the boxes.” This is the best way to reduce manual in-house effort and increase streamlined automation for reconciliation and other back-office processes.

The post Rethinking Back Office Architecture appeared first on PaymentsJournal.

As consumers flock to digital and P2P payment methods, the need for more robust messaging has come to the forefront. The top-line messaging standard for electronic data interchange (EDI), ISO 20022, describes and transmits information about financial services and includes both a metadata repository and a maintenance process for the repository content. If the previous sentence dried your eyes up just a little, you might wonder: What is all the fuss around a messaging standard? 

To learn more about what ISO 20022 actually is, what it does, why companies are implementing it, and how it is being used, PaymentsJournal sat down with Jack Baldwin, Chairman of BHMI, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group. 

Powerful design: the exacting detail of data enrichment 

“The primary power of the specification is attributable, at least in part, to how it was designed,” Baldwin began. There are around 21 different domains of business processes specified in the ISO 20022 standard, along with the messaging and data necessary to support the different processes. Not all financial business services have the same profiles, however. Fee collection has a different profile than foreign exchange trade, which has a different profile than securities clearing, or card administration, or ATM management. Moreover, within each of those categories are subsections and each require the transmission of different information.  

The messaging standard manages all aspects of payments messaging at a granular level. “ISO 20022 messaging includes additional detail to help remove ambiguity from the interpretation and processing of these messages,” Baldwin explained. “This is basically referred to as data enrichment.” Whether you are dealing with reconciliation, settlement, money laundering, or fraud detection, the extra attributes included in the ISO 20022 messaging standard improve processing transparency and help to dramatically reduce potential issues with the payment experience.  

This sharply contrasts with the experience of using an older standard such as ISO 8583, a popular transaction protocol that has been used for decades. The operative difference lies in how much information the data field can support. “Because of the [ISO 8583] standard, there will be data that [transaction partners] want to transmit, but there’s not really a data field to support it,” clarified Baldwin. Instead, two parties might work out an arrangement between them and use a different unused data field that can support the amount of information. Skirting the protocol to accommodate extra data leads to a cascading set of problems, such as needing to adjust for every new communication and constantly swapping out data fields as needed. “[ISO 20022] obviates the necessity of trying to override or misuse the protocol,” said Baldwin. 

ISO 20022 – past, present, and future 

The first iteration was published in 2004, and the second edition in 2013, which is the version now seeing widespread use. “The initiatives around ISO 20022 sort of coincide with real-time payment systems,” explained Murphy. “That’s really taken off in the last 6-7 years.” There are approximately 60 real-time payment systems across the globe, including recent implementations in Canada, Peru, Indonesia, Colombia, New Zealand, Singapore, Thailand, and more. ISO 20022 is the de facto standard for all of them. 

Other high-profile use cases include: 

• SWIFT – Conversion to ISO 20022 is expected by 2024 for all cross-border and B2B payment messaging, including partnerships with EBA CLEARING and The Clearing House (TCH). 
• EBA CLEARING – Migration to ISO 20022 is underway with a current deadline of November 2022. 
• The Clearing House (TCH) – Real-Time Payments (RTP) network and CHIPS clearing system are both en route to use ISO 20022 by mid-2022. 
• U.K. Faster Payments Service (FPS) – Moving to ISO 20022 by April 2023.  
• P27 Nordic – Cross-border payments for the Nordic regions already operate on ISO 20022. 

• Bank of International Settlements (BIS) – Project Nexus cross-border payments will operate on ISO 20022 standard. 
• Fedwire – One of two real-time gross settlement (RTGS) or wire systems, along with CHIPS, that plan to convert to ISO 20022 in the next several years. 
• FedNow – Proposed to be operational in 2023, and will also use ISO 20022 specifications. 
• Cuscal – Australian payments solution company uses The New Payments Platform (NPP), which has run on ISO 20022 since 2018, with support from BHMI. 
• PayShop – Portugal-based payments institution has used ISO 20022 since last July with support from BHMI. 

There are obvious benefits for this kind of harmonization in B2B, B2C, and P2P payments. “There really isn’t any recently developed financial services network that is not based on ISO 20022,” Baldwin summarized. The BHMI Concourse financial software suite acts as a comprehensive back-office module that, among other offerings that modernize electronic payment transactions, aligns companies with the ISO 20022 standard. 

Begin the adoption process now! 

The writing is on the wall: everyone is moving towards ISO 20022. This is easier said than done, however. In a perfect world, older financial service networks would have legacy carryover, but this does not necessarily happen. Old protocols have what Baldwin refers to as “logical tentacles” that stretch into other areas of the application set. “There is really no clear separation or delineation between internal and external data,” Baldwin pointed out. “This complicates adopting something like ISO 20022 as a standard.” 

The good news is that it is designed to functionally support old data messaging standards, while still adding the extra attributes that resolve any potential ambiguity lurking in the contents of the data. The only drawback is that while integrating ISO 20022, any older messaging standard in use may not maintain the enriched data offered by the new standard, so until the switch is complete, there may be an interim period with some limitations. “The advice I would give is to implement ISO 20022 from the get-go,” Baldwin concluded. 

The post What’s All the Excitement around ISO 20022?  appeared first on PaymentsJournal.

Every corner of the payments industry is undergoing significant technological advancement. Ironically, one key back-office area that is often overlooked is the role of treasury management. With just over a month left in Q1 2022, now is the ideal time to assess treasury and payment technology trends and plan for the future. 

To learn more about the strategic role of treasury, top treasury priorities and challenges, and the role that technology will play in delivering treasury success in 2022, PaymentsJournal sat down with Jon Paquette, VP of Solutions at TIS, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group. 

Where treasury has been and where it is going 

“Treasury has traditionally been a specialized and lightly resourced area of the Chief Financial Office within corporate structures,” Murphy explained. However, after the Great Recession of 2008-2009 – and catalyzed further by the COVID-19 pandemic – financial processes have been moving towards digitalization, with new technology evolving specifically on the workstation side. To that end, TIS recently conducted a survey to gain insight into current treasury management trends. 

First and foremost, Paquette noted that 80% of survey respondents indicated an expectation of increased responsibilities. “The survey results were across multiple departments,” Paquette mentioned. “Treasury, FP&A [financial planning and analysis] accounting, and accounts payable all responded, but actually it was treasury who responded the most favorably to having increased responsibilities next year.” Moreover, about 50% expected professional development opportunities to increase, and 75% planned to upgrade technology in their department. 

Putting payments technology in the right places 

The specifics of what payments technology upgrades were desired, and how and why the tech would be used, varied between small and midsize vs. enterprise organizations. “For small companies, we saw a big focus on the desired impact of their technology investments around process automation within treasury and also cash forecasting,” Paquette pointed out, emphasizing how most respondents were also bullish on the role of AI. “If you flip that and look at enterprise organizations,” Paquette continued, “the main trend was that most companies have a big focus on data.” Bigger organizations are looking to extract more insight from their data, avoid data lakes, and use their data for machine learning and pattern recognition to bolster fraud detection. 

While many of the survey results made perfect sense, such as 75% of respondents planning to use bank APIs in 2022, other findings were more surprising. “About 50% indicated they wanted to take advantage of real-time payments,” said Paquette, “which I thought was on the higher side. And even 15% of respondents indicated some interest in cryptocurrencies.” Conversely, only about 5% of survey respondents showed interest in improving account validation services, which seemed very low to Paquette given the potential benefits, and which did not align with the day-to-day conversations TIS had been having with treasurers.  

Strong payments technology and treasury concerns: risk mitigation and cash management 

Behind data management, the TIS survey showed the top desired impact of technology was in the realm of risk mitigation. In particular, the biggest efforts organizations were looking to put in place were 1) eliminating manual payments, and 2) revamping training programs. “AI will play a big role in driving those solutions in 2022,” Paquette clarified. “Although eliminating manual payments seems like an at least conceptually simple idea, the reality behind it means basically broad adoption of straight through processing, right across your entire organization.” That includes managing back connectivity, file formats, global payments, ERP connectivity, and more. 

Cash management appeared as the number one most important skills upgrade for small and mid-sized companies, with 41% of respondents indicating as much. “It seems to be very market-driven,” noted Paquette. “It’s not the fintechs. It’s not the banks telling corporates they have to do this. It’s the corporates telling us that they want to manage things more real-time.” One potential explanation for this trend is that the unpredictability introduced during the pandemic accelerated the desire for real-time cash management, especially due to supply chain issues and other COVID-related slowdowns. 

Other trends – eBAM, crypto, and APIs 

An interesting result from the TIS survey involved electronic bank account management, or eBAM: it was the bottom priority for most organizations. “[eBAM] came in dead last amongst emerging technology adoptions for 2022,” said Paquette. “It even came behind cryptocurrency.”  

Widespread adoption of eBAM technology seems to be hindered by the market expectation that automated workflows around opening and closing bank accounts won’t catch on. “There’s been various iterations of [eBAM] that have been introduced over time,” Paquette explained, “and nothing has ever gained full adoption amongst all the players that would need to adopt it within the industry.” APIs, on the other hand, are on the rise, and while API technology could be used to solve some of the eBAM challenges, Paquette suspects it won’t happen this year. “I wouldn’t rule out eBAM permanently,” he clarified.  

Corporates who want to adopt APIs for other uses will have to make several key decisions. “With functionality vs. standardization vs. institutional costs of adopting APIs, there’s still quite a bit of variability between the API capabilities between most banks,” noted Paquette. Still, banks are clearly moving towards an American-style open banking. “A lot of banks are offering [APIs] for free right now,” Paquette pointed out. “What does that tell you? Banks never offer anything for free… the market is pushing everything in this direction very fast.” 

Regarding cryptocurrency, Paquette views it as a win that treasurers are even marginally open to its adoption. “Crypto probably doesn’t make sense in most organizations,” Paquette said, “but it seems like for some of the use cases around global payments, crypto is a settlement currency.” Using cryptocurrency can potentially accelerate the settlement of foreign exchange transactions, though those use cases have not been made concrete as of yet. Overall, there has been so much volatility due to the pandemic that it can be hard to gauge which technologies are practical or desirable in the long-term. “That’s a good question,” concluded Paquette. “Are organizations really in a good place to take advantage of this technology?” 

The post Treasury and Payment Technology Trends in 2022  appeared first on PaymentsJournal.

BOULDER, Colo., February 16, 2022 —Tilled, the leading PayFac-as-a-Service provider, announced today the close of an $11 million Series A extension, led by G Squared, with participation from existing investors Peterson Ventures and Abstract Ventures. In addition to a new infusion of capital, Tilled has also launched omnichannel payments, offering a more complete solution to enterprise-level customers. The new funds, which follow a $11 million Series A in May 2021, will allow Tilled to continue its aggressive growth trajectory, investing in top-tier talent to fuel the development and rollout of new products and services. 

“PayFac-as-a-Service is transforming the payments landscape for the better. With this Series A extension, Tilled will continue to move fast to ensure no software company has to choose between modern technology and competitive economics when looking for a payments partner for their business,” says Caleb Avery, founder and CEO of Tilled. “In just over six months, we doubled our funding, nearly tripled our valuation, quadrupled our team, and launched core products such as omnichannel payments. Looking ahead, I’m proud to add G Squared to the Tilled investor team. With their support, we can aggressively tackle our ambitious roadmap ahead.”

“Tilled’s innovative, turn-key solution is designed to allow its partners to own more of the value chain, deliver margin improvement, and create a new revenue stream,” said Larry Aschebrook, Founder & Managing Partner of G Squared. “The platform’s economic benefit is enhanced by its outstanding customer experience and full omnichannel product suite, a combination that has driven exceptional interest from leading ISVs. We are delighted to support Tilled in this Series A extension as the company accelerates its growth.”

New Functionality and Features: Introducing Omnichannel

Omnichannel payments, Tilled’s newest functionality, enables independent software vendors (ISVs) to now process card-present transactions, in addition to card-not-present, and accept a wider range of payment forms. While card-not-present transactions have increased over the last two years, the vast majority of transactions still take place in a card-present environment. 

For ISVs that previously hadn’t had omnichannel payments capabilities, their merchants were forced to find another solution, ultimately leaving a substantial amount of money on the table. Now, with Tilled’s omnichannel payments functionality, ISVs can capture revenue from both card-present and card-not-present transactions. This new functionality means ISVs can offer their merchants a complete solution for their payments needs.

Building a World-Class Team

Since May 2021, when Tilled raised a Series A, the team has more than quadrupled to more than 50 today. Tilled was recently named one of Built In Colorado’s 100 Best Places to Work, as well as one of the top 10 best paying companies in the state. With the new funding, Tilled plans to more than triple the size of the current team by the end of 2022. 

Tilled is hiring across all departments including sales, marketing, engineering, implementation, and customer support. Searches are being conducted both locally in Boulder and nationwide searches for the best candidates. Offering flexible work options that take team members’ lifestyles and work preferences into account, Tilled has invested in a 26,000 square-foot office space near Boulder for team members to gather in, while supporting those who prefer to work-from-home.

“At Tilled, we take pride in our culture of accountability, fairness, transparency, and collaboration. There are endless opportunities for candidates to grow and perform, with supportive leadership who know that creating an environment where everyone feels included and important is key to our success,” said Tim Meurer, Tilled’s director of talent. “At the same time, while we take our product seriously, we don’t take ourselves too seriously. We are changing the payments landscape for the better, and we’re having fun while we do it.”

To find out more about how Tilled is revolutionizing payments for software companies with PayFac-as-a-Service, visit our website at www.tilled.com. To see open positions and apply, visit our Careers page. For all the latest, and more than a few dad jokes, follow us on LinkedIn. 

About Tilled
Tilled empowers ISVs to monetize the payments flowing through their platforms. Through Modern APIs and SDKs, Tilled’s turnkey system allows software companies to be set up and running in a matter of weeks, with no upfront costs or additional headcount required. Without any of the headaches, regulatory compliance, or liabilities of becoming a fully registered facilitator, Tilled makes it easy for any software company to take full advantage of the benefits of payment facilitation. Tilled was founded in 2019 by Caleb Avery and is currently based in Boulder, Colorado. For more information, including pricing, contact information, and careers, visit www.tilled.com.

The post Tilled Expands PayFac-as-a-Service Innovation with New Capital and Capabilities appeared first on PaymentsJournal.

This release in the Valdosta Daily Times speaks to the latest acquisition by Billtrust, the New Jersey Payments automation firm that went public in early 2021 via the SPAC path. One of the main goals at the time was to use the new capital for expansion. In this case, the expansion is into Europe by acquiring Netherlands-based Order2Cash, a cash cycle automation firm. There is no information posted about the size of the deal.

‘For over 20 years, each company has pursued a similar vision to streamline and accelerate B2B payments for its customers. Now, those customers will gain access to a broader platform of SaaS modules and a global B2B payments network at a time when it is critical to digitally transform accounts receivable to maximize cash flow. Order2Cash’s enterprise customer base, global interoperability capabilities and established connections to over 70 B2B and B2G e-invoicing networks will broaden BPN’s reach to deliver fully compliant and secure e-invoicing across multiple markets. As an open network supporting buyers and suppliers, allowing both accounts payable and accounts receivable platforms to exchange invoices, payments and remittance data, BPN delivers invoices to over 170 leading accounts payable (AP) portals.’

Billtrust had been building a steady inflow of clients for about 15 years and began to develop some momentum with their Business Payments Network with Visa back in 2018. Then the pandemic hit and the value of digitization jumped and these payments automation fintechs with solid client bases took off in terms of new volumes, while the SPAC idea provided a good way to hit the stock market during this critical momentum swing.  

‘“On behalf of our Order2Cash team, we are pleased and excited to combine with Billtrust, a true industry leader and innovator,” said Frank Hoekstra, CEO, Order2Cash. “Since 2000, we have worked to make the digital transformation of AR fast and simple while streamlining B2B invoicing and payments. Billtrust brings us an exciting opportunity to leverage our joint commercial and industry experience and offer all customers greater access to a global marketplace. Our coming together ensures that we can continue to provide the speed and quality of service needed to operate in today’s digital landscape.”…

The Order2Cash team will continue to operate from Netherlands locations in Amsterdam and Joure, as well as offices in Krakow, Poland and New York City, USA.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Billtrust Acquires Dutch Financial Platform Provider Order2Cash appeared first on PaymentsJournal.

Following a significant period of consolidation within fintech, Global Payments is looking for efficiencies by focusing on its B2B sector and seeking to offload the consumer portions of its Netspend prepaid card division. Netspend was acquired by TSYS prior to the merger of TSYS and Global Payments in 2019. The move provides strategic clarity for Global Payments as highlighted in Barron’s. 

Jeff Sloan, Global Payments’ CEO, said the company is seeking to refine its portfolio and focus on its core corporate customers, which include merchants, financial institutions, software partners, and technology leaders. “As part of that initiative, we have commenced a strategic review of our Netspend consumer business to sharpen our focus on our B2B assets,” he said in prepared remarks. The consumer business has a favorable profile, but its customer base doesn’t overlap much with Global Payments’ traditional clients, he said. 

Netspend operates within Global Payments’ business and consumer solutions department, which reported flat operating income results for 4^th quarter 2021 as compared to growth of 14.7% across the entire organization. The move could also be a harbinger of additional moves in the industry, with Barron’s also reporting that NCR is considering strategic changes to benefit shareholder return. 

Overview by Jordan Hirschfield, Director of Research at Mercator Advisory Group

The post Global Payments Looking to Sell Netspend Consumer Business appeared first on PaymentsJournal.

The beginning of a new year is often a time to reflect on past accomplishments and set goals for what’s to come. This is true in people’s personal lives and within the world of business. Recognizing this, DadeSystems took time in 2021 to speak with hundreds of leaders in accounts receivable, credit, and finance about the challenges they have faced and how they plan to address them. A clear theme emerged from these conversations: technology and digitization are more imperative than ever before. 

To learn more about why accounts receivable automation is poised to thrive in 2022, PaymentsJournal sat down with Brian Greehan, Chief Revenue Officer of DadeSystems, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group. 

Cash flow is a top concern for business leaders  

Access to capital is not a “nice-to-have” for businesses: it is essential. The PwC U.S. CFO Pulse Survey conducted in June 2020 found that 66% of senior financial executives reported that cash flow is among their top three business concerns.   

Through his work at DadeSystems, which offers a suite of integrated AR automation solutions, Greehan has seen firsthand how seriously organizations are taking cash flow. “We recently contracted with a new customer, a multi-billion dollar food distributor. We’d been selected as the vendor of choice and then waited weeks–months–for the CIO to sign the contract. I asked procurement why the CIO had to be the signer [as] he seemed pretty high up and he told me that cash flow efficiency is absolutely mission critical to the entire organization,” he explained. 

This cash flow emphasis is apparent among DadeSystems’ food distribution, lumber distribution, law firm, and other types of clients. The prioritization of cash flow “is really kind of universal, both in terms of vertical [and] industry as well as organization size,” he added.  

Late payments contribute to cash flow concerns 

One of the driving factors behind businesses’ cash flow concerns is the rising prevalence of suppliers not paying them on time. In fact, the same PwC study referenced above found that 59% of business executives reported an increase in average days late for payments.  

“Some companies are paying late because they need to, some because they can, and others because they haven’t automated their payables effectively. But mostly, I think it’s the uncertainty and disruption of overall commerce. While the job market is extremely tight and the stock market is up, it is still safe to say we’re not in a normal economy,” said Greehan.  

It is common for small businesses to rely on manual accounts payable processes such as physically writing and addressing checks to their distributors. But some businesses lack the personnel necessary to do so efficiently. For example, businesses depending on a small team of accounts payable employees may fall behind on making payments if members of that team call out sick or go on vacation. Automating accounts receivable wherever possible allows suppliers to mitigate the impact of these delays by enabling them to apply cash as quickly as it comes in.  

Managing cash flow and B2B payments in 2022 

In the past few years, there has been an enormous amount of investment and innovation around business-to-business (B2B) payments. “You have real-time payments, you have virtual cards, checks, wires, ACH, direct debit, and now there’s crypto. You see portals popping up all over the place in businesses that are smart and want to be flexible for their customers to make payments,” said Greehan.  

At the same time, suppliers need to be vigilant to control the cost associated with offering additional payment types. For starters, each payment type has its own remittance. “The matching exercise with these different payment types and these different remittance types is really complex and tedious,” he added.  

To illustrate his point, Greehan gave real-life examples. He highlighted the manual accounts receivable processes seen at a global shipping company that relies on a team of around twenty employees in Central America to match payments with remittances daily. Due to of employee turnover, ongoing training is needed to keep the team operating smoothly.   

Another company, this time a logistics company in the United States, relies on thirteen full-time employees managing cash applications and is struggling to fill the remaining two openings on the team. “They’re spending more than a million dollars a year on personnel costs for manual exercise, of which 90% could be automated at a much lower cost,” he explained.  

Digitizing AR has other efficiency benefits as well. “As companies digitize their payables and receivables process and series of processes, they have all sorts of data flowing through these systems. Now that data can be used for greater effectiveness throughout the cash cycle process,” noted Murphy.  

Accounts receivable automation is within reach 

Inefficiencies in accounts receivable processes have been apparent for some time. COVID-19 increased the urgency to address them. But many businesses still have not made the move to automation, with 75% of businesses still applying cash manually.  

“Over the last couple of years, there has probably been more focus and investment on the payables side of the coin driven by banks and overall economics. But as we sit in 2022, I think it is receivables’ time to shine,” said Greehan. “We’re talking to hundreds of businesses that are ready, and not just ready, but budgeting to tackle receivables automation this year.”  

The adoption of new receivables technology faces two major obstacles: the lack of resources and knowledge to implement it, and the difficulty in creating a return on investment (ROI) model. DadeSystems helps companies overcome these obstacles with its suite of integrated AR automation solutions. 

“The good news is if you look at  receivables automation relative to other IT or finance projects, this is an easy one. This is not a complex, multi-year ERP migration where your IT team needs to stop everything else and dive in. This is a relatively quick contract, six-week implementation, [and] in-quarter ROI,” concluded Greehan. 

The post Accounts Receivable Automation: A Resolution Businesses Can Keep in 2022  appeared first on PaymentsJournal.

This release at Cision PR Newswire is a summary of the new report from the Association for Financial Professionals (AFP) called the Payments Cost Benchmarking Survey, the last version of which was released in 2015. The new report should provide a decent contrast given the lapsed time of six years, and would be in the B2B space, which is where AFP concentrates their research. The survey was conducted in September 2021, so the data is quite recent. One of the key questions anyone might have is what has happened with check usage and/or costs, particularly given the two+ years of pandemic-driven digitization. Members of AFP can download the full results, but the high-level summary indicates that check usage, though still widely in use, has gone down.

‘Financial professionals are processing fewer checks; currently the median volume of checks processed is 500-999 per month compared to the 1000-1999 reported in 2015.Survey findings reveal median volume of ACH transactions have doubled in the last six years (1,000-1,999 per month versus 500-999). Median costs to issue and receive paper checks remain unchanged since 2015 at $2-$4 and $1-$2 per check respectively, while costs to initiate and receive ACH transactions are far less at $0.26-$0.50 per transaction.’

The summary article also states that the cost of processing checks remains relatively high versus electronic payment types. There are also a couple of new data points in this survey, including real-time payments, which did not exist in the U.S. market in 2015. Again, one would need to get access to the full report to see these data points.

‘”The findings of this survey confirm that paper checks to continue to be considerably more expensive than some electronic payment methods.” said Jim Kaitz, president and CEO of AFP. “As the coronavirus pandemic unfolded, companies sought more streamlined and efficient payments processes, which accelerated the transition to digital payments. It will be interesting to see how payment types evolve as the pandemic continues and new real-time payment rails become more established.”’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post AFP B2B Survey: Checks Decline, New Data for Real-Time Payments appeared first on PaymentsJournal.

Banks, which have existed for centuries, have long dominated in the business payments and treasury space. With little competition, they have not been pushed to evolve beyond their traditional money moving role. Thanks to the emergence of fintechs, that is now changing. In recent years, fintechs have sprung up to challenge the longstanding role of banks as the primary processor of business payments. Armed with cutting-edge technology and innovative services, fintechs are fundamentally changing the payments space.

Bank commercial card programs are missing the mark

A key difference between banks and fintechs is the way they view payments. Broadly speaking, many legacy banks view payments as a product to be sold. Fintechs, on the other hand, view payments as a process that can and should be optimized. To fintechs, this perspective means combining financial technology with service to move both money and data.

“An overlooked benefit of automated processes is the capture of data in a digital format, which then allows for the more optimal use of latest generation technology like AI to further improve results,” said Steve Murphy, Director of Commercial and Enterprise Payments Advisory Group.

Banks’ tendency to view payments as a product can cause them to fail to address business payments as a holistic process. This is evident in commercial card sales pitches, which often focus exclusively on rebates, sign-on offers, and other upfront perks that help them close a sale. However, these pitches go into little detail around if or when a customer will reach that rebate number and truly reap those benefits. On top of that, these offers often contain clauses that result in the bank getting their sign-on bonus back.

Also missing in banks’ sales pitches are the details around the true operational costs of implementing a commercial card program. The truth of the matter is that adopting these card programs can place enormous strain on accounts payable (AP) and accounts receivable (AR) teams.

When forced to adopt a new card program, AP teams suddenly have a new payment channel they must manage. They are tasked with talking to their suppliers about accepting a card. But top tier suppliers that have already negotiated terms may be unwilling to give away more of their margin, which is exactly what happens when card payment interchange fees emerge. These unmentioned consequences and hidden costs can take a toll on businesses.

The value of a holistic approach

Unlike traditional banks, fintechs are anything but stagnant. Fintechs are often cloud-based and can amass large, cross-customer, cross-industry data sets and make ongoing improvements to the payment process. With easy-to-use interfaces, AP and AR teams can dedicate less time to repetitive manual tasks related to payments.

Using a holistic view of the process surrounding payments, fintechs such as Corpay combine technology and services to address pain points in the payment journey. For AP and AR teams, this means consolidating different payment types into a single automated collected process.

“Mercator Advisory Group has been expecting the convergence of financial operations now for some time. The most prominent areas in what is now a growing trend is viewing both payables and receivables as a continuous flow,” explained Murphy.

The ability to initiate all payment forms in a single process is the new normal for most fintechs. Cutting-edge technology means that most fintechs can accommodate whatever file a customer pulls from an accounting system, and top-notch service means that supplier enablement and support can be removed from the workload of AP teams. In fact, supplier changes can often be enabled across the entire customer base of a business automatically.

Banking on fintechs is a safe bet

Outdated mainframe setups and existing inefficient legacy systems mean that for many banks, banking data will continue to be siloed for decades. Some banks are embarking on the journey of digital transformation, but this is no quick process.  

By definition, fintechs depend on newer financial technology to offer financial services. As a result, fintechs represent a huge opportunity for businesses attempting to compete against quick, nimble rivals. Fintechs make it possible for businesses to simply connect to a cloud platform or other modern infrastructure and reap the many benefits it offers—all without having to reinvent internal infrastructure.

Modernizing payments through process automation benefits customers and mitigates competitive disadvantages of failing to transform. Ultimately, tech-savvy fintechs are key to businesses seeking success in the modern world.

The post Fintechs Represent an Opportunity to Propel Businesses into the Future appeared first on PaymentsJournal.

This release in businesswire announces a new service to be incorporated into the Mastercard Track Business Payment Service, the open loop network launched a couple of years back. We have been following developments for the network, which started in 2017-2018 as an information sharing network for trade between buyers and suppliers but has been adding capabilities (and users) for the past two years. In this latest development, the service has added the capability to automatically issue virtual cards against invoices.

‘Slow and inefficient payment processes continue to create challenges for businesses. Lengthy payment terms and late invoice payments impact cash flow for suppliers, while manual invoice approval and check processing is costly and time consuming for buyers. Other payment methods, like ACH, require buyers to safeguard sensitive bank account information, adding another layer of complexity. Research shows a growing demand from businesses to automate supplier payments with virtual cards, but existing solutions aren’t meeting these needs, with 90% of virtual card transactions still being processed manually.’

Although we have not yet received a briefing, it seems as though the new capability allows for the automated intelligent review of invoices, during which a decision is made (using machine learning algorithms) as to whether or not a virtual card should be issued for payment and settlement. This of course presupposes that the supplier has been set up for a buyer-initiated card scenario, which then allows for straight-through processing of the payment, which should be the goal of any receivables department. So it will be interesting to hear about adoption, since most virtual cards are still initiated by the supplier using CNP terminals. So this should be a popular feature, assuming the up front supplier acceptance flow is easily implemented.

‘“Delayed payments create significant challenges for businesses financially and operationally, especially in today’s environment,” said Ron Shultz, executive vice president, New Payment Flows, North America at Mastercard. “Track Instant Pay helps solve these pain points by enabling buyers and suppliers to automate their manual payment processes, unlocking valuable time, working capital and choice. This innovative new solution is the latest step in our ongoing commitment to support multiple payment rails and mission to modernize B2B payments.”…

Mastercard Track Instant Pay combines machine learning capabilities from Previse, an artificial intelligence and data science company, with Mastercard’s core commercial solutions and global payment network to transform how businesses send and receive payments. The solution is part of Mastercard’s comprehensive suite of B2B products and services designed to reduce complexity and risk, cut costs, and automate processes for businesses around the world.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Mastercard Announces Virtual Card Solution for Instant B2B Payments appeared first on PaymentsJournal.

It’s no secret that cryptocurrency and its underlying blockchain technology continue to make headlines. With companies such as Tesla announcing its acceptance of bitcoin (it has since backtracked on this due to environmental concerns), Coca-Cola launching over 2,000 crypto accepting vending machines, and sports stars like Aaron Rodgers requesting to be paid in cryptocurrency–the phenomenon seems to be here to stay.

However, these payment developments are predominantly in the business-to-consumer (B2C) space. The crypto boom for B2C companies hasn’t genuinely translated to the business-to-business (B2B) environment yet. Although, it seems change could possibly be on the horizon. Businesses are starting to embrace blockchain technology in a multitude of ways. Consider these developments: In October 2021, Ubisoft announced its plans to incorporate play-to-earn principles into its business model through cryptocurrency. Soon after, in November 2021, Deloitte announced its strategic alliance with the Avalanche blockchain to improve state and local governments’ recovery from natural disasters.

Companies embracing blockchain technology isn’t exactly widespread cryptocurrency payment adoption, but are the tides changing? What is stopping B2Bs from accepting crypto? And when could B2Bs receiving cryptocurrency become commonplace? We’ll start by exploring further where things currently stand.

The current state of the B2B payment environment

As of late 2021, B2B companies are resistant to accepting cryptocurrency as a form of payment on the majority. According to a recent B2B payments research, only 32% of B2B company representatives show considerable interest in accepting cryptocurrency payments. That same study revealed 59% of B2B Companies are not open to cryptocurrency as a form of payment at all. Conversely, only 2% of those studied currently accept cryptocurrency. Within the survey data, there is an interesting group of companies that are open to accepting crypto at the right time (22%), not accepting crypto but intend to (7%), and those actively exploring the possibility of crypto payment acceptance (10%).

Additionally, the payments study revealed that cryptocurrency would need to offer convenience and currency value appreciation to really drive industry adoption. With those desired outcomes in mind, what are some headwinds preventing cryptocurrency from guaranteeing convenience and value appreciation?

Headwinds for B2B crypto acceptance 

A catalog of factors is causing B2B companies to shy away from cryptocurrency payment acceptance. Here are a few prominent factors preventing cryptocurrency from currently being accepted:

1. Volatility

Cryptocurrency markets can be staggeringly volatile. According to an Investopedia.com article, “In a single day in May 2021, the price of Bitcoin plunged by about 30% before recovering to be down about 12%.” Cryptocurrency’s volatility can be partially attributed to the preceding items on this list.

2. Utility 

B2B companies need to feel that they can use cryptocurrencies as money to spend or convert into cash without the aforementioned significant volatility risk. They’ll need to see their upstream vendors and service providers accepting crypto as a form of payment for this to happen. There’s a chicken and egg problem here that’s unlikely to resolve itself without robust adoption among consumers.  

3. Security 

The cryptocurrency has been rife with high-profile security breaches. B2B Companies are willing to wait on the sidelines until these security issues are resolved, and they can confidently rely on the reality of accepting cryptocurrency as payment.

4. Fear of regulation

The cryptocurrency industry is widely unregulated, and regulation is inevitable. China recently banned cryptocurrency mining, and India is expected to outlaw cryptocurrency almost completely. These regulatory winds are causing B2B companies in the U.S. to take a cautious, late-mover approach to cryptocurrency payment acceptance.

When might B2Bs accept cryptocurrency payment?

As I mentioned before, it’s not all bad news for cryptocurrency. In addition to companies embracing blockchain technology, web3, which empowers technology such as non-fungible tokens (NFTs) through cryptocurrency, is exploding in popularity. So when might B2B companies start to embrace cryptocurrency payment?

B2B companies will continue to be highly cautious and lag behind the B2C companies. B2Bs will be hesitant to introduce volatile assets onto their balance sheets which is a primary precursor to accepting cryptocurrency as payment. However, the actual kicker is that B2Bs will need to see cryptocurrencies used as currencies. Blockchain developments aside, cryptos are not being used as a traditional currency–specifically as a medium of exchange. Cryptocurrencies are essentially being used as a speculative store of value or token.

Eventual B2B cryptocurrency payment acceptance isn’t guaranteed 

As the B2C world continues to adopt cryptocurrency and blockchain technologies, the B2B companies might one day follow suit. However, this development seems far off. For this to happen, cryptocurrency values will need to stabilize, avoid the onslaught of potential regulation, improve security flaws, and showcase increased utility as an actual currency. While there’s no guarantee crypto will ever cross these gaps, it could potentially be a lasting, influential component of the financial industry and business at large if crypto can address these concerns. B2B companies will only be willing to adopt it as payment when crypto makes sense from a convenience, cost, and profitability standpoint, which could be some time into the future. Regardless, it’ll be a fascinating development to monitor over the next few years.

The post Moonshot: The Tipping Point for Cryptocurrency Acceptance in the B2B Space Seems Vastly Far Out appeared first on PaymentsJournal.

This piece is found in Yahoo! Finance and discusses the latest from Optimizely, the 2009 New York-based fintech that provides customer experience optimization, allowing businesses to drive up the value of their digital products, commerce, and campaigns through its experimentation software platform. In this case, the release indicates that the company has integrated two of its products, the B2B Commerce Cloud and the Content Cloud. 

‘The integration makes use of the B2B Commerce Cloud as a headless commerce API to make B2B data and capabilities available within the Content Cloud. Now, B2B customers choosing to select both the B2B Commerce Cloud and Content Cloud with the new integration can:

• Take advantage of B2B-specific features within the B2B Commerce Cloud

• Use the Content Cloud to manage all the pages, templates, content and assets of their site

• Benefit from an out-of-the-box, combined site search engine that searches products in the B2B Commerce catalog while searching content in the Content Cloud and combining the results

• Manage their product catalog in B2B Commerce, but have all the products available for use in the Content Cloud

• Build and manage multi-sites in the Content Cloud while leveraging the shared data for customers, products and orders in the B2B Commerce Cloud’

As we have pointed out in member research, the B2B portion of the e-commerce space potentially dwarfs that of the retail market. There has been rapid growth in the past several years, even prior to the pandemic, but certainly further supported by WFH scenarios, which have continued through 2022. As we pointed out in said research, the overall B2B market for goods and services is estimated at over $125 trillion. However, this number combines all B2B sales channels and does not reveal the interesting dynamics occurring in the B2B space. Growth trends differ substantially between electronic and physical sales channels, with the former growing and the latter constricting during the pandemic. So, companies that are utilizing solutions such as Optimizely’s offerings should be staying ahead of the pack in terms of having experiences that the younger demographic is expecting.

‘To help customers get the most from the combined products, Optimizely is also releasing a B2B-specific sample site that includes numerous Content Cloud templates and blocks that can be used to accelerate customers’ build time. Customers can leverage the provided assets or reference them as examples before customizing their own. The sample site will address the time-to-market metric that many B2B customers find critical when selecting their technology vendors…

“Optimizely Content Cloud has a long history of providing marketers with extensive tools for content publication and creation of exceptional digital experiences,” said Justin Anovick, Chief Product Officer of Optimizely. “With the integration of B2B Commerce Cloud, businesses can extend these tools to B2B customers, enabling the delivery of optimal digital experiences across audiences.”’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Optimizely Integrates B2B Commerce and Content Cloud Products appeared first on PaymentsJournal.

Here is another example of a piece on the transition over to B2B automation, which appears in TechCrunch. The startup is called Topi and it is based in Berlin. There are several other companies with the same name if one is looking at startups. In this company, the goal is to deliver better e-commerce payment solutions for businesses at the time of checkout in B2B scenarios. The announcement indicates that Topi received $4.5 million in seed funding led by a couple of VC firms and some angel investors.

‘And yet, B2B transactions haven’t changed as much. Businesses often face a simple dilemma — they pay directly or they spend some time negotiating a financing offer. A supplier can offer some financing options directly. Sometimes companies ask their bank directly. In all cases, it’s a lengthy, bureaucratic and manual process…

Topi wants to reach the ideal Venn diagram of B2B payments — a payment solution that doesn’t require any paperwork, but a payment method with some financing offers. Topi thinks it can offer financing options of up to five years with instant approval…

“We’re building all of that ourselves. We’re building the first product right now and it’ll come on the market during the course of next year,” co-founder Estelle Merle told me.’

So, this sounds a lot like working capital lending or supply chain finance, which is certainly a welcome thing across the board but even more so in the SME space. We did not receive a briefing so it’s not exactly clear who Topi would be targeting specifically. However, the additional level of risk for SMBs was mentioned in the article so we assume that is the primary audience that the solution would benefit, with B2B merchants expanding their flexibility for buyer financing choices. As one reads through, there are longer term potential business opportunities as well, with expanded financial product offerings.

‘When you look further down the road, Topi’s vision goes beyond simplifying payments. If the startup manages to become an important brick in B2B transactions, companies who use Topi could end up spending a lot of time on Topi’s portal. They could see upcoming payments and manage early repayments…

But Topi’s portal could also become a SaaS product on its own. For instance, customers could choose insurance products from Topi directly. Once you control the customer relationship, there are a lot of possibilities to expand horizontally. And Topi is well aware of that opportunity.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Topi Is Building a New Payment Solution Designed for B2B Transactions appeared first on PaymentsJournal.

Everywhere you look, you see it yet you don’t—the paradox of payments: As payment options grow, they also become less visible, disappearing into the workflows that create them. For example, an increasing number of e-tailers offer “Buy Buttons” that bypass the standard shopping cart process. Customer expectations for payments revolve around simplicity and ease of use, and those same demands are creeping into the B2B space. However, the “consumerization” of B2B payments carries a great deal of complexity, particularly when it comes to implementing embedded payments systems.

To learn more about the complex machinery of embedded payments, the importance of creating a seamless B2B customer experience, and other key considerations for adopting embedded finance, PaymentsJournal sat down with Brandon Spear, CEO of TreviPay, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The rise of e-commerce and e-procurement

Both e-commerce (online shopping) and e-procurement (online acquisition of goods or materials) have been steadily rising over the last decade. According to Mercator research, the combination of the two forms of electronic sales for B2B transactions hit a new projected high of $2.2 trillion dollars in 2020, not including electronic data interchange (EDI), which by itself accounts for additional trillions of dollars. Moreover, since much of the data was collected before work-from-home trends boosted online shopping, the volume of electronic transactions likely jumped much higher in 2021.

The uptick in popularity of B2B electronic payments has spurred advancements in the online customer experience (CX). “These sites are constantly being improved to make the experience closer to a consumer-type interaction,” explained Murphy.

B2B customer expectations are evolving

“Historically, B2B buyers have been pretty uncomplicated,” said Spear. “They kind of deal with just about anything.” However, the tremendous, recent shift towards electronic transactions has caused B2B buyer expectations to resemble that of B2C buyers. Often, when new e-commerce sites launch, the quickest and easiest payment method for them to accept is credit cards, but limiting payments to a single channel will not accommodate surges in new customers. People want simple online shopping experiences, easy onboarding, and multiple payment options.

Conversely, trade credit invoicing and pay-on-terms are the traditionally predominant payment offerings in the B2B landscape. “In most cases, you don’t want to pay on a statement,” Spear said about procurement. “You want to pay on an individual invoice so that you’ve got the choice of saying, ‘I’m paying this invoice but I’m not paying that one because there was an issue with price, delivery, or quantity.’” The ability to smoothly handle disputes is one of the primary reasons procurement and accounts payable departments prefer invoicing.

Suppliers that are well-equipped to flexibly meet the specific needs of their buyers are gaining a disproportionate amount of the market share, according to Spear. “The challenge in B2B always is you don’t have a single stakeholder like you have in the B2C realm,” Spear explained. “You’ve got procurement, you’ve got accounts payable, you might have a subject matter expert or a budget owner… they all might need different sets of data or different ways of interacting with the supplier.”

Moving beyond the “Buy Button”

There are many elements that must be considered to deliver high-quality B2B transaction experiences: dealing with different customer data requirements, creating loyalty and customer incentives such as rebates and discounts, and providing different payment terms and invoice frequencies, among others. All of these offerings can affect the cash flow of a business, as well as impact the ability to manage customer risk. “When you distill this all down,” said Spear, “the end goal has to be: How do you establish or improve the stickiness of the relationship with your buyers?” Keeping the customer front and center can be complicated, but it is the surest way to facilitate business growth.

Many sellers/suppliers are finding the burden of payments optimization falling into their lap. Some might get drawn into the conundrum of buyers only accepting invoices that are uploaded into their individual invoice portal, so that sellers end up with tens or hundreds of buyer-side portals that, if not used, will probably result in late payments. TreviPay has taken a new approach to tackling the process of payment portal optimization. “We invested in robotic process automation [RPA] that essentially allows you to take the data and automatically load it directly into these various portals, eliminating the need for sellers to do that manually” explained Spear. This technology lets sellers deliver what the buyer needs in a smart and cost-efficient way.

Best practices for embedded payments

Embedded payments occur invisibly in the background and are the key to meeting digital-first buyer needs. Uber offers one of the best B2C examples of embedded payments: when you leave the car, you don’t have to do anything physical to complete the transaction, the app just knows the ride is over and the payment goes through. “How do you deliver that notion to the B2B buyer, understanding all of the complexity that goes on around it?” asked Spear. “The short answer is you’ve got to have a lot of infrastructure in place to make sure that it’s quick and easy for the customer to check out.”

In order for businesses to make embedded payments a reality, it is important that they provide several key elements:

• Invoicing and pay-on-terms options
• Quick and transparent customer underwriting
• API- and data-driven infrastructure
• Robust onboarding and other digital-first offerings
• Simple accounts payable processes
• Strong credit application fraud and business identity theft management

Businesses must also account for potential fraud or account takeover. While efficiency draws in customers, lack of security will drive them away. The goal of any B2B embedded payments infrastructure should be to marry speed and security so the customer can securely create a shopping cart, select their invoice, select their payment option, and be done in a minimum number of clicks. That process is supported by data aggregation in the background, informing where the data needs to go.

While there are common standards for implementing embedded payments, there may also be differences between businesses and industries. “If you’re somebody selling electronic equipment – clearly a very easy item to resell – if it’s ‘stolen’ then you have to be particularly careful,” Spear pointed out. On the other hand, “If you’re selling parts for wind turbines, you’re probably not going to get a lot of fraud.”

Additionally, if sellers have longstanding relationships with their customers, they will prioritize different processes than sellers that deal with one-off buyers; offering a variety of payment options will be more important for fostering loyalty with repeat customers, whereas credit cards work perfectly fine in an infrequent use model. “Understand what your customers care about,” Spear concluded, “and then make sure you’re able to meet those needs.”

The post Using Embedded Payments to Meet B2B Customer Experience Expectations appeared first on PaymentsJournal.

Business and larger-market credit card products are valuable assets for the clients of financial institutions, banks, and credit unions. However, not every FI has such an offering. In fact, many financial service providers  need a better understanding of the difference between business cards and larger-market credit card products, such as corporate cards, purchasing cards (P-Cards), multi-cards, and virtual cards.

Further, even for Issuers with some knowledge about these larger-market products, many  need clarity on which products are most appropriate for their business clients.  And they are seeking consultative advice on the business hurdles and expertise required to achieve commercial card program profitability. 

To dig deeper into these  needs and offer insight into how banks, financial institutions, and credit unions can successfully deploy commercial card offerings, PaymentsJournal sat down with Kris Carrera, Business Line Executive, Credit Solutions at FIS, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

An overview of the commercial credit card space

According to Murphy, there are seven major product sets in the broader commercial card space. Five are associated with credit, and two—debit and prepaid cards—are not. The five credit-related commercial card types include:

1. Corporate cards, which have traditionally been used for travel and expense (T&E) management. However, some of that spend shifted to maintaining home offices and other creative use cases during the pandemic.
2. Purchasing cards (P-Cards), which are used for maintenance repair operations (MRO) expenses. Larger ticket items and payables have also begun to migrate to P-Cards.
3. Multi-cards, which are used by companies that want to keep all their expenses within a single program.
4. Fleet cards, which are specialty fuel cards used for vehicle and fuel maintenance and repair in commercial fleets.
5. Small business cards, which are designed to support both the basic T&E expenses and office expenses associated with running a small business.

“If you add all of these together, you’ll get in the range of $2 trillion in spend annually in the U.S.,” explained Murphy. Among these card types, P-Cards and multi-cards are seeing the most rapid growth.

What’s noteworthy is that both are often delivered in the form of virtual cards. Financial institutions can leverage the benefits of virtual cards to differentiate their commercial card offerings. “These are single use types of non-plastic  cards—that’s the fastest growing segment in the commercial credit card space at about 20% per year… and that’s really the only sort of delivery method during the pandemic that did not decelerate in growth. It’s back to pretty large growth in 2021,” he added.

Deploying the right commercial card program

Financial institutions ranging from community credit unions to large banks are using commercial card programs. As community banks attract more small business deposits, they are looking  at new products to satisfy customer demand. Meanwhile, larger banks are likely to have a large commercial and treasury base but may not yet offer a commercial card program.

“The give and take [is] that we have treasury managers out there wanting to sell an additional product to their very valuable customer base, as well as these customers that are new to the bank who are demanding products like a revolving [credit] facility… so they can continue to do that business,” said Carrera.

Given the breadth of commercial card types available, it can be difficult for financial institutions to identify the best products to offer their business clients. Having a deep understanding of their customer base is key to solving this problem. “[FIS] is consulting with these financial institutions on what the segmentation of their customer base is. Especially on the customer side, that’s where we get into more about the specific product. Does it really fit the spending needs of these verticals?” asked Carrera.

For example, the medical industry is particularly savvy when it comes to knowing the products, rebates, and data they are looking for. Other sectors, such as the auto industry, have different needs. More specifically, FIS has seen several auto dealerships in the Midwest express interest in buying goods and services on P-Cards because it allows them to track spend and see a higher level of transaction details.

Higher education is another example of an industry with unique needs. “Schools and universities were probably one of the first adopters [to] truly [understand] the value of a purchase card and a T&E card, especially for traveling teachers,” explained Carrera. Commercial card programs are significantly more likely to succeed if banks and credit unions cater these programs to the needs of their business clients.

A little underwriting goes a long way

Another important part of deploying a commercial card program is understanding the back-office operations, spend potential, and risk that go into it. Murphy highlighted how commercial card programs can go awry, using the example of a hypothetical small business with $10 million in annual revenue. If the business spends 90% of its revenue in direct and indirect costs, it accrues $9 million in expenses each year.

Commercial credit cards are currently used in about 3% of payables across all business sizes. Using that number as a reference point, a $10 million business may spend around $270,000 on a commercial card program each year.

Another way to estimate card spend is by acknowledging that commercial cards are typically not used for direct spend. Assuming direct and indirect spend are equal, that same business would have indirect expenses of around $4.5 million per year. Estimating that 10% of this spend goes to T&E and MRO, the business may spend up to $450,000 on a commercial card program each year.

Averaging the two estimates above for a more accurate prediction, Murphy estimates around $360,000 in commercial card program spend for a $10 million business. While the issuing bank would profit from around $9,000 in interchange fees, the cost of rebates, net operating expenses, and enablement expenses may very well leave them in the red.

While the estimate is just that—an estimate—it’s also “a way to think about whether a full-scale commercial card program is the right one for a relatively small business. You have to figure out whether or not those businesses need all the technical capabilities that a full-scale commercial card program can provide: the spend management integration, the card management program, the hierarchy, the  central billing capabilities, and so forth,” said Murphy.

The takeaway

The most successful commercial card issuers are those that put thought and effort into their programs. Understanding the upfront costs and risks of launching a commercial card program and being able to scale it up and expand in the future are key.

“What an FI should be doing is a thorough analysis of their business client portfolio. They must figure out how many clients they have by revenue size [and] by industry vertical, then figure out average travel budgets. How much did they spend on payables every year? What is the business growth potential? Then use all that information to determine if a commercial card program is worthwhile launching and [if it] will be a profitable business,” said Murphy.

Collaborating with a trusted partner can help banks decide the best approach to a commercial card program. FIS offers a robust selection of small business and commercial card products that meet the needs of financial institutions’ business customers.

“From a scale perspective, investing in commercial capabilities, expense management, and card management [are important]. From there, once you get that up and running, it is the value of adding additional companies and seeking more companies and cross-selling into the business Demand Deposit Account (DDA) or customer base to make them aware that there is a card product out there,” concluded Carrera.

Interested in speaking to the FIS PaymentsEdge Marketing and Advisory Team directly about growing your small business or commercial card programs? Email us at: PaymentsEdgeFI@fisglobal.com

The post Launching a Successful Commercial Card Product Offering appeared first on PaymentsJournal.

Traditional paper check usage has been on a downward trend for decades. Consequently, more organizations are aiming to incorporate digital payment solutions into their business-to-business (B2B) transactions. Shifting to digital payments can save time and money, but businesses must also heighten their security measures to prevent the associated fraud risk.  

To learn more about the risk of fraud, what companies should look for in their next payment platform, and how to maintain strict compliance with changing regulations, PaymentsJournal sat down with Chris Clausen, Executive Director of Digital Payment Solutions at Deluxe, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.  

Paper checks and fraud: a recent history 

According to Mercator research based on the 2021 AFP Payments Fraud and Control Survey, checks are by far the most frequent vehicle for both attempted and actual payments fraud. Every year between 2015-2019, at least 73% of surveyed U.S. companies experienced actual or attempted fraud, and for at least 70% of those companies, it was in the form of check fraud. Fraud in general saw an upward trend over those years.  

2020 saw a slight reduction in check fraud, with 66% of companies reporting actual or attempted fraud, likely due to the rise in electronic payments induced by the COVID-19 pandemic. Analysts have been predicting the demise of paper checks for years, and many saw COVID-19 as the catalyst that would finish them off for good. “We’re seeing that in certain use cases and not in others,” Clausen remarked. Although checks were already fading away, the pandemic only bruised commercial check usage in the early months due primarily to office dislocation. 

Naturally, as check use declined, fraudsters were denied access to the various points that were prone to check fraud. “The physical delivery of the check is where a lot of the exposure lies around fraud,” said Clausen. “There’s a lot of hands touching it.”  

In fact, since the first half of 2020, checks have been on the rebound, reverting to pre-COVID levels. There are many possible reasons why paper checks have stuck around longer than expected. Broadly speaking, it can be somewhat difficult for businesses to make a full transition away from using checks. One reason might simply be that, even though payments were a pain point due to COVID-19, companies still have more pressing priorities.  

“Business customers are dealing with other major pain points outside of just managing their payments,” said Clausen. “One of the things about the check is most businesses know how to use it. They don’t have to devote a lot of calories to making their payments, and they need to spend those calories elsewhere.”  

Another reason involves payee portal fatigue. “A lot of the digital payment technology that’s out there struggles to meet all of the industry needs that go with the payment in terms of remittance, in terms of enrollment, and in terms of payees into the digital payment portals,” Clausen explained. COVID forced companies to try implementing new solutions, and according to Clausen, “a lot of those solutions didn’t check all the boxes.”  

In many instances, the success or failure of phasing out checks in favor of digital payments was determined on a case by case basis. Some companies found it didn’t work for them, while others are still working it out but have not yet shifted all of their volume over. “It’s really an interesting mix,” Clausen summarized. 

How digital payments can decrease fraud risk  

On average, eight people are going to handle a physical check as it makes its way through the payment life cycle. “Every time somebody handles a paper check, you are exposing that payment to third-party fraud,” explained Clausen. Paper checks can be susceptible to alteration and counterfeiting, and though businesses like Deluxe have led the way on building improved security features into checks, most of those features rely on bank staff recognizing the problem and taking swift remedial action. “It is an imperfect system,” said Clausen. 

Conversely, a digital payment tends to be handled by only two people: the payer and the payee. In terms of pure numbers, digital payments represent a significant security benefit. Additionally, digital payments provide a digital fingerprint that follows the life cycle of the payment. “You can easily deconstruct who has had access to that digital payment and what they were able to see and do with it,” said Clausen. “The good digital payment solutions make that information readily accessible so that if there ever is a problem, it can be identified early in the process, as well as prevent future issues.” 

Another benefit of digital payments is separation of controls. Business owners can put structured processes in place to prevent any one employee from having all the pieces necessary to conduct large-scale fraud. “Digital payments can help, both with external fraud by third parties and also internal employee fraud,” Clausen summarized.  

Clausen was careful to clarify that digital payments are not 100% fraud-proof, and that criminals can be rather creative in how they seek to attack emerging digital payments technology. “The industry will have to continue to innovate and be very aware of what’s happening,” he said.

Companies like Deluxe use different payment modalities, each of which adds additional security benefits such as Positive Pay, real-time verification, and separation of controls. These measures reduce risk and bring immediate benefit to both business and bank customers by lowering actual losses.  

What organizations should look for in their next payment platform 

When businesses evaluate their digital payments platform needs, they should focus on four main areas to ensure security and efficiency: 

1. Digital account access – Ensuring the right parties are credentialed to issue and process payments by setting up protections such as multi-factor authentication and separation of controls 

2. Payment delivery and retrieval – Preventing any opportunities for alteration, redirection, or money laundering and avoiding undue exposure of key details such as account or card numbers 

3. Payment deposit – Understanding how payment data are retained and protected and setting up notification requirements for any potential data breach  

4. Overall platform security – Regularly testing the payments platform from a penetration perspective and maintaining ongoing security protocols to retest for new vulnerabilities 

Every security measure in place should be visible and explicit because deterrence is a big part of fraud protection. “Criminals do just like everyone else does by human nature: they go to where the easy money is,” Clausen explained. “If it’s difficult to get to, they are likely to pass and look for easier targets.”  

Companies should also incorporate anti-fraud training programs, according to Murphy, so that employees can recognize and prevent business email compromise, ransomware, and phishing attacks. Overall, payment service providers should have clear measures to determine if fraud is being perpetrated. Businesses should be able to ask questions about all of the above measures, and if the provider cannot readily offer sensible answers, then that provider might not be the best option.   

Finally, businesses must stay aware of changing regulations and compliance requirements in the industry. It can take a lot of resources and energy to keep an eye on evolving rules and regulations, so the best way to stay updated is partnering with an established entity such as a large bank, service provider, or fintech like Deluxe, with a strong reputation for compliance. This is especially important for smaller startups that may be bringing technological innovations that can brush up against legal boundaries.  

“Whether it’s PII compliance, whether it’s HIPAA, whether it’s PCI compliance, there’s a lot of different regs that impact your business’s ability to stay current with the law,” Clausen concluded. “What you want to look for is an established player that has the bench strength to be able to stay current on state- and federal-level compliance related regulations.” Deluxe’s SOC-2 certified Deluxe Payment Exchange (DPX) platform leverages digital technology to lower costs and reduce fraud for B2B payments, all while maintaining strict compliance.  

The post Combating Fraud with B2B Digital Payment Solutions appeared first on PaymentsJournal.

Accounts payable (AP), like many other spaces in the business world, has been trending towards automation for at least five years. For a while, AP automation growth saw a steady if tepid increase. Now, revamping AP systems has become one piece of a broader and more tactical review of financial operations across organizations. Accounts payable is just one important leg of the procure-to-pay ecosystem. Another equally important and connected piece is supply management, and though AP and the supply chain are separated by multiple intermediary processes, one still directly affects the other.

To learn more about the importance of considering supplier relationships when using AP automation, PaymentsJournal sat down with Kim Lockett, VP of Customer Success and Services at Nvoicepay, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

Turning problems into opportunities

The push to assess and digitize internal processes may have started as a COVID-induced crisis but has now transitioned into an opportunity to think strategically about the future. “We’ve conquered the initial COVID piece of it, where we had to figure things out,” said Lockett. “Now let’s look at the bigger picture.” There is always room to grow in business, and presently, the smart move is to increase operational intelligence and effectiveness. Creating automated workflow adds benefits for all parties by digitizing upfront invoice recognition and determining the best payment options.

Murphy summarized the wave of payments modernization: “Because of the pressures on bank bottom lines and the corporate need for liquidity, faster payment rails, and the transition to new payments messaging standards, there’s definitely a move towards modern tech as a service model,” he said. “That [model] can adapt more readily to infrastructure choices on a plug-and-play basis, using APIs as the integration method.”

Payables automation serves suppliers

Why do customers or companies want to automate? Easy: it makes things quicker. The massive disruption to the economy caused by the COVID-19 pandemic lockdowns has snowballed into the worst global supply chain shortage in decades. “The last thing you want is to have a long dragging process from AP to prolong what we’ve already seen with the supply chain side,” said Lockett. “Automation equals faster, cleaner, and more efficient.”

Nearly $25-30 trillion is wrapped up in global trade and cross-border B2B commerce, according to Murphy. Even small delays can cause major issues for companies that need to constantly send and/or receive vast sums of money to and from the farthest reaches of the planet. “You’ve got ships sitting in ports, and one day can make a difference in the speed of payment,” Murphy explained. With many companies just trying to stay afloat in a time of financial instability, unexpected inefficiencies can make or break a company in as little as one week. AP automation can drastically ease a supplier pain point in the payments cycle. “The ability to utilize a payment provider to get payments from A to B in a way that you’re not able to it today… that’s a pretty big deal,” said Lockett.

Digitized payments leads to data insights

In order to apply payments in a timely and efficient manner, suppliers need certain pieces of information, whether it is an invoice number, an account number, or a PO (purchase order) number. “If we don’t have the information, this has to go to unapplied cash, and we all know what happens when money sits in unapplied cash,” said Lockett. “That doesn’t benefit anyone.” Digitization lets companies and suppliers share key data with one another more quickly.

Additionally, once that digital information is secured, it adds value to the company. “One of the underappreciated or maybe even unrecognized benefits of the automation process is that once you’ve got all this digital information, you can treat it as an asset,” Murphy suggested. “You can then use the latest gen technology like robotic process automation and machine learning to actually – in the algorithms – improve those matching processes and even build in intelligent decisions.”

By automatically recognizing and connecting payment patterns, companies can optimize their operations and reduce costly errors. If, for example, an automated AP system notices that a large number of customers send payments to the same supplier, companies can choose to efficiently bundle payment data to import right into the ERP (enterprise resource planning) system for processing. Increased flow of information brings down the cost of accepting payments. “The biggest part of that cost is handling errors,” Murphy clarified. “To the extent that you can increase that straight-through processing when nobody has to touch it… that’s part of the primary reason we want to automate.”

Roadmap for implementation

Implementing an automated AP process can look scary to a lot of organizations. According to Lockett, there are a number of obstacles that all dovetail together and must be overcome in order for companies to even begin the automation journey:

• “If it’s not broken, don’t fix it” – Sticking with old systems because they still technically work.
• Inertia – Sticking with old systems because it takes more energy to change course.
• Fear of the unknown – Sticking with old systems because of uncertainty around potential replacements.
• Fear of time commitment – Sticking with old systems because of a desire to avoid disruptions and it is quicker to patch up issues with a short-term band-aid.

Nvoicepay puts those concerns to rest by leading companies through the process every step of the way. “You’re going to get an implementation manager,” Lockett explained. “They’ve got a guideline that’s going to say, Here’s our project plan, here’s what we need to do to get to the end result.”

The service setup is adaptable to each specific company, using a “plug-and-play” infrastructure. Implementation timeframes might range from 60 to 90 days, depending on what type of ERP system the company has. By mobilizing a full team devoted to ensuring a smooth transition to AP automation, Nvoicepay will set several wheels in motion at once:

• Mapping the ERP system – Processing payments that are sent out.
• Starting enrollment efforts – Contacting suppliers by phone or email to ask questions about payment preferences.
• Providing a unique URL – Setting up a link that allows vendors or suppliers to enroll in the payments system.
• Training personnel – Walking employees through trial payments and ensuring they understand the full extent of the process.

One company making the move towards automation leads to a domino effect, particularly in vertical industries. “If you see that your competitors are starting to do things better, it becomes a disadvantage not to automate,” Murphy pointed out. Whether it’s the construction industry, the automotive industry, or the hospitality industry, similar businesses share similar back-end issues, and they will compare notes with one another even if they consider themselves competitors in the marketplace. “Word of mouth is a really big deal,” Lockett concluded. “When somebody makes the comment that they’ve made a decision and it made a huge impact to their company, others will follow suit.”

The post How AP Automation Impacts Supplier Relationships appeared first on PaymentsJournal.

Since the emergence of COVID-19, the payments industry has experienced rapid digital transformation. Bank customers who once stood in line at branches now deposit checks via a mobile app. Shoppers who flocked to malls for holiday shopping now opt to buy online. Consumers who once ate in restaurants are now well-versed in curbside and contactless pickup options. 

Business to business (B2B) payments are no exception to this trend. While some organizations still rely on paper invoices and checks, there is an increasing demand for digital-first B2B experiences. 

In an interview with PaymentsJournal at the 2021 Money20/20 event, Brandon Spear, CEO of TreviPay, spoke about the need for companies to embrace a digital-first payment strategy and how B2B companies can approach modernization.  

The pandemic-driven shift to digital processes 

The past 18 months have brought remarkable digital transformation. Much of this transformation was driven by sheer necessity—digitizing processes meant people did not have to be in a physical location amid health and safety concerns and widespread social distancing mandates.  

“What we have seen in the last 18 months would probably have taken four or five years to accomplish, but because of the urgency of everything else that was going on, it was all compressed,” said Spear.  

While manual processes made sense when they were first implemented, that is no longer true. “In the past, if your entire interaction model was face-to-face, then it might not seem strange to have paper invoices and paper checks. But if your interaction model is digital, it can suddenly feel [outdated] if you have paper invoices and paper checks that are following everything around,” he added. 

Other factors contributing to digitization  

COVID-19 is not the only driving factor behind digitization. “What’s also happening is a generational shift of who is buying. As buyers become younger and younger, we are talking about a generation that has only known digital-first,” explained Spear. This will only become truer over time as Gen Z, born beginning in 1997, make up a greater portion of the workforce.  

These younger generations are less likely to be loyal to a specific brand than generations past. Rather, they prioritize the customer experience. “We often describe this as a shift away from brand loyalty to experience loyalty. More and more often, you are picking who you are going to work with and who your suppliers are going to be based on the quality of the experience you have with them, rather than the brand per se,” said Spear. 

Offering a digital-first experience is no longer optional 

To ensure that customer experience keeps customers coming back, businesses need to provide an all-encompassing digital-first experience. That includes everything from how they onboard new customers to how they provide customers with credit lines, how they prepare and present invoices, and how their transactions flow.   

For example, digitizing the invoice payment process can reduce the days sales outstanding (DSO), or the number of days it takes a company to collect a payment on a sale. Having these funds sooner can free up credit lines and improve cash flow, allowing companies to focus on their core business.  

“I think the combination of working capital and the digital-first experience is providing sellers with more cash flow to grow their businesses, which is really the theme that we drive home,” said Spear.   

The importance of meeting  buyers where they are at  

According to Spear, B2B businesses need to meet their buyers where they are. “If you can meet your buyer where and how they want to interact with you, then that buyer is likely to spend more with you and you’re likely to increase your share of wallet,” explained Spear.  

Achieving this can be difficult in a B2B context. Unlike business to consumer (B2C) payments, B2B payments typically involve multiple stakeholders in every purchasing decision, adding complexity to digitization. A B2B commerce partner can help companies conquer this challenge.  

“If you can simplify that, if you can make it easier for your customer to buy from you and match up with their procurement processes and the processes that are important to them… If you are able to fulfill those requirements from those customers, then our experience is they will spend more,” said Spear.  

This could be as simple as providing buyers with a purchasing order for every invoice so their accounts payable team can respond accordingly. “At the end of the day, in all our business lives and our consumer lives, we want the experience to be slick. We want it to be simple. We want it to be easy. It’s more difficult to do in B2B, but it’s not impossible,” he added.  

Slow and steady wins the race  

Digitization may seem like a daunting process, but it doesn’t have to be. Instead of overhauling an entire legacy system at once, companies can take a slow and steady approach to integrating modern tools into existing systems. 

“There are definitely techniques you can use [where] you do not have to rip out all of your back-office environments in wholesale fashion. Integration is a key technique that we see being used very often,” said Spear.   

In fact, many legacy systems were built on sound processes. But even though there is nothing fundamentally wrong with these processes, they were not designed to work well in an integrated world. A lack of APIs, interfaces, and other modern front-end tools can result in valuable data being locked away in inaccessible legacy systems.  

“If you can find ways to expose the data through integrations, through APIs, through portals, you can actually accomplish a lot of what you’re trying to transform, which is information sharing,” Spear concluded.   

The post It’s Time for B2B Businesses to Embrace a Digital-First Payment Strategy appeared first on PaymentsJournal.

This piece in Yahoo Finance speaks to a 2021 startup out of San Francisco named Slope, which is described as a firm that enables any B2B platform to offer Buy Now, Pay Later by handling the lending, underwriting, and debt collection. So, this is another offering in the growing space of BNPL, although applying a somewhat different twist on the approach by focusing on working capital (not necessarily sales) and the cross-border aspect of B2B e-commerce globally, which is growing at a rapid pace, aided in some respects by the pandemic.

‘Prior to the global pandemic, suppliers were extending net terms of 30 days to pay, but at that scale, it is hard to build up credit for small businesses, Murata told TechCrunch…

“Then with the global pandemic, the pace at which business-to-business payment was moving online was accelerating,” Murata told TechCrunch. “We wanted to bring it online at checkout and empower businesses by making access to capital easy.”…

Businesses can get approved in seconds and begin offering the installments. At checkout, customers can choose the payment terms that work for them. Slope manages the lending, underwriting and any debt collection, and will pay out to the business once the product or service ships.’

The piece goes on to discuss the seed funding of $8 million based on early growth rates for the firm, which apparently had clients lined up before the product was actually built, suggesting highly pent-up demand. When targeting the small business merchant space, access to cash is a primary selling point, and there is no better time to do so than in uncertain times, especially when the latest gen tech can enable it at scale. If one thinks of this as another form of receivables finance, then it becomes more of a differentiator. With merchant sign-ups across multiple foreign markets for the months-old firm, it looks like something bearing a closer look.

‘Don Stalter, partner at Global Founders Capital, said Slope’s growth was “impressive from the start, and one of the fastest-growing companies we have seen globally, at its stage and leanness of the team.”…

Businesses have gone to banks for business loans, but it was a “janky process,” and anyone who can improve it at a rate of five times with technology will be a major disrupter, and if they can do it 100 time, they will revolutionize it, he added…

He believes Deng and Lawrence can do this by taking that big B2B payments market and attacking it with artificial intelligence and new technology that is going to improve opportunities for businesses.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Slope Brings BNPL to the Cross-Border B2B Space appeared first on PaymentsJournal.

The business world is in the middle of a massive wave of digitalization. Old, manual, in-person processes are being automated across the board. These changes reduce costs and improve efficiency, specifically when it comes to the customer/business cash cycle. The proof is in the pudding: despite -3.4% U.S. GDP during the COVID-afflicted year of 2020, electronic B2B sales saw 7.4% increases over the past two years. Moreover, automated order-to-cash (O2C) processes directly led to 15-30% savings for participating companies and their customers. Rather than fight progress, businesses should seize the opportunity to add embedded B2B payments to their infrastructure. 

Advantages of embracing digitalization 

There are myriad benefits to automating O2C processes, including the following: 

• Consistent and accurate data tracking 
• Higher chance of on-time payments 
• Easily available working capital 
• Opportunity to explore modern technology 
• Improved customer satisfaction 
• Greater brand loyalty 

All of these positive effects are interconnected and reinforce one another. Moreover, the move towards digitalization is not just a luxury, it is becoming a necessity. The COVID-19 pandemic forced people out of the office. A return to in-person operations is slow in coming, and in some cases no longer desirable. Any processes that can’t move to an online space are doomed to either become relics or overcomplicate business operations with disparate expenditures of time, energy, and resources.  

Challenges of adopting automation 

Several obstacles may get in the way of companies making the move to digitalized financial processes: 

• Corporate inertia 
• Misperceiving industry trends 
• Issues with scalability 
• Complex/multiple invoice management 
• Lack of available funds 
• Difficulty adapting to a larger market 

Some of the problems that impede progress towards automated processes can be overcome with a change in attitude or some basic consulting, but the larger issues will need to be addressed with the sustained help of professionals. Digitalization brings access to a significantly expanded field of potential customers and almost universally ensures that businesses can grow beyond what was otherwise physically possible. However, smaller businesses may struggle to locate the funds to support such rapid growth, whereas larger businesses might require more up-front work to update widespread pre-existing systems.  

Evaluating priorities and fostering trust  

The most important question for companies to ask themselves is, Where should we spend our energy, and what areas are in the greatest need of outside help? Implementing changes can be a big risk, and so can outsourcing certain tasks to new partnerships. However, building trust in reliable third-party providers can be the smartest way to prepare for overwhelming yet ultimately beneficial renovations. Regular self-assessment and the incorporation of a growth mindset will allow companies to make a pivotal leap forward. 

To learn more about how B2B embedded payments can fix the broken order-to-cash process and make it a business driver, and to learn from the practical wisdom of experts in the field, consider reading TreviPay’s whitepaper. 

Access TreviPay’s whitepaper, Embedded B2B Payments Are Advancing the Order-to-Cash Process, by filling out the form below. 

The post How Embedded B2B Payments Can Improve O2C appeared first on PaymentsJournal.

Introducing new practices to an organization can feel daunting, but it’s also a necessary part of how businesses grow and change. A clumsily executed new program can be disastrous for any sized company. No matter how stellar an idea an executive cooks up, it can be seriously hindered by poor communication, lack of buy-in, and disjointed rollout. Implementing a virtual card program is one such winning idea, and it takes a village to make it a successful reality. 

Nvoicepay’s recently released whitepaper, Best Practices for Implementing a Virtual Card Program, takes an in-depth look at internal strategies that will ensure a successful virtual card program for vendor payments. 

The future is now 

Over the past decade, the payments industry has experienced a revolution that has all come to a head in the last 18 months. Payments were already becoming fast, flexible, and digitized en masse when the COVID-19 pandemic hit, as evidenced by this Mercator report. The new realities of pandemic life (social distancing, work from home, etc.) led to an explosion in virtual card signups both among consumers and businesses.  

Virtual card use for B2B payments has seen marked growth in popularity, no doubt due to the many benefits that come with incorporating virtual cards into the accounts payable process. Virtual card programs are the critical first step towards automating AP processes, improving profit margins, and reducing paper checks. But getting set up for success isn’t as simple as tossing off a one-sentence memo announcing an upheaval in the inner workings of a business. There’s an effective and methodical approach to operating a virtual card program, and organizations that follow best practices greatly improve their chances of reaching program goals and increasing rebates. 

Four-step process 

Nvoicepay identifies four steps to successful implementation of a virtual card program, which are unpacked in greater detail in the white paper. Although they may seem straightforward, these steps require commitment and know-how to execute: 

1. Designate an executive sponsor 

2. Identify a dedicated program owner 

3. Set program goals 

4. Promote and launch the program in-house 

These measures will enable any business to move in the right direction. Setting up a senior leader to spearhead the transition to virtual card payments gives the project credibility from the top down. Entrusting a point person to oversee day-to-day operations keeps everything on track. Setting program goals gives participating departments a sense of where the company is heading and allows them to appreciate when they have been successful. Holding a cross-functional virtual card kickoff coheres the project across the organization and reinforces the company brand.  

A continuing post-pandemic priority 

Every day there are new examples of companies adopting virtual card programs to improve their accounts payable processes. Clearly, the payments industry is shifting towards digital innovation. Virtual cards bring enhanced security, efficiency, cash flow control, customer loyalty, and payment optimization, among other benefits. Some projections forecast that B2B usage of virtual cards will double over the next five years. The time is now to advance business operations by bringing antiquated AP systems into technological maturity. 

To learn more about internal strategies for implementing virtual card programs, ensuring that every key player at a company plays the proper role, setting specific and achievable organizational goals, and guaranteeing the effective adoption of a new payments initiative, consider reading Nvoicepay’s whitepaper. 

Access Nvoicepay’s whitepaper, Best Practices for Implementing a Virtual Card Program, by filling out the form below.  

The post Strong Steps for Starting a Virtual Card Program appeared first on PaymentsJournal.

If readers go back to 2016-2017, they would see the focus of VC and other fintech investment had started to shift from the ubiquitous concentration on consumer-related products and services over to some B2B types of uses. This has steadily continued, and with the onset of the pandemic, investment in B2B fintech has maintained a high trajectory throughout 2021. This article is about how these B2B fintech enterprises can scale up and continue to grow, by replicating to some extent what the consumer fintech businesses have done.

‘The pandemic has put the B2B fintech sector in the limelight, and it does not seem to be slowing down; on the contrary, the B2B fintech industry is thriving… Companies in the field are maturing… With all of this investor interest, competition is heating up among B2B fintech. As a result, these businesses are continually seeking new methods to keep their consumers happy. Bringing in new consumers in B2B requires a significant investment of resources; therefore, keeping them satisfied is critical…

Scaling in new customers requires finding methods to scale the customer success function for many high-growth organizations. But, how? For years, the B2B sector largely focuses on the business side of things rather than building a relationship with their clients. However, with the shifting mindset, more B2B companies rely on best practices from modern consumer financial companies to level up their customer experience.’

The author goes on to discuss six different things that these maturing fintechs can do to shore up their growth models going forward, so readers can click through and see what is recommended; this incudes such headlines as ‘upgrade payments infrastructure,’ which is of course the same thing that we advise FIs, but which does apply to many other businesses in the fintech space as well. It’s worth a couple of minutes to browse and stimulate some thought.

‘The pandemic has been a hotbed for innovation, quickening digital trends, and increasing the need for new payment mechanisms. Consequently, the B2B fintech industry has prospered, and investors are flocking to it like bees to honey… The B2B fintech industry may genuinely be a domain leader in the next few years by concentrating on customer service. Taking a page from B2C fintech firms, all they need to do is create a financial checklist centered on delivering clients with the greatest goods and services that surpass their expectations!’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post What Consumer Fintechs Can Teach B2B Financial Companies appeared first on PaymentsJournal.

Buy-now-pay-later: It’s the global fintech revolution enabling shoppers to pay for everyday products in installments, and arguably marks the greatest disruption in consumer finance since credit cards.

Yet whilst the likes of Klarna have taken the world of B2C finance by storm, there has been very little innovation or disruption within the B2B payments world – until now.

A growing number of fintech-based finance providers are now working to replicate the booming B2C BNPL model in the B2B world, by proactively providing credit to B2B merchants. These credit lines empower merchants with the ability to become their own BNPL provider and offer their business customers a new and different option to pay for purchases.

Why now? And can B2B BNPL replicate the success of its B2C counterpart?

B2B credit is not, in itself, a new concept – through invoice financing, most businesses can already pay for an item or service at a later date. What has changed, however, is the technological, financial and social context within which modern day businesses are operating, and it is this transformation – and three key factors, in particular – that has led to the rise of B2B BNPL.

The first factor is the maturing of financial technologies that makes B2B BNPL possible. Previously, when providing credit, businesses would have to undertake arduous, manual and generally offline checks. This could typically take days.

Today, digital solutions – such as the wide use of open banking allowing fast and accurate credit checks and automated KYC and AML – streamline the entire process, meaning lending decisions can be made in minutes.

The second factor is the proven B2C model, which has given businesses and B2B credit providers confidence that the model can work. With B2C BNPL having transformed the consumer market, businesses and lenders have started to think about how to replicate this idea in the B2B world, while improving the obvious shortcomings such as lending to people with poor credit history.

The third and final factor that has accelerated the development of B2B BNPL has been the economic impact of the pandemic. The squeezing of finances – particularly for SMEs – has resulted in pressure on cash flow, with the majority of British businesses having only three months or less cash in reserve according to a March 2021 survey by the British Chamber of Commerce.

It is clear, therefore, that the stage is firmly set for B2B BNPL. Yet despite the roaring success of companies such as Klarna, there remain considerable concerns over irresponsible B2C lending, the inability of borrowers to maintain their repayments and the risk of them spiralling into debt. This risk led to the government announcing in February 2021 that consumer BNPL products would be regulated by the FCA.

Businesses – in particular small enterprises – are no strangers to the perils of taking on too much debt, and carefree B2B BNPL lending has the potential (as any form of business lending does) to increase risk. This is why responsibility must be at the heart of a B2B BNPL culture.

Responsibility starts with lenders like us, Fintex Capital, who provide the finance allowing businesses to become BNPL vendors in the first place. It is our responsibility to ensure that we are only partnering with reputable companies that, in turn, will use this function responsibly. It is also our responsibility to work with businesses so they understand how to be lenders, from assessing credit risk to developing a collections policy if something goes wrong.   

It is then the responsibility of those companies to undertake due diligence on their customers. One advantage of the B2B world is that lender and borrower are far more likely to know each other, and have an existing relationship, than in the B2C world. Responsibility does, however, also mean businesses assessing the credit quality of their clients.

With businesses increasingly modelling their online infrastructure along the lines of an eCommerce site, BNPL solutions will also need to be accessible, integrated at point of sale and compatible with everyday payment partners. Unlike mass market B2C BNPL, companies offering BNPL will also need to ensure that their solutions are flexible to satisfy each borrower’s individual needs.

With BNPL having revolutionised consumer finance in recent years, business finance is now set to undertake a similar transformation. Thanks to fintech innovation, the potential for BNPL finance to unlock growth and scalability is now vast. It will be up to all of us – tech innovators, financers, lenders and customers – to ensure that this lending power is deployed responsibly.

The post B2B BNPL: The Future of Business Finance? appeared first on PaymentsJournal.

In yet another indication that financial operations software is converging across key systems, we see this posting at Crowdfund Insider about a collaboration to create payables and receivables flows through a combined platform approach. The Swiss fintech Quadient has a receivables SaaS solution called YayPay, which it acquired in 2020, and will be partnering with Boston-based Flywire, a payments enablement and software company, to embed YayPay into the Flywire B2B solutions set.

‘As YayPay’s global presence and client base has increased, the requirement to offer accessible cross-border payments has also surged… Flywire’s B2B solution, which brings together an innovative payments platform, global payment network and vertical-specific software, will “embed into the YayPay platform.”…

In turn, Quadient’s clients are expected to benefit from flexible and dynamic payments solutions that “enable businesses to accept and settle payments in more than 240 countries and territories and in more than 140 currencies,” the announcement noted…

YayPay users are able to use Flywire when transacting globally and to pay using direct debit or electronic banking. They are also able to take advantage of Flywire’s foreign exchange market (FX) management and currency exchange, automated reconciliation and local collection and settlement.’

As we have called out consistently over the past few years, this convergence trend across cash cycle solutions has been bolstered by the increasing use of APIs to connect disparate systems, creating embedded finance opportunities that will increasingly dominate as more companies and banks move to cloud infrastructure environments. A top priority for companies across the globe is to continuously seek financial operations efficiency, minimize operational resources consumed by manual processes, and gain better control over the management of working capital through automation, rather than to extend payment terms (buyers) or increase collections activity (suppliers) through arbitrary decisions.

‘Flywire also brings greater transparency for YayPay users, who can easily “track when payments are coming in. For Flywire, the collaboration broadens the company’s reach into the strong B2B segment of the AR market,” the update noted…

YayPay by Quadient is a software-as-a-service (SaaS) predictive and automated AR management solution. It is part of Quadient’s portfolio of solutions that is “bringing together AR, accounts payable (AP), customer communications management (CCM), document automation and customer journey mapping (CJM) into an advanced cloud-based suite that offers companies the benefits of automation and intelligent communication.”

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post YayPay Partners with Flywire to Digitize B2B Payments appeared first on PaymentsJournal.

Automating and future-proofing operations with digital processes has become a priority for most organizations. This is especially true given the added disruption brought on by COVID-19.  

To optimize their processes and decrease the risk of error, companies must automate and modernize existing accounts receivable (AR) processes. But what is the best method to do so? As more companies prioritize digitization and outsource accounts receivable, there is opportunity to implement a payment solution that solves for the common pain points of existing AR processes.  

To learn more about the current state of AR and how organizations should approach their payments process transition, PaymentsJournal sat down with Beth Bourgoin, Receivables Product Manager at Deluxe, Anna Tallo, Senior Solutions Consultant at Deluxe, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group. 

Businesses understand the value of AR automation 

For the past two years, Deluxe has partnered with Strategic Treasurer to survey the state of AR processing, gathering insights on pain points, trends, and key findings within the market. Noteworthy findings from the 2021 Accounts Receivable Survey Report, in which 150 corporates and banks were surveyed, can be found in the infographic below: 

“Over 50% of corporates surveyed still maintain commercial lock boxes for the processing of paper payments. That’s just an interesting fact considering the COVID-19 pandemic that we’re moving through and what we know about payers and their desire for less touches in the payment process. Paper payments are still there, they still exist, and they’re still pretty common,” said Tallo. 

On the other hand, these corporates are very much interested in moving toward a more fully electronic accounts receivable process, with 72% of corporates saying that a fully electronic AR process is important or very important to them.  

“That kind of demonstrates, or tells us, a couple of different things,” Tallo continued. “The first is that they’re looking for a better payer-payee relationship, and they know that offering additional payment channels—more electronic options—is what the payers are looking for… I [also] think that corporates are seeing the benefit of moving to fully electronic processes.” 

These benefits are plentiful. Corporates that automate AR processes can not only collect payments more quickly, but they can apply them and use that cash flow to grow their companies more quickly as well. All in all, even though paper processes still dominate many companies’ AR processes, they are eager to automate moving forward. 

The sheer percentage of organizations that see automation as important “shows that they’re ready,” said Bourgoin. “And the question these businesses are asking themselves is: Who’s ready to partner with me and support my strategy? I’m ready to do it, but who is going to walk alongside me?”  

The current state of AR automation 

As reflected in the survey data above, most corporates have forward-looking goals to highly automate their AR processes. At the same time, some have become attached to their manual processes in certain arenas.  

“They kind of have an unfounded confidence. [Manual processes are] working and they just don’t have that moment to take a step back and see what sort of value that automation can bring,” said Tallo. Another portion of corporates have achieved partial automation, such as the introduction of electronic payment options for consumers, but fail to see other obstacles in their way when it comes to streamlining AR. 

For example, organizations that have introduced digital payments may now have cash application teams that spend a majority of their time associating invoices to payments. These corporates may fail to see that there are automated solutions in the marketplace even for that reassociation piece of the process. They are missing the bigger picture. 

There are also several major pain points when it comes to AR automation, with the most noteworthy pain point being limited IT resources. “There are only so many of them, and they’re crucial to bringing an [AR automation] solution like this to bear if you’re wanting to do it in-house,” Tallo added. 

Competitive benefits of AR automation 

Some businesses lack trust in their technology since they worked long and hard to cobble their processes together. However, they must start somewhere: AR isn’t going to request automation itself. The benefits of taking the plunge are worth it. 

“The benefits are just truly exponential, and it’s not until you start whatever you decide to call it—your journey, the transformation, bringing the strategy to life—it’s not until you start that process that businesses start to unlock the visibility to those benefits and really what that means for them and how they operate as a business,” said Bourgoin.  

Multiple competitive benefits of automating existing accounts receivable processes include increased efficiency, decreased time in the order-to-cash cycle, reduction in manual errors, and a greater ability to scale and grow business and support large volumes as needed. 

Reducing the AR errors inherent in manual processes can also strengthen organizations’ relationships with their customers by not taking up their time with questions regarding billing. Rather, organizations can deal with AR issues themselves and leave customers more satisfied.  

Bourgoin used the analogy of a restaurant to underscore this point. “You, as the customer, should not know whether or not there’s chaos in the kitchen, whether someone called out, whether your food got burnt on the first try. You should not be aware of that. And the more automation is brought to AR, the happier customers are going to be,” she explained.  

How organizations should approach automation 

Approaching AR automation may seem daunting, but a good place to start in knowing what can be automated.  

“A lot of times [corporates] underestimate what can be accomplished with help from a solution and with automation and machine learning, and that’s one of the things that I do in my day-to-day, is help them realize what their pain points are and then see if there’s a way to automate that process,” said Tallo.  

Murphy agreed that understanding is crucial, explaining that automation is an evolutionary process. “You need to understand the direction you’re going in and what you want to evolve into. And I also think the other thing is remembering that you can approach this from multiple angles,” he advised. 

By understanding what can be automated, businesses no longer have to settle for partial automations. “Half the time, I don’t even think they know that they’re settling. They think they’ve done what they came to do, and they need help understanding what more there is out there to help them with their accounts receivable automation [and] getting it where it is truly end-to-end with very little manual interaction,” concluded Tallo. 

The post Future Proofing AR Operations with Digital Processes appeared first on PaymentsJournal.

This announcement in Yahoo! Finance provides an overview of a collaboration between the Federal Reserve System and the Business Payments Coalition (BPC) around an industry initiative to create a place for e-invoices in standard formats to be exchanged, while separately seeing if the same can be accomplished for remittance information that accompanies payments. The BPC is a volunteer organization originally established about ten years ago under the name Remittance Coalition, and currently has about 500 member entities.

‘The Federal Reserve and the Business Payments Coalition (BPC) today announced 73 organizations have joined an industry effort to stand up an operational pilot exchange framework to enable businesses of all kinds to exchange electronic invoices (e-invoices). Another 42 organizations will strive to assess whether a similar exchange framework can facilitate electronic delivery of remittance information across all payment types….

The E-invoice Exchange Market Pilot and the Remittance Delivery Assessment Work Group are two industry efforts aimed at catalyzing the modernization of business-to-business (B2B) payments in the United States. The commitment to these work efforts by organizations across the industry is evidence that there is a real desire to modernize B2B payment processes. Digital payments and processes benefit businesses through lower costs, better cash management, error reduction, risk mitigation, increased transparency and improved efficiency.’

This effort sounds somewhat familiar since there are other products and services that are attempting to fill in parts of these gaps, for example the Nacha Phixius platform, Mastercard Track, and any number of commercial e-invoicing capabilities that one can find. We suppose that since there is no e-invoicing standard in the U.S., unlike some markets in Europe, this is a way of establishing de facto standards. We certainly applaud any methods to further the digitization of cash cycle operations, and standards are welcome. Given the adoption of ISO 20022 in all new real-time payments systems, as well as conversions of Fedwire, CHIPS and SWIFT, we would also think that the remittance part of this is a somewhat clear path.

‘The E-invoice Exchange Market Pilot and Remittance Delivery Assessment Work Group will continue to drive innovation and adoption of electronic B2B payments processes in the United States. To stay informed of the progress of both initiatives, visit BusinessPaymentsCoalition.org and FedPaymentsImprovement.org, and join the FedPayments Improvement Community to be among the first to hear about the latest payments improvement announcements.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Fed and BPC Announce Two Industry Efforts to Modernize B2B Payments appeared first on PaymentsJournal.

Embedded finance allows non-financial businesses to make payments and other financial services simply disappear into the background of the solution being offered to a customer. And its growth trajectory is staggering: the total addressable market for embedded finance will top $7 trillion globally by 2030 with the embedded payment sector in the US forecast at a $300 billion revenue opportunity.

The most visible example of embedded payments that has been experienced by most is Uber, a seamless transaction that actually requires no transacting on the consumer’s part. B2C embedded payments have proliferated from there. Now, unsurprisingly, B2B buyers who require a variety of payment options, including net terms, are beginning to expect that their purchases be transacted with the ease and convenience of an Uber payment.

“Three years of consumer behavior change was squeezed into one year in 2020,” wrote Forrester Principal Analyst Jay McBain. “Consumers are now demanding online experiences, happily virtual, wanting seamless digital procurement and provisioning, and wanting everything at the click of a button. The delta between B2C buyers and B2B buyers has collapsed during the pandemic. It’s all about speed, convenience, and remote, whether the buyer is acquiring a Peloton or a software product.”

These disruptions and revolutionary changes intensify the competition to “own” B2B customers. B2B companies must develop a future-ready and resilient payments strategy in response. And while B2B embedded payments require more expertise and work to satisfy, B2B sellers and marketplaces that meet these heightened expectations will establish stickiness and loyalty with customers, and enjoy cost savings, increased revenue potential and better cashflow.

If your customers don’t already expect their B2B payments to be invisible, they will soon. Embedded payments can enable that invisibility; however, building the capability requires significant work, technical expertise, and a firm grasp of all of the costs that can arise. Here are four important considerations:

• B2B payments should feel like B2C payments. Merchants that can do this will meet the expectations of the digital-first buyer. This can be difficult because B2B payments are far more complex than the transactions and processes that enable B2C embedded payments, which tend to be performed by a single stakeholder (a consumer) using a single payment method (a credit card). Any given B2B transaction may involve multiple stakeholders (the purchaser, the budget owner, the procurement group, the accounts payable team and others) and numerous different payment options (net terms, purchasing cards, and credit cards, among others). Each of those B2B purchasing stakeholders has unique needs and preferences that must be met, and each payment option comes with a unique set of procedural and technological integrations to be managed. Smart B2B embedded payments should help the merchant improve cashflow by allowing buyers to receive invoices daily, weekly or monthly and make payments on terms that they control. It is also critical to allow for ways to add data, like PO numbers, to invoices and support integrations into Procure-to-Pay and Enterprise Resource Planning platforms. The speed and ease of these embedded payments should mask the significant amount of transactional plumbing that must be installed and orchestrated behind the scenes.

• Instant decisioning and credit are key and will help merchants attract B2B buyers and build loyalty. The most effective embedded payments experiences make a company easier to do business with by letting the buyer interact, and transact, on their preferred terms.  Business customers prefer to purchase on terms and spend more, more frequently when they have a dedicated financial relationship and credit line with a business. The advantage over competition is significant when customers know they can painlessly purchase from a merchant once they’re ready for more stock. But the credit issuance cannot be too cumbersome or slow. In the move to digital- first interactions, instant decisioning is critical to grab the buyer and the sale.

• Don’t forget A/R when building an embedded finance strategy. All businesses are in the midst of digital transformation and a key part of the embedded payment evolution in B2B merchants is extending to accounts receivable with a 100 percent digital experience and automated onboarding. This can deliver significant time and cost-savings to the merchant – eliminating the need to email forms, wait days for credit decisions, or spend human time on procedures such as creating PDF invoices or performing manual bank reconciliations.

• Protect against the growing threat of business identify theft. As more customers are acquired online and globalization accelerates,there is a growing risk of business identity theft and other forms of digital fraud. When implementing an embedded payments strategy, it is important to work with a partner who can reliably enhance the relationship between buyers and sellers by providing sophisticated fraud detection processes and maintaining a strong track record for risk decisioning.

B2B merchants must be closely in tune with the revolutionary changes to customer experience, engagement and convenience embraced by the rising digital generation and accelerated by COVID. B2B customers  are also consumers after all, and they now have the same heightened expectations for seamless, invisible payments in their B2B purchasing that they have come to expect in B2C transacting. B2B merchants must now make it as easy as possible for customers to transact with their brand by embracing the value an embedded payments capability delivers.

The post Embedded Payments for B2B Merchants and Marketplaces: 4 Considerations appeared first on PaymentsJournal.

TreviPay, a global financial technology company, today announced its foray into the US fashion sector after being selected to power the trade credit offering for Flowfy, an integrated service platform for online B2B fashion and apparel marketplaces. TreviPay’s API enables Flowfy’s ‘FlowPay’ offering, which is sold to fashion marketplaces, and provides quick and reliable settlement terms to marketplace sellers as well as extends trade capital to buyers at a competitive rate. The digitized and seamless payment experience allows marketplace buyers and sellers to focus on their core business functions in the already complex fashion supply chain.

Friction-free B2B payments have become paramount to meet shifting consumer expectations. Over 90 percent of respondents in TreviPay’s recent Forrester Consulting study reported that better payment options for B2B customers will improve customer satisfaction, quicken transactions, free up internal resources, and increase business success. These benefits, coupled with marketplace sellers’ desire to lower business risk with online buyers, are heightened in the fashion wholesale market.

“Offering long-term trade credit can be challenging for small and medium-sized fashion wholesalers, but fashion retailers rely on 30- to 60-day payment terms in order to protect their cash flow,” said Brandon Spear, CEO of TreviPay. “TreviPay’s unique payments solution for Flowfy will provide 30-second credit approval for fashion marketplace buyers with a B2C-like experience. Additionally, FlowPay protects marketplace sellers from the risk of extending credit by providing reliable underwriting and settlements within two days.”

Flowfy is already integrated with B2B fashion marketplace Brandboom, an AI-driven marketplace that provides introductions between sellers and buyers that fit each other’s profiles.

“Our goal is to continue modernizing and digitizing the buyer-seller marketplace relationship as we recognize these growing needs in the fashion sector,” said Jesse Kim, Director of Flowfy Commerce Service. “Partnering with TreviPay has enabled us to provide faster and more reliable settlement terms to sellers while managing payment details and extending trade capital to buyers at a competitive rate – all of which are needed to host a frictionless check-out experience.”

About TreviPay 

TreviPay is a global financial technology company specializing in payment and credit management for B2B companies through custom omni-channel payments solutions. We support merchants by streamlining the purchasing experience and supporting increased customer interaction in B2B Commerce, facilitating $6 billion USD in transactions per year in 18 currencies for customers in more than 27 countries. To learn more about TreviPay, please visit TreviPay.com.

About Flowfy 

Flowfy is web-based shipping/payment service provider for the business in B2B Marketplaces. Flowfy helps the business easily complete online transactions with Net 60 payment terms and small parcel shipments at a discounted rate. We are currently partnered with Brandboom, a fashion B2B marketplace who carries +4,500 Sellers and +200,000 buyers and Flowfy provides the services to both Brandboom’s sellers/buyers. Please visit our website for more details of our service. https://www.flowfy.com/

The post Flowfy Selects TreviPay to Power its B2B Trade Credit Offering for B2B Fashion Marketplaces appeared first on PaymentsJournal.

This piece appears in TechCrunch and discusses a funding round for the 2019 startup out of Tel Aviv named PayEm, which provides spend management solutions for MNCs and others. Readers will likely be familiar with the uptick in interest among employees and organizations in general around making work processes easier; in effect digital and certainly more mobile. A number of fintechs are upping the game in the space, among them this recent entry. The posting speaks to a $27 million seed and series A investment by several funds. 

‘Itamar Jobani was a software developer working for a medical company and “hated that time of the month” when he had to use the company’s chosen reimbursement tool….“It was full of friction and as part of the company’s wellness team, I felt an urge to take care of the employee experience and find a better tool,” Jobani told TechCrunch. “I looked for something, but didn’t find it, so I tried to build it myself.”….What resulted was PayEm, an Israeli company he founded with Omer Rimoch in 2019 to be a spend and procurement platform for high-growth and multinational organizations.’

We have covered the procure-to-pay space in the past through member research, as well as cross-border, where PayEm seems to be carving out their niche, to make certain parts of financial operations easier for the FPs as well as traveling employees. Given the pandemic and increasing use of APIs for faster and crisper integration between internal systems and external gateways, etc. this easing of the work experience is gaining momentum. So the solution combines a few key processes and products, including the ability to issue corporate cards, which have also become more popular as a means of getting paid faster and safer.

‘The company’s technology automates the reimbursement, procurement, accounts payable and credit card workflows to manage all of the requests and invoices, while also creating bills and sending payments to over 200 territories in 130 currencies…. It gives company finance teams a real-time look at what items employees are asking for funds to buy, and what is actually being spent. For example, teams can submit a request and go through an approval flow that can be customized with purchasing codes tied to a description of the transaction. At the same time, all transactions are continuously reconciled versus having to spend hours at the end of the month going through paperwork…. The company, which also has an office in New York, has 40 employees currently, and the new funds will enable the company to triple its headcount, focusing on hiring in the United States, and to bring additional features and payment capabilities to market.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Payem Comes Out of Stealth with $27m and Its Answer to the Expense Report appeared first on PaymentsJournal.

This American Banker posting discusses a new instant payments development in Canada, whereby a number of banks are rolling out a more robust e-Transfer system service (e-Transfer for Business) that includes ISO 20022 messaging and added security features that allow for real-time settlement. The new product is targeting additional volume from businesses that continue to use paper checks and more expensive wire transfers, but who have not found the existing e-Transfer system to be a compelling tool. This new system is rolling out one year ahead of the expected Canadian Real Time Rail instant payments system. We had no previous knowledge of this development.

‘Thirteen of the country’s financial institutions are launching an instant business-to-business payments service more than a year ahead of the rollout of the country’s fast payments system, the Real-Time Rail….The companies will run the service on the existing Interac e-Transfer platform, but they’ve added features such as fraud vetting and the global ISO 20022 payments messaging standard in an effort to wean more companies off paper checks and wire transfers. The new features are meant to address the limitations of e-Transfer, a next-day settlement system which is popular with consumers but hasn’t achieved significant business adoption.’

The new system service increases the transaction limit from the current C$10,000 to a new limit of C$25,000.  Apparently, this is deemed to be sufficient to attract the expected volume jump that they seek. We can say that the original $25,000 transaction limit on The Clearing House’s RTP did not stimulate great payables volume, so that was increased to $100,000 last year. We now expect that limit to be increased even further, so this contrasts a bit with the e-Transfer for Business expectation.  Nonetheless, this provides another option in Canada, and once we get a briefing will know a bit more about settlement and so forth.

‘“The new service enables real-time reconciliation and automation of account payables and receivables and working capital as well as enhanced payment tracking from end to end,” Siromani said….Another important aspect of the new service is the automation of risk assessment to speed up payments. Although traditional Interac e-Transfer transactions are near-real-time, sending financial institutions may delay e-Transfer payments depending on the risk profile of a transaction….“Interac and participating [financial institutions] use a risk-detection model to analyze real-time payments fraud risks before e-Transfer for Business transactions are sent,” Siromani said. This enables all e-Transfer for Business transactions to be processed in real-time with funds arriving in recipients’ accounts within seconds….RBC is running an educational campaign about the service, targeting markets such as insurance firms that need to optimize their claims payments, with documents and payments being sent together. “Over time, as suppliers and buyers get to know e-Transfer for Business, there will be a network effect in terms of adoption, with users bringing in new users,” Siromani said.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post New Canadian B2B Payments Network Offers Test Case for U.S. appeared first on PaymentsJournal.

Request for pay (RfP) is getting more attention as real time payments evolve.  In May, 23 banks plus some key processors announced their intention to implement RfP through The Clearing House. This signal of support was needed to let potential users know that an audience for RfP for use cases like consumer bill pay or invoiced payments was on the horizon.  In another sign that momentum around RfP is growing, Chase Bank publicized that they are launching a B2B payment option using RfP:

The new Chase product enables immediate wholesale payments between companies, or certain consumer-to-business transactions, such as someone buying a car. The bank is piloting the product through an undisclosed fintech partner.

In the auto industry, consumers who don’t take out a loan must pay with cash, a cashier’s check or wire transfer. Chase wants to replace this with a real-time digital payment. Real-time payments in a car dealership can also speed up other processes, such as setting up the vehicle’s registration.

There are many inconveniences today because a wire transfer doesn’t run 24/7,” said Cyrus Bhathawalla, managing director and global head of real-time payments at JPMorgan Chase.

He added that Request for Pay will also provide better transparency about the resolution of business-to-business transactions.

“A corporate would like to know if and when you paid and be told in real time to ship a product or provide a service,” he said. “That’s not present in all payment types.”

But Chase, a founding member of clearXchange, which became the Zelle network, may only be one of the first to apply the model of real-time P2P transactions to commercial payments. Other banks may follow the same pattern.

Initially, Chase will link its RFP product to The Clearing House’s Real-Time Payments network, which also helps power Zelle. That network has more than 150 participants, a $400 average transaction and 60% coverage for demand deposit accounts.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Chase Bank Launches Request-for-Pay for B2B Payments appeared first on PaymentsJournal.

As consumers, we tend to view making payments as a highly automated process, whether paying for something using our debit/credit cards, or paying our household bills online through our bank’s website. In the B2B world, however, many of the payments that businesses make to other business are still done manually.  Why?  It’s all about relationships.  In a retail sale, the buyer and seller don’t necessarily know each other, so payment is expected before goods are delivered.  In contrast, businesses depend on their suppliers, and suppliers depend on the repeat purchases by their business customers. The recurring nature of B2B sales is designed to keep the supply chain moving, with payments occurring as a byproduct of that.

Automating B2B payments continues to be the target of many fintech companies, with most focusing on either on payables automation or receivables automation. 

“There are two sides to every payment—creation and receipt” says  Derek Halpern, Senior Vice President of Sales for Nvoicepay. “When it comes to consumer payments, both sides are straightforward, especially with today’s technology. But in the world of business payments, process complexity adds friction between them. Accounts payable’s goal is to manage cash flow by hanging on to money as long as possible. That puts them at odds with accounts receivable, who wants to get paid as quickly as possible.”

Companies providing B2B payment automation solutions have focused on either the receivables side or the payables side, but no one provider has reached the significant critical mass needed to form a universal business payments network.  Fundamentally, though, the technology is not the limiting factor in the slow pace of B2B payments automation.  “Digitizing transactions doesn’t efficiently address the complexity or friction between the sender’s and receiver’s processes,” says Halpern, “And the lack of consideration can worsen the issue.”

Overview provided by Don Apgar, Director, Merchant Services Advisory Practice at Mercator Advisory Group

The post Why The Players That Focus On Both Sides Will Win The B2B Payments Market appeared first on PaymentsJournal.

In a recent announcement through businesswire we see that U.S. Bank has agreed to acquire Bento Technologies, aka Bento for Business, the 2014 startup based in San Francisco that specializes in payments technology to improve cash flow for SMBs. There has been a great deal of emphasis on the SMB space, particularly in the pandemic timeframe as many smaller businesses have failed and ongoing cash flow concerns are a top priority. Digital financial processes are not usually associated the SMB space, and a number of vendors have developed solutions to address the traditional gap in bank products and services in that space. So as we pointed out to members in the CEP Outlook for 2021, collaboration between banks and fintechs is one way to address the product and distribution advantages that each have.  One way of doing this of course is through acquisition.

‘The acquisition is part of the vision at U.S. Bank to bring payments and banking services together to simplify cash flow and money management for small businesses. Bento’s accounts payable-based software complements the bank’s existing Elavon and talech accounts receivable software solutions, providing U.S. Bank clients a holistic one-stop experience for both their accounts payable and accounts receivable needs….“Business owners work hard every day to turn their passion into a business. Our goal is to make money management easier for them so they can spend less time on administrative tasks, and more time on doing what they love – serving their customers,” said Tim Welsh, vice chair of Consumer and Business Banking at U.S. Bank. “This is why Bento Technologies is a great fit for U.S. Bank.”

Bento has strong spend management capabilities, facilitated through virtual card technology, mobile integration and associated analytics.  Knowing where the money is across financial operations is a key to understanding and managing business cash needs, so this looks like a good fit all around.

“Our focus is to provide customers with digital capabilities they need to manage their finances from anywhere, while also retaining the visibility and control that are important to managing cash flow efficiently,” said Shailesh Kotwal, vice chair of Payment Services at U.S. Bank. “Pair that with the banking products and the global footprint of U.S. Bank, and it’s clear to see a great opportunity for our customers.”…The expense management tools from Bento Technologies will blend well with the other services U.S. Bank offers businesses, from credit, deposit and card accounts, to modern and secure payment acceptance and digital money movement….”Small businesses are the lifeblood of our economy,” said Farhan Ahmad, founder of Bento Technologies. “In 2014, Bento pioneered the concept of smart corporate cards and automated spend management for small businesses. I’m proud to say that we have saved our customers millions of dollars since then. We are now very excited to join U.S. Bank in order to accelerate our vision of creating a one-stop financial operating platform to help small businesses that serve communities across the country.”

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post U.S. Bank to Acquire Small Business Payments Software Company, Bento Technologies appeared first on PaymentsJournal.

The innovation train just keeps rolling as another startup emerges in the B2B payments space. Centime is based in Massachusetts and is led by founder and CEO BC Krishna, who some readers may recall was the founder of payables fintech Mineral Tree. Through its platform, the Centime startup is providing better cash flow options to companies in the SMB segment, which can be broken down into many sub-segments, but shares a common general issue of maintaining adequate levels of liquidity. 

This has been especially punishing during the pandemic, so new entries like Centime are creating ways to improve cash visibility, provide speedier execution in financial operations, and easier access to credit where needed. We covered the importance of more advanced cash cycle automation in a recent member report. 

The release at PRNewswire indicates that the company has joined the Visa Fast Track program for fintechs, which provides some advantages to innovative startups, including faster onboarding to the Visa network and easier access to its partners across the globe, as well as support from payment experts where required.  

There is a link in the release for those interested to learn more about the program. The release also states that Centime will be working with bank partner FNBO for easier access to commercial credit card lines.

‘Centime’s Cash Flow Control solution empowers small and mid-sized businesses to control and manage cash flow. The relationship with Visa will help Centime power the solution, which allows clients to monitor cash, improve decision-making with real-time cash flow forecasting, nudge late-paying customers and instantly access cost-effective credit to bridge liquidity gaps.’

We managed to chat with CEO Krishna for a few minutes, who indicated that the firm has a strong funding base, great partners, and a unique approach to the glaring cash flow issues faced by SMBs. He advised that there will be much more information available about how the Centime platform solves this common business problem in the coming weeks. 

“We’re delighted to be part of Visa’s Fast Track program,” Centime founder and CEO BC Krishna said. “Small and mid-sized businesses can plan better and grow faster by using Centime to gain control over cash flow. Working with bank partners and empowered by Visa’s network, our clients can now easily access cost-effective credit to meet their working capital needs.”…“By joining Visa’s Fast Track program, exciting fintechs like Centime gain unprecedented access to Visa experts, technology and resources,” said Terry Angelos, SVP and Global Head of Fintech, Visa. “Fast Track lets us provide new resources that rapidly growing companies need to scale with efficiency.” 

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Centime Links Up With Visa’s Fast Track Program appeared first on PaymentsJournal.

One of the things you hear about in the x-border payments space is the need to improve the speed, transparency, and cost of these transactions, which on the consumer side (P2P remittance, and C2B) has actually gotten better due to some of the customer experience work done by fintechs.  Most of the x-border transaction volume and value, however, is on the B2B side of things, and a huge challenge faced by banks and other service providers in this space are regulatory hurdles around AML.

In this release found at AITHORITY, we see the collaboration between a couple of fintechs to make that challenge easier to handle.  ONEPIP, a Hong Kong-based fintech that specializes in comprehensive solutions for money transfer, currency exchange and FX rate services, is adopting a solution from Napier, a 2015 UK-based regtech startup that develops an intelligent compliance platform for AML and trade compliance. 

‘RegTech company, Napier, provider of advanced anti-financial crime compliance solutions, has announced that cross-border payment specialist ONEPIP will be using its technology as part of ONEPIP’s upgraded anti-money laundering (AML) controls….Napier’s AI-led Transaction Monitoring, Client Activity Review and Risk-Based Scorecard Review will give ONEPIP a systematic, intelligent review of all its transactions and customer profile data to help identify suspicious activity quickly and easily, creating a robust compliance solution.’

So while we cover the challenges in x-border experiences, with >80% of transaction value in B2B uses, and AML/CTF one of the great regulatory hurdles, Those with interest in the space should be aware of the developments in compliance tech.

Dagian Cheong, Head of Risk Management, said “With over 25,000 transactions worth over USD4.5bn in value since 2016, licensed operations in Hong Kong and Singapore, and planned expansion in the region, automated transaction monitoring has become imperative for the management of the risks in our business….“As one of the fastest-growing FinTechs in the region, ONEPIP is on a continual quest to collaborate with best-in-class technology innovators, to integrate with our proprietary FX management platform, to meet the exacting standards of all our stakeholders, which include regulators and partner banks. We are particularly grateful to the Monetary Authority of Singapore for awarding us with the Digital Acceleration Grant which helped fund this project.”…..Robin Lee, Head of APAC at Napier, said: “Financial services organizations continue to face mounting pressures to ensure that their regulatory compliance measures are constantly up to date and robust enough to identify any potential criminal activity, or face huge fines. With Napier’s advanced and intelligent technology, this can move from being a mandatory duty to a competitive edge. ONEPIP’s new solution enhances its regulatory compliance regime to further strengthen its position as the trusted cross-border payment specialist in the region and beyond.”

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Cross-Border Payments Specialist ONEPIP Gains Competitive Edge With New Compliance Solutions From Napier appeared first on PaymentsJournal.

Disruption is an ever-present threat in the banking industry as cutting-edge fintechs and solutions providers offer technology that streamlines the customer experience. But this doesn’t mean banks are doomed to fall behind. By leveraging an open-platform approach, collaborating with other industry players, and harnessing data, banks can turn the tide on disruption and come out on top.

To learn more about how banks can go from disrupted to disruptor, PaymentsJournal sat down with Robert Mancini, Head of Payments for Americas at Finastra, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The pillars of banking success in the modern world

To provide some context on banking industry trends, Murphy referenced findings from a Mercator Advisory Group report from October 2020. The chart below shows that digitalization, platform banking, collaboration, and risk management are four major pillars of success for payments in 2021 and beyond:

“Digitalization of financial operations accelerated in 2020 and will continue, since corporate inertia around these types of investments has been greatly challenged by the pandemic,” explained Murphy.

Platform banking services are gaining traction as well, which is particularly important given the need to gain efficiencies for the coming shift to ISO 20022. Additionally, the move to the cloud will foster growing adoption of artificial intelligence, machine learning, and data usage. Meanwhile, risk management continues to be an ever-present priority for banks.

Industry collaboration, such as fintechs and banks working together, is another game changer. “[Banks] don’t have to reinvent customer tools and solutions, as they can integrate these proven solutions, these best-in-class products, to complete an end-to-end service for specific segments,” said Mancini. Through collaboration with other industry players, banks can elevate their value proposition by enhancing product offerings.

“In the end, banks can create an end-to-end digital experience for their customers and embed fintechs’ value proposition within that digital process. Eventually, this will lead to banking-as-a-service. I think that model will further proliferate the bank’s role across financial services in many industries. If you think about healthcare or insurance and countless others, I think this is an opportunity that banks will need to tackle promptly, as early adopters will have the most to gain here,” Mancini added. 

Open platforms enable banks to meet rising consumer demands

Asked whether open platforms are living up to the hype to enable banks to meet customer needs, Mancini responded with an overwhelming yes. Two examples of this are Amazon and Uber, which have each been successful in providing customers a seamless and automated transaction process. Banks, too, are using platforms for ease of integration into fraud, compliance, and other processes.

But this is just the tip of the iceberg. “As we look to the future of platforms and how [they] will be the key driver in revenue growth and deeper penetration into supporting financial services and other verticals… banks will be able to support transformations across any vertical by leveraging the platform to automate the process end-to-end and, in some cases, reimagining the customer experience,” said Mancini.

Soon, customers will expect a seamless buying experience across all products and services. For example, it is not unrealistic to expect grocery shopping to become more automated via technology such as smart fridges and a marketplace of suppliers.

“It’s really a self-feeding process. The more you elevate that bar, the more consumers’ expectations rise, and the more that the market responds to it and the technology adopters will start bringing that into play and outperforming their competitors. I think the key question for banks, what they should be asking themselves, is why [they] are not getting ahead of this versus waiting to be further disrupted,” he continued. 

Collaboration plays a key role in innovation strategy

The innovation efforts of any one player within the ecosystem of banking, fintech, big tech, and solution integration organizations simply cannot compare to the scale of innovation occurring in the space. As a result, it is unrealistic for any individual organization to expect to best serve their customers exclusively using the solutions within their four walls.

“The truth is that collaboration across the ecosystem can accelerate your value proposition and revenue growth while avoiding being disrupted. The added benefit to this model is that competition drives innovation and elevates the bar as your solutions can more easily… be interchanged via the platform,” said Mancini.

This is good news for banks looking to respond to market changes and better serve their customers. “To take it one step further,” he continued, “I think banks can collaborate with fintechs and partners to help drive their own revenue streams in a true balance of trade model.”

For example, banks can finance fintechs and enable them to monetize their services via a platform approach. This drives revenue for banks and fintechs alike, resulting in a win-win situation. While a few years ago, it was rare to hear about fintechs and banks working together, it is now becoming more commonplace as both parties see the advantage of doing so.

Data elevates the customer value proposition

The value of data is paramount for banks seeking to better serve their customers. However, it often goes under-leveraged, which is understandable given the traditionally siloed nature of data. However, it needs to change.

“I can understand that because it’s a difficult balance, as banks have the data often sitting in different silos. But the customers also trust that the banks protect that data and [do] not abuse it or share it in any way, so banks must take a cautious approach to achieve those objectives,” said Mancini. 

Banks should not overlook the benefits of starting small. For example, banks may be able to use existing data to identify that a customer is using checks for disbursement instead of a more secure and efficient channel that will reap better financial gains.

“Banks have plenty of data at their fingertips, and they can even pull up via their analysis statement and look from period to period at the behaviors to make better recommendations for their customers. And this all leads to the platform,” Mancini added. A platform approach makes it possible for banks to break down these data silos, harness existing data, and bring in external data to supplement what they already have.

Murphy agreed, adding that, “if you’re not actually utilizing the data that you have by driving it through the digital tools that are available… you’re actually at a disadvantage because your competitors that are better utilizing or transforming their data into digital uses are taking advantage of the latest generation technology.”

The takeaway

In a modern world, banks need to keep up with innovation, rather than scramble to catch up. In other words, they need to be the disruptors, not the disrupted. Leveraging an open platform, harnessing data, and collaborating with other industry players makes that possible.

“Banks have an opportunity by means of leveraging technology to counter that disruption and putting the bank in control to enable itself as the central point in the ecosystem of players, whether that be fintechs or others that drive innovation and an agile approach, would be one key item as we look to the future,” summarized Mancini.

The post From Disrupted to Disruptor: A Banker’s Guide to Turning the Tide on Disruption appeared first on PaymentsJournal.

This piece was dropped in The Scotsman, which seems apt given that the 2018 Oslo-based startup fintech Eedenbull has operations in Edinburgh. The company develops products for corporate banking entities in the payments space and has a platform banking solution. It seems that Eedenbull will be incorporating Mastercard Track into their offering.

The Mastercard Track network was first announced in late 2017 as a B2B information sharing system and has been evolving into a broader range of services, most recently the Mastercard Track Business Payments Service announced last year. Eedenbull will become a member of the network and utilize the BPS to enhance its’ own offerings to bank constituents.

‘One of the first open-loop B2B commercial networks, Mastercard Track automates payments-related data exchange between buyers and suppliers….Consisting of a portfolio of B2B solutions, it helps businesses increase simplicity, flexibility, and efficiency, optimizing the best option of paying or getting paid for every invoice across multiple payment rails….As a result of the tie-up, Oslo-headquartered EedenBull says its fast-growing network of banking partners will benefit from reduced complexity, driving down costs and enhancing the end-user experience for their business and corporate customers….The integration demonstrates EedenBull’s commitment to drive modernisation of the B2B commercial payment ecosystem.’

So it seems that the Mastercard Track network is starting to gain some traction, given the recent announcement that Barclaycard Payments will also be a participant. Eedenbull distributes through banks, which often do not have the technical resources to keep up with all the latest-gen tech that is available for corporate customers to consume. 

As we see the acceleration of digital payments and processes, we also have the corresponding workplace and demographic changes happening simultaneously, which increase demand for easier B2B payments experiences, in line with how people conduct their personal lives. So we’ll keep an eye on these developments.

‘Nicki Bisgaard, CEO and co-founder of EedenBull, said: “The global pandemic is accelerating a move towards automated B2B payments and shifting business’ digital expectations in the process….“As a result, banks need help optimising their offering to not lose out on customer loyalty or the huge opportunity that lies ahead. This collaboration underpins our commitment to delivering optimised B2B payment solutions to our banking partners, allowing them to meet the complex needs of their business customers.”…He added: “EedenBull is delighted to continue its excellent relationship with Mastercard. By joining Mastercard Track, we believe our solution helps to solve some of the most urgent B2B payment challenges today.”…Eedenbull will use Track Business Payment Service as a Buyer Payment Agent (BPA) by integrating with Mastercard APIs and it will be actively offering the service to its partner banks.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post EedenBull Integrates Mastercard Track To Drive Modernization of B2B Payments appeared first on PaymentsJournal.

More B2B payments news, this one coming out of the state of Connecticut, which has an investment entity called Connecticut Innovations and established a hub facility called District, located in New Haven. In this announcement through businesswire, we learn about pre-seed funding for CoreChain Technologies, a B2B payments startup that uses a combination of blockchain and cloud technologies to help further evolve businesses beyond manual and hybrid financial processes into more fully digital experiences. 

‘CoreChain Technologies, the digital B2B payments network built on blockchain, today announced it has raised $1.25 million in pre-seed funding from investors that include Ulu Ventures, Connecticut Innovations, Bloccelerate VC and New Form Capital.  The funding will be used to accelerate enterprise customer adoption and aggressively expand its payments and financing network…..Using enterprise blockchain technology to power B2B payments and financing, CoreChain is streamlining the manual processes and painful reconciliation that has remained static for decades, while mitigating fraud. CoreChain also unlocks lending opportunities to finance the working capital being held in unpaid invoices that age towards settlement due dates, frequently 30 to 120 days in arrears.’

We were able to chat with both Chris Aguas, founder and CEO, and Tom Romary, co-founder and Chief Commercial Officer, in order to gain some further insight into the firm’s capabilities and direction. The company expects to achieve rapid growth and scale through a distribution model that integrates its platform with networks, marketplaces, software companies, other payment providers, and banks.  

The CoreChain platform uses both latest-gen tech and existing capabilities. The solution has a blockchain network to provide a common system of record for transactions and documentation, while also allowing final settlement through existing EFT rails. This creates minimal disruption and a faster, easier digital reconciliation process. We were also advised that both access to supply chain finance for working capital optimization and the use of cryptocurrency settlement (stable coins) are in the delivery mix going forward.

“CoreChain exists at the intersection of both future and past payments, with a goal of moving companies towards fully digital, end-to-end financial operations”, advised Aguas.

‘Since its launch in September 2020, CoreChain has processed over $300 million in B2B payments for enterprise buyers, including transactions for channel customers, such as PaymentWorks.  Available as a white label platform, CoreChain allows any ERP or Business Process Automation software company or even banks and other payment networks to offer a blockchain-based B2B payments solution to its enterprise clients…..“CoreChain is the future of enterprise payments,” said Thayer Stewart, CEO of PaymentWorks. “CoreChain provides a future-proof platform with immutable transaction data and offers settlement mechanisms that move dramatically faster – and with more conveniences – than legacy systems.” ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post CoreChain Raises $1.25M to Revolutionize B2B Payments for the Enterprise With Blockchain Technology appeared first on PaymentsJournal.

Another topic that has been appearing in postings more and more is Buy Now Pay Later (BNPL), also sometimes referred to as In-purchase financing, which in the fintech world has worked its way from primarily consumer uses into the small business and larger space.  Members of the Credit service will be familiar with some of our work in this space. 

In the referenced posting from The Fintech Times, we see a new development in B2B uses for BNPL.  The piece talks about former execs from a couple of known fintech ventures who have developed a solution that they call Biller, which is based in the Netherlands. 

This is a very new venture, so we are unsure if this will be the final company name or just a product name, given that there is already a fintech named Biller, which is a 2016 startup based in Uruguay.  This piece says that the company will be built out in conjunction with Slimmer AI, another startup based in Amsterdam. 

‘The product will assist commerce leaders in reducing risks, optimising cash flow, and exceeding buyers’ needs and expectations. The Biller team is co-building its company with Slimmer AI, a European AI B2B venture studio that recently spun-out regtech startup Sentinels….The B2B commerce market is changing rapidly and according to Goldman Sachs, B2B is the next untapped market opportunity for the payments industry. In Europe, online B2B commerce volume was 710 billion and growing at 18% CAGR….Derek Vreeburg, co-founder and CEO of Biller explains why he is excited to launch Biller, “Current B2B invoice solutions have lacked innovation for years. With our experience at Klarna and Mollie we know how to transform complex processes into easy-to-use services. Combined with the AI expertise of Slimmer AI, we are confident that we can challenge the status quo and contribute to the next chapter in online B2B commerce”  ‘

We recently covered the B2B e-commerce space in member research and would of course agree that it is a high growth space, particularly in the post-pandemic world.  The brief article emphasizes the use of AI (machine learning) to help power the invoicing and decision-making processes across the Biller solution.  AI has of course found many uses in B2B use cases, most noticeably in risk management and financial processes, so expansion into credit assignment and ongoing management is not unexpected.

‘Biller was founded to take away the challenges both buyers and sellers experience trying to fit traditional processes into an increasingly digital world. Realtime, AI-powered credit and fraud checks, flexible payment terms, personalised debtor management, and guaranteed payouts are all areas needed to future proof B2B invoicing and provide an improved experience for both sellers and buyers….JC Heyneke, CEO of Slimmer AI, concludes with, “We are convinced that machine learning will reshape the way credit risk assessment in B2B is done, and that this is needed to evolve B2B eCommerce. We are thrilled to partner with Derek, Mick, and Uwe to build Biller!”‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post New AI-Powered Solution for BNPL B2B Purchasing Introduced by Former Mollie and Klarna Executives appeared first on PaymentsJournal.

Working capital is a financial necessity for small and medium businesses (SMBs). Often, many business owners use credit cards or other high-interest loans to pay for needed goods and services. Behalf, an alternative lending source, just received additional venture financing as well as an expansion of its in-purchase financing to merchants and their SMB customers.

Most SMBs were hit hard during the pandemic and those that survived will benefit from more attractive lending options that can be integrated within online checkout pages.

The following excerpt from a Yahoo Finance article reports more on the topic:

Behalf, a provider of In-Purchase Financing solutions for B2B sellers and buyers, today announced $19 million in new venture financing. The round was led by existing investors MissionOG, Viola Growth, Viola Credit and Vintage Investment Partners. New investors Migdal Insurance and La Maison Partners are also participating in the round.

In addition, Behalf announced the creation of a new debt facility totaling up to $100 million, provided by funds managed by Ares Management Corporation (“Ares”). The capital raised will enable Behalf to expand the availability of In-Purchase Financing to a broader array of B2B merchants and their SMB customers, while continuing to extend the capabilities of its industry-leading platform.

“The B2B eCommerce market is ripe for transformation. Merchants are recognizing the opportunity to drive new revenue by deploying In-Purchase Financing,” said Rob Rosenblatt, CEO of Behalf. “At the same time, small and mid-sized businesses (SMBs) need access to affordable financing options — an evergreen challenge exacerbated during COVID. Even as the U.S. economy is improving, SMBs continue to seek financial assistance to purchase critical supplies, inventory and equipment. Oftentimes they lack the requisite spend capacity on their personal or business credit cards. By offering In-Purchase Financing with flexible terms, B2B merchants can increase average order size by as much as 50-80 percent while reducing their risk, improving cash flow and driving operational efficiencies.”

Overview by Raymond Pucci, Director, Merchant Services, at Mercator Advisory Group

The post Behalf Expands In-Purchase Financing For B2B Merchants appeared first on PaymentsJournal.

In many financial services organizations, the payments value chain spans across a slew of systems, teams, and rails. This can make it difficult to create a holistic end-to-end view of business operations and understand which parts of the organization could benefit from process automation.

Recognizing this, the financial services consultancy firm Capco, which was founded in 1998, formed a partnership with the process mining software company Celonis. By leveraging its partnership with Celonis, Capco has been better able to help its clients address key efficiency challenges.

To learn more about how, with the help of Celonis, Capco has successfully helped clients improve end-to-end payments flow, PaymentsJournal sat down with Ed Kelley, Managing Principal at Capco, and Patrick Galbraith, VP of Financial Services North America at Celonis.

Key operational challenges in the payments industry

Payments processes often span across different aspects of an organization. In addition, initiatives such as real-time payments and the migration toward ISO 20022 can make challenges even trickier to address. As a result, figuring out what processes should be improved is no easy feat.

According to Kelley, operational challenges are twofold. “One, there’s the operational side [including teams working on data, SSI and processesing wires], and two, there’s the risk side, [where ensuring your operations are efficient and controlled to allow for payments to] go out the door properly,” he said.“ These challenges, in a nutshell, can be really burdensome [from] an operational perspective within an organization, whether it’s a settlements team, a treasury team, [or] a margin team,” he added.

Such challenges are compounded by the ever-evolving nature of market conditions. From regulatory changes to mergers and acquisitions, fintech competition, new product launches, and more, financial services organizations have a lot on their plates.

“Companies are trying to act faster. They’re struggling to keep up with that transaction volume, and this is resulting in a growing number of missed payments, and in some cases, significant unrecoverable losses and [damage to] client relationships,” explained Galbraith. In fact, it is estimated that an alarming 20-30% of revenue is lost annually by companies unaware of poorly executed processes within their organization.

Streamlining operations solve these challenges

While operational challenges can be daunting to overcome, it is both possible and worth doing. By mapping the payments flow end-to-end, the straight through processing (STP rate) can be increased. Straight-through-processing (STP) refers to the proportion of transactions that pass through a payments system with no errors that require manual intervention. A higher STP rate speeds up the payments process, reduces manual processing costs, and improves the customer experience, among other benefits.

“We kind of look at it from a spaghetti string perspective. You want it to be one spaghetti string from top-to-bottom as your STP. But what you’ll see is that when you boil a bunch of pasta, it’s going to be all over the place. And that’s really the challenge today,” said Kelley.

A powerful partnership: Capco and Celonis join forces to improve payments flow

Through the combination of Capco’s years of industry expertise and Celonis’ process mining technology, it is possible to identify and automate operational efficiencies. More specifically, process mining aggregates the data feeds for all systems involved in the payments flow, making that “single spaghetti string” ideal (i.e., a seamless end-to-end flow) a reality.

“[Celonis] likes to let the data tell us the story. There’s been a great deal of automation already in payments and there’s opportunity for more, but what Celonis really does is bring a data view of those processes and sub-processes so that when organizations look to drive automation, they’re doing it intelligently,” noted Galbraith.

Thanks to its partnership with Celonis, Capco now has access to a software component that enables them to promote process mining, which maps payment journeys from initiation to release and allows management to look at process inefficiencies they may not have even known existed.

Both Capco and Celonis appreciate the value that the partnership has brought. “[Capco] has used [Celonis’ process mining solution] with multiple clients specific in the payments space at this point, as well as with other critical processes like KYC and trade lifecycle. It’s not just related to payments, but we know that it works for payments and that challenge is looking at data, looking at flow, and working with the proper technology and business teams on the client side to get that done,” said Kelley.

Meanwhile, Celonis sees tremendous value in Capco’s expertise and trusted client relationships. “Capco’s expertise spans not only Celonis and processing mining, but banking and its complex processes, including payments. Celonis continues to grow 100% year over year, and we absolutely could not do that without strategic partners like Capco to deliver solutions with banking capital markets,” added Galbraith.

Immediate steps organizations can take to improve efficiency

The first step organizations should take to achieve end-to-end payments flow and improve operational efficiencies is simple: use a process mining tool over a period of time to gain a holistic view of automation opportunities.  

“Bringing all of these pieces together… allows banks to run their core front, middle, and back-office operations as efficiently as possible, and also allows them to perform as an organization at their full potential,” concluded Galbraith.

The post Improving End-to-End Payments Flow with Process Mining appeared first on PaymentsJournal.

In yet another example of the cross-border payment investment and innovation levels maintaining a high-velocity mode, we have this announcement posted in Nium’s website, which has the Singapore-based fintech receiving a $200 million capital investment from various P.E. firms and some high profile individual investors. The release indicates that the additional capital raises the firm’s valuation to the unicorn range ($1 billion+), which is apparently the first time this has been achieved by a fintech HQ’d in Southeast Asia. 

Nium is a 2015 startup that focuses on global payments, with technology that provides easier experiences for their clients in cross-border payments execution using API connectivity to global payment infrastructures. Core clients include financial institutions, other fintechs, payment companies focusing on disbursements, and travel industry players.

‘Nium has established its platform as the preferred connection to the global payments infrastructure. Serving hundreds of enterprise clients, and with plans to onboard thousands more, Nium will use the Series D funds to expand its technical infrastructure and add new embedded fintech services. Through a single API, Nium provides access to the world’s payment infrastructure, including technologies for pay-outs, pay-ins, card issuance, and banking-as-a-service. Once connected, Nium customers can send funds to more than 100 countries (most in real-time), pay out in more than 60 currencies, accept funds in 7 currencies, and issue cards in more than 40 countries. Foundational to Nium is its license portfolio, owning the most complete set of money transfer, card issuance and banking licenses in fintech, with services available in 11 jurisdictions.’

We were able to spend a few minutes chatting with Frederick Crosby, Chief Revenue Officer for Nium, who provided some additional texture about the company and its’ expected uses of the new capital. Although Nium is a relatively new fintech and derives substantial revenues from the Asia Pacific and Europe, it already has offices in 17 cities across six continents. 

Some of the capital investment will indeed be used for adding staff and creating a larger customer base in North America and Latin America.  Mr. Crosby indicated that other uses of the new funds will include continued investment in core business and technology, new use cases, and additional strategic acquisitions. “Today’s global payments infrastructure is breaking under its complexity.  We’ve built a unique platform that provides access to all your cross-border payment needs in one API suite. This significant round of funding will enable us to scale our execution, expanding not only the capabilities our platform offers but also the markets and clients it serves”, said Crosby.

‘Nium’s business has significantly scaled in the past year. Nium processes US$8 billion in payments annually. It has issued more than 30 million virtual cards to date. Revenues grew by more than 280 percent year-over-year…. Success will be driven by two recent strategic acquisitions, including the acquisition of travel B2B payments leader, Ixaris, which added comprehensive virtual card issuance capabilities to the Nium platform, as well as the acquisition of Wirecard Forex India Private Limited, which gives Nium greater reach into India’s booming payments market. The Series D investment provides the flexibility to explore additional strategic opportunities…. The capital infusion arrives at a time when the global market opportunities for Nium in embedded financial services, cross-border transfers, and card payments are large and rapidly expanding. Nium estimates these global trends to have a total addressable market of nearly $50 trillion.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Nium Raises US$200+ Million Series D and Becomes First Global B2B Payments Unicorn From Southeast Asia appeared first on PaymentsJournal.

Amazon is hiring a Digital Currency and Blockchain Product Lead who will reside in the payments acceptance and experience team to “own the vision and strategy for Amazon’s Digital Currency and Blockchain strategy and product roadmap.” With 70 open positions, Amazon appears to be ramping up development of a blockchain or crypto solution. 

Stablecoins, such as JPM Coin and Signature Banks Signet have demonstrated value in both intracompany and B2B payment models so perhaps Amazon will focus on its supply chain. However, the real opportunity is to utilize crypto to reduce C2B payments costs, but that might be accomplished at almost no cost if the US adopts a CBDC in the next few years:

“The company has posted a job listing for a Digital Currency and Blockchain Product Lead. The new hire will work in the payments acceptance and experience team to “own the vision and strategy for Amazon’s Digital Currency and Blockchain strategy and product roadmap.”

That could hint at a potential future integration of cryptocurrencies on the site. The opening also comes five months after whispers began to grow that Amazon was laying the groundwork for a new digital currency to use in its marketplaces and platforms.

In February, CoinDesk reported Amazon was preparing to launch a “digital currency” project in Mexico, noting a job posting that described a “new payment product” for the company.

Amazon presently has more than 70 openings for blockchain specialists, so the company could also be building out a blockchain supply business for customers of its Amazon Web Services.

Amazon, in a statement, said ‘ We’re inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like on Amazon. We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible.’ ”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Amazon Hires Crypto Experts as Crypto Market Appears To Swing Towards Stablecoins and CBDC appeared first on PaymentsJournal.

Some more investment activity across the fintech space covering financial operations, which has been on a tear during the past year as the lingering pandemic has refocused eyes on the need for business transformation to digital systems and processes. This piece is posted at Tech Crunch and points to a $50 million cash infusion for the California fintech Paystand, a payments-as-a-service outfit using blockchain and cloud tech to offer a billing and payment platform. We again see a non-traditional model that de-emphasizes transaction fees, instead creating a flat monthly fee model. 

‘It’s pretty easy for individuals to send money back and forth, and there are lots of cash apps from which to choose. On the commercial side, however, one business trying to send $100,000 the same way is not as easy….Paystand wants to change that. The Scotts Valley, California-based company is using cloud technology and the Ethereum blockchain as the engine for its Paystand Bank Network that enables business-to-business payments with zero fees.’

As we have been advising now for years, the bulk of corporate investment in digital financial operations during the past five years or so has been more focused on the payables side of the business, but not always in a comprehensive strategic manner.  In the 2021 Outlook, we pointed out that managing the financial cash cycle involves systems and processes touching everything from procurement to payables, trade financing, receivables, and reconciliation.

The cash conversion cycle for corporations is the time from inventory investment to receiving cash for a sale. Those firms that do a good job of understanding how to best organize these operations have a distinct advantage over laggards.  As this brief article points out, Paystand solutions are more directed towards the receivables part of the puzzle, which has been receiving a greater share of digital transformation focus during the past couple of years. We see this as a continuing trend for some time, and in our view companies not transitioning will be finding themselves at a competitive disadvantage not too far into the future.

‘Paystand’s view of the world is that the accounts receivables side is harder and why there aren’t many competitors. This is why Paystand is surfing the next wave of fintech, driven by blockchain and decentralized finance, to transform the $125 trillion B2B payment industry by offering an autonomous, cashless and feeless payment network that will be an alternative to cards, Almond said…… The company said it will use the new funding to continue to grow the business by investing in open infrastructure. Specifically, Almond would like to reboot digital finance, starting with B2B payments, and reimagine the entire CFO stack…. As part of the investment, Jazmin Medina, principal at NewView Capital, will join Paystand’s board. She told TechCrunch that while the venture firm is a generalist, it is rooted in fintech and fintech infrastructure. She also agrees with Almond that the B2B payments space is lagging in terms of innovation and has “strong conviction” in what Almond is doing to help mid-market companies proactively manage their cash needs. “There is a wide blue ocean of the payment industry, and all of these companies have to be entirely digital to stay competitive,” Medina added. “There is a glaring hole if your revenue is holding you back because you are not digital. That is why the time is now.”’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Paystand Banks $50m to Make B2B Payments Cashless and with No Fees appeared first on PaymentsJournal.

More cross-border payments developments as Visa again dips into its coffers in acquisition mode, this time for the London-based fintech Currencycloud.  Readers may recall our commentary on the Visa participation in a 2020 funding round for Currencycloud, so this is not a surprising investment, given the numerous acquisitions and other funding by the global network, and the heavy activity around the cross-border payments space.  The announcement appears in businesswire and gives general highlights of the transaction.

‘Visa today announced it has signed a definitive agreement to acquire Currencycloud, a global platform that enables banks and fintechs to provide innovative foreign exchange solutions for cross-border payments. The acquisition builds on an existing strategic partnership between the two companies and values Currencycloud at £700 million, inclusive of cash and retention incentives. The financial consideration will be reduced by the outstanding equity of Currencycloud that Visa already owns….Currencycloud’s cloud-based platform offers a broad set of APIs enabling banks and financial services providers to offer currency exchange services, including real-time notifications on foreign exchange transactions, multi-currency wallets, and virtual account management. The Currencycloud platform supports nearly 500 banking and technology clients with reach in over 180 countries.’

The Currencycloud platform is mainly for banks and other fintechs to build their own API-based cross-border experiences, or choose an out-of-the box solution to which they can apply some custom, white labeled features. The acquisition by Visa fits in with their network of networks approach to capitalizing on an extensive global reach with new products and services for their core clients (banks) but also recognizing the increasing presence of fintechs collaborating with banks and also developing their own direct to client capabilities in an increasingly open banking financial environment.

‘Cross-border payments have seen significant growth due to rising demand from businesses of all sizes to engage in international trade. A recent study revealed that 43% of all small businesses conducted international trade in 2020.¹ The addition of Currencycloud’s capabilities to Visa’s network will widen access to innovative international payment products that help businesses meet their cross-border needs.’

Overview provided by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Visa to Acquire Currencycloud appeared first on PaymentsJournal.

This announcement comes from The Paypers and speaks to a coming product offering based on collaboration between several players.  We all know Visa, and the other participants are Fuiou Pay, a Shanghai-based fintech with payments solutions for POS, online payment, prepaid cards, convenience store payment, money transfer, and account products, along with Nium, a 2017 Singapore startup with a global payments platform. 

The collaborative effort seems to be mostly targeted towards Chinese enterprises that are seeking to expand e-commerce globally. 

“Through the partnership with Visa and Nium, Fuiou seeks to create global payment products and solutions for cross-border ecommerce, advertising, overseas education and cross-border travel, among other major payment categories, and offer the following services to different sectors across a wide range of payment scenarios:

• Card customisation: users can tailor their payment cards based their needs, including the customisation of payment scenarios, regions, the period of time for actual usage, etc. The card allows users to handle funds online 24×7.  
• Multi-format support: the card is compatible with all different operation platforms for both B2B and B2C users. Proven solutions are available for API connection, risk control rules, etc.
• Service support: as Visa’s B2B partner and Nium’s project manager, Fuiou focuses on its customers’ experiences in payment and technology. Exclusive communication channels are provided to different customers to ensure their payment issues are addressed in a timely manner.“

We have pointed out the x-border focus and innovation globally, both here and in research, which seems to be accelerating during the past 18 months, so expect many other announcements of collaborations.  This is coming in the form of blockchain, cryptos, fiat, and combinations thereof.

“In addition to the booming cross-border ecommerce industry, as well as those enterprises along its upstream and downstream industrial chains, the three parties have also kept track of the recovery of the aviation and travel sectors and the demand of global enterprises in relation to payments for international purchases…With the bridge built by Visa, Nium and Fuiou, this brand-new business payment solution can expand the reach of B2B payments, narrow the gap between small enterprises and their suppliers, and make cross-border payment easier and more accessible.“

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Fuiou Pay, Visa, Nium Partner to Launch B2B Payments Solution appeared first on PaymentsJournal.

This brief announcement in businesswire underlines some of the increased momentum in receivables management automation. This is something that began trending about 2-3 years ago and gained additional tailwinds with the pandemic. In this case, we have Kone expanding their use of Billtrust capabilities into their Canadian operations. 

Readers may recall that Billtrust, a mature New Jersey-based fintech, recently went public through the SPAC route, which we covered in this channel.

“Billtrust, a B2B accounts receivable automation and integrated payments leader, announces KONE Inc., a leader in the elevator and escalator industry, will now be using Billtrust’s Invoicing platform and Business Payments Network (BPN) in Canada, enabling the company to send more invoices electronically while positioning them to accept digital payments through their preferred channels.“

Historically speaking, when it comes to investments in financial operations, receivables automation has taken a back seat to the payables part of systems and processes that companies seek to modernize. However, more recently we’ve seen a trend towards more of a strategic review of end-to-end financial operations, as companies more clearly see how the entire chain of events is connected. We covered this in a recent member report as well. 

Whether due to the pandemic or just a natural evolution of the way automation projects are now reviewed, given the spreading of APIs for integration purposes, companies are taking a broader view across order-to-cash cycles.  Companies like Billtrust provide a service in the market that allows for resource deployment to more revenue-generating activities while reducing the implementation timeframes and stress of hosted operations.

“’Expanding our relationship with Billtrust brings me confidence that we are leveraging the most advanced cash flow acceleration capabilities available,’ said Ken Schmid, President and CEO, KONE Americas. ‘There is great power and efficiency in a trusted, single-platform provider across the order-to-cash process, and we are thrilled to leverage the strong U.S. results we’ve had with Billtrust in Canada.…We appreciate the opportunity to expand our relationship with KONE while increasing our international presence,’ said Steve Pinado, Billtrust President. ‘We look forward to supporting both their U.S. and Canadian teams as they continue their digital transformation journey across the accounts receivable spectrum.’”

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Billtrust Expands Accounts Receivable and Integrated B2B Payments Capability with KONE Inc. appeared first on PaymentsJournal.

The digitization of payments has accelerated over the last 16 months, and so has the demise of checks. Organizations that still rely on checks for business processes are now recognizing their inefficient nature and looking for a better way to distribute payments. One of these better options is push-to-card payments.

To learn more about how a partnership between Avidia Bank and KyckGlobal is enabling businesses to make push-to-card payments, PaymentsJournal sat down with Cliff Thompson, SVP of Strategic Partnership at Avidia Bank, Max Grande, VP of Product Management at KyckGlobal, and Raymond Pucci, Director of Merchant Services Advisory Practice at Mercator Advisory Group.

What is KyckGlobal?

Avidia Bank’s partnership with KyckGlobal is enabling it to leverage payments as a point of differentiation and provide a next generation experience to bank customers.

KyckGlobal is a digital payments firm that provides a cloud-based payments platform that allows companies to pay individuals however they want to be paid. KyckGlobal works with banks, networks, and businesses of all types to help them access an array of the world’s most popular payment types. This includes both traditional options such as check, wire, and ACH as well as alternative options including push to card, PayPal, and Venmo.

“Imagine getting a real-time disbursement from an insurance claim, and instead of getting that check in the mail, you’re getting a wallet notification saying you just got paid or you’re getting funds in your bank account immediately. We’re that company that unlocks that payment experience,” explained Grande.

Push payments: No longer just for P2P

Today, push-to-card payments provide a real-time payment of funds option to more than 245 million bank-issued debit cards in the United States.

“Conceptually, [push to card] is really straightforward. The consumer essentially provides their card details—their PAN and expiration date—and funds are moved across the major card brands into the linked bank account rather than the traditional one-to-two days for ACH,” said Grande.

Whether they realize it or not, many consumers have already initiated push payments by pushing a deposit to their bank account instantly from a digital wallet like PayPal or Venmo. “Now picture that same experience from getting funds out of that wallet applied to any business vertical. It’s really game-changing stuff,” added Grande.

Ultimately, the immediacy of funds inherent in push-to-card scenarios can provide value in several use cases beyond P2P transactions. From insurance claim payouts to merchant settlements, government disbursements, and more, push payments make it possible for consumers to have a similar instant payment experience in other aspects of their lives.  

“As more of those peer-to-peer transactions are kind of sweeping the market and individuals are getting consistent and used to that experience, businesses are starting to get asked the question of why can’t [they] move funds just as fast. And that’s really where our partnership with Avidia and what we’re doing in the market comes into play,” said Grande.

Stacking payment capabilities does not have to be a challenge

A major trend in the payments industry today is stacking payment capabilities with a platform coupled with efficient onboarding. In combination, this leads to a potent offering for financial institutions, technology partners, fintechs, and program managers alike.

“Today, instant and/or real-time money movement is most sought after and certainly takes center stage in the platform payments stack. The KyckGlobal – Avidia partnership allows clients ease of entry into near real-time payment via push to card,” noted Thompson.

Thanks to KyckGlobal’s simplified front-end plan, engagement and onboarding process made possible through API connectivity, and robust underwriting, firms can be making near instant payments in a matter of days. “A short application starts with the completion of a service agreement with KyckGlobal and an automatic creation of a new funding reserve account at Avidia Bank,” Thompson added.

FIs looking to succeed need cutting edge technology

The use of technology – specifically within the payments space  is a differentiating factor that banks need to have if they want to remain competitive in today’s market. “At one time, it was only big financial institutions that had resources. And now, technology is available. As we’re talking about the partnership that you have here, there are some new developers that are doing such a great job at making this technology available [for] solutions that everyday financial institution customers are looking for,” said Pucci.

With challenger banks and fintechs taking hold, it is paramount to the success of financial institutions that they explore their roles not only as providers of traditional financial services, but also as technology providers.

“I believe it’s important for financial institutions to understand the gravity of what’s occurring in the tech space today. Technology and payments are colliding with pent-up demand. A responsive, redundant, efficient platform, like the one described here today in our collaboration with KyckGlobal, will prevail to meet that demand,” concluded Thompson.

The post Push-to-Card Payments Push Financial Services Forward appeared first on PaymentsJournal.

Another piece on the growing experimentation with CBDCs, this one posted in Banking & Finance. Various central banks have been quite active in testing x-border CBDC exchanges with their neighbors, as we have been tracking on these pages. It is also interesting to note that although the Fed continues to participate in various studies, there is a healthy institutional skepticism about CBDCs, which does not seem to be widely shared at this point, given the spreading activity. 

This referenced announcement describes x-border CBDC exchanges of Singapore dollars and Euros, between the MAS and the Banque de France, the central bank of France.

‘This is the first multi-CBDC experiment that applied automated market making and liquidity-management capabilities to reap cross-border payment and settlement efficiencies, said the two central banks in a joint statement….Currently, cross-border payments rely on correspondent bank arrangements that have limited transparency on foreign exchange rates, restricted operating hours of payment infrastructure, and currency settlement delays due to differences in time zones.’

The posting goes on to describe in limited detail how the simulated transactions were completed. Although the piece mentions JPMorgan’s Onyx platform and a permissioned blockchain network using Quorum technology, we would guess this is the JPMorgan Interbank Information Network (IIN). 

So the various potential benefits of x-border CBDCs are reviewed (more visibility, faster, cheaper, etc), including a reduction in KYC complications given the bypassing of X number of correspondent banks, which is the traditional path for x-border B2B transactions. There will be more of these announcements going forward and we’ll keep you posted.

‘Sopnendu Mohanty, chief fintech officer of MAS, said that this multi-CBDC experiment has “broken new ground” by decentralising financial infrastructure to improve liquidity management and market making services. “It charts the path for scalable CBDC networks in which central banks and commercial banks can work together to achieve the vision of cheaper, safer and more efficient infrastructure for cross-border payments,” he said….Valérie Fasquelle, director of Infrastructures, Innovation and Payments at Banque de France, said: “It is an opportunity to construct arrangements for multiple-CBDC models, improving cross-border payments and increasing harmonisation of post-trade procedures.”  ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post MAS and French Central Bank Complete Wholesale Cross-Border Payment and Settlement Experiment Using CBDC appeared first on PaymentsJournal.

By now, most daily consumers of this channel who have an interest in B2B transactions will already know that there has been a leap in appreciation for digital financial processes since the pandemic hit. WFH caused a reassessment of manual workflows, which cuts across all business sizes but is a particular issue with smaller SMEs. 

Therefore, we have seen a large amount of activity with fintechs that have built nice solutions during the past 5-10 years, and are now finding more of an audience that is paying attention. One of these is a 2016 startup out of Sydney, Australia called Finstro, which touts a holistic cash flow management platform. The company is offering up some new solutions and expanding into the U.S., where the B2B payments market spend is in the $30 trillion range (expenditures for goods and services).

“However, Finstro CEO, Brad Prout, notes that the past 15 months have seen a growing shift towards B2B digital payments in the U.S., and this has created a window of opportunity for Finstro’s well-tested business model to expand…’Since early 2020 businesses of all sizes had to give AR and AP management more attention as they navigated through the impact of the COVID pandemic. The adoption of digital processes in the order-to-cash cycles can create workflow efficiencies and reduce working capital to the benefit of both suppliers and their business customers. We expect to see these disruptive trends continue in U.S. B2B markets, and suppliers who adopt technology-driven solutions will have a competitive advantage when providing business customers with more flexible trade credit terms,’ said Prout.“

So while the piece discusses this state of digital payments, we would note that this ‘trend’ is nothing new, and is not at the very early stages, although lots of opportunities exist since infrastructure needs to be replaced in addition to the adoption trends. This is why banks are somewhat out of position and have been (and will continue) relying upon collaboration with the more effective fintech solutions.

While the trend is not new, nor are many of the solutions, the recognition of their value and tendency towards more strategic uses has been more evident since the crisis hit 16 months ago. So we will continue to see more investments in the space, including IPOs, SPACs, and so so forth, as companies try to capitalize on the growth possibilities over the next five years.

“Furthermore, according to a 2020 survey by the Association for Financial Professionals (AFP), suppliers and businesses large and small are already realizing the benefits of electronic payments. Sixty percent (60%) of respondents said they are either very likely or somewhat likely to convert the majority of their B2B payments to suppliers from check to electronic payments….’Without doubt we are at the early stages of a revolution in B2B trade when it comes to capital flows between suppliers and buyers, and this will mean huge opportunities for businesses of all sizes and in all industries,’ said Prout. ‘We are confident that our proven technology, global infrastructure, and experienced leadership team will be at the forefront of this shift in the U.S. market, and we look forward to leveraging our deep experience to enable businesses to improve the way they trade and grow.‘”

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Finstro’s Expansion Into U.S. Market Fueled by Growing Momentum Behind Digital Adoption in U.S. Supplier/Buyer Transactions appeared first on PaymentsJournal.

In this Finextra posting we have the author discussing corporate debit cards, and the overall benefits of having the virtual card version of this payment utility available. Members of CEP will know of our extensive coverage on the commercial credit card product set, which has been a standard and expanding offering in North America for decades, then spreading into Western Europe, Asia Pacific and other regions during the past 15-20 years. However, the use of commercial debit is less extensive, and more or less limited to Europe since the preference in that region has never been credit cards, either corporate or consumer, with the exception of the UK. 

‘Virtual multi-currency debit cards are getting more popular and for good reason; they have several positive implications for how you do business. As the name suggests, virtual multi-currency debit cards are payment cards created entirely online that act in the same way traditional, physical debit cards do—just without the physical card. They’re issued by Mastercard or Visa, stored in a secure wallet on your smartphone, and you can use them wherever traditional payment cards are accepted. As a business owner, you can choose the currency and digital assets you need, set spending limits, and define the merchant types where the card can be used.’

For the past decade Virtual commercial credit cards have been growing in popularity (mostly in North America and parts of Europe) for use in accounts payable scenarios, and more recently in provisioning mobile wallets to accommodate travel for non-frequent travelers, contract labor and potential new staff. So as one reads the passage, the author points out the various benefits of virtual corporate debit cards, which in effect mirrors those same benefits related to virtual commercial credit cards, except for the fact that with a virtual debit card there is no working capital benefit since the company is using current accounts held in various currencies. These benefits include ease of creation, reduced paperwork, improved reconciliation, better fraud control and expense management. These are all good things generally, but more in demand as we exit the pandemic and return to regular employee business travel. Worth a quick read as a reminder of card capabilities and new options.

‘Virtual multi-currency debit cards are streamlining payments for suppliers and vendors, and they have several compelling benefits for your business. Read all about the main benefits of multi-currency debit cards for businesses below….Adding virtual debit cards to your business can empower your team and improve your money management.’

Overview provided by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post The Benefits of Virtual Multi-Currency Debit Cards for Businesses appeared first on PaymentsJournal.

Interesting title to this piece at Yahoo Finance, which is penned by a senior at Comdata, the payment processing company that specializes in fleet cards and other B2B payments. Members will know that we cover this space fairly closely through ongoing research and other postings. The pandemic wreaked havoc on business travel but B2B payments (payables) are more closely related to general economic activity, which was down about 3.5% in the U.S. last year.  However, some of that gap in potential card spend was filled by the rush to expand upon the use of electronic payments to replace paper financial process in the remote working office environment.

‘With the advent of widespread remote work, businesses have made impressive leaps in eliminating checks and adopting electronic supplier payments. These changes primarily translated to increasing the number of ACH or Direct Deposit payments made. According to Nacha—the governing body for the ACH network—business-to-business payments for supply chains, supplier payments, bills, and other transfers increased by almost 11% in 2020. But as organizations adopt electronic payment processes, there’s another strategic opportunity for AP to consider: electronic credit card.’

Commercial cards have been around for several decades, having traditionally been used for T&E purposes but over the past 20+ years have expanded into office supplies (P cards) and accounts payable (virtual cards).  So if one looks at commercial credit cards historically as a percentage of overall B2B payment activity (for the purpose of value exchange in goods and services), it is somewhere in the range of 2%, which is a fairly small share of payments.  Most value exchange is made through ACH, wires, and check payments (although check payments are now declining more rapidly than prior to the pandemic). So the author reviews the value prop of using commercial cards for B2B payments, and some of the reasons suppliers are now opening up to acceptance.  Whether or not there will be a massive uptick over the next few years remains to be seen, but the utility of the product(s) for inbound payments is at least getting a better reception as an option these days.

‘Fintechs—technology-focused by nature—build their systems with a holistic viewpoint in mind, preferring to create software that doesn’t sacrifice one business’ operations for another’s. By enhancing the system end-to-end, previously reluctant accounts receivable teams, who felt strong-armed into giving up outdated payment processes, often become more willing and interested to learn about electronic alternatives.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Why Credit Cards Could Be The Next Big Opportunity In B2B Payments appeared first on PaymentsJournal.

The open banking space is widely considered to be primarily in the domain of consumer-related products and services, which at this stage is generally true.  Just as with other fintech developments over time, the path of least resistance (or perhaps fastest way to get users) is through consumer apps. PSD2 however, pertains to all uses and there is a gradual uptick in the goodies that are being marketed for businesses. This piece in Tech Crunch by one of the staff writers talks about a very recent Germany-based startup (like starting up now) called Airbank. The firm is described as a cash management SaaS for bank account management, real-time cash flow monitoring, cash forecasting and payments and received seed round funding to pursue the model. 

‘Airbank just raised a $3 million (€2.5 million) seed round led by Pia d’Iribarne and Jean de la Rochebrochard at New Wave, with Speedinvest and Tiny VC also participating. A handful of business angels are also joining the round, such as Cris Conde (executive in residence at Accel), Luca Ascani (Accel scout) and Marc McCabe (Sequoia scout)….The startup’s value proposition is quite simple and can be easily explained in one screenshot. With Airbank, you can enter your login information for all the bank accounts and related accounts that you use. After that, you can view everything from your Airbank account:

Again, as we have been advising members through research and other readers through various postings, Europe is a bit ahead of the game, along with a few other markets that have pushed for open banking regulatory initiatives. Banks in the U.S. are approaching it from a client demand standpoint, since there is no regulatory zeal around it (on the contrary, privacy matters are more often highlighted), but more activity is building, so be on the lookout for B2B open banking innovations.

‘Other startups have been working on cash flow management, such as Agicap, and B2B payments, such as Libeo and Upflow. Airbank is starting with account aggregation and wants to tackle B2B finance in a holistic manner….Vertical SaaS products have been booming lately. And there’s a reason why the space is quite competitive: There’s still a ton of stuff to do around B2B fintech and specialized software-as-a-service products.’

Overview provided by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Airbank Centralizes All Your Business Bank Accounts and Financial Data appeared first on PaymentsJournal.

This piece is another one surrounding the topic of cross-border payments, this time written by staff at The Fintech Times and summarizing a discussion with a senior at Wise (formerly Transferwise) who manages Asia-Pacific business development.  

The discussion, in this case, is mostly about experiences and innovation in APac around the remittance and B2C commerce space, although the specific pain point about lack of transparency has certainly been a universal experience in all use cases over time.

‘Customer expectations are bigger than ever: the best-in-class experience that customers receive today is tomorrow’s baseline expectation. When one company raises the bar for customers, it primes consumers to expect something more across all aspects of their lives….Look at the advent of BBM (BlackBerry Messenger) and the way it overhauled customers’ expectations on how messaging should work — instant, convenient and on-the-go. That innovation which took root in personal communication led to a knock on effect on other communication verticals, such as Slack for team collaboration or Facebook Chatbots for customer engagement….These expectations have also spread to other industries, whether it’s aviation, entertainment or health. In the same vein, customers are also expecting these same seamless experiences from their financial services providers….While there has been significant progress made with domestic banking — think mobile banking and the ability to send funds to a phone number — the story is very different as soon as there is a cross-border element. Lack of transparency, slow speeds and hidden costs are historic pain points of cross-border payments that continue to plague consumers and businesses of all sizes even today.’

The $150 trillion in cross-border commerce mentioned in the piece is an estimate that incorporates all use cases, although we have estimated that >80% of uses are for B2B cases, but we have also covered that part in various postings over time as well.  

The piece goes on to point out a few of the new approaches being taken in Asia, specifically Singapore and Korea, and the transparency issue being overcome (transparency meaning, among other things, knowing the actual cost of the money transfer, including FX conversion percentages).  Worth a quick read for those attempting to keep current with advancements in global markets.

‘Here-in lies the opportunity for customer-first organisations to lead the way by setting the standards in their core markets. Customers want brands they can trust and research shows that transparency fosters trust and loyalty. Studies have found that the key to creating trust is to simply do what customers expect of you. In this context, that means making their banking experience seamless, quick, and most importantly, transparent, by charging them exactly what you said you will be charging with no hidden fees….So, why aren’t more players doing this? One of the reasons why only a few incumbents adopt transparency is because it exposes the inefficiencies that exist in the legacy infrastructure that is used to move money around the world. This infrastructure is not built to service the 21st century customer — unknown intermediary fees, high bounce-back rates and manually intensive processes are just some factors that make the cost of cross-border remittance high for banks. The poor customer experience only compounds this by impacting revenue margins. Saddled with these costs, incumbents have little incentive to adopt transparency, instead maintaining the status quo of hiding costs in the FX spread.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post It’s 2021: So Why Do We Still Lack Transparency In Cross-Border Payments? appeared first on PaymentsJournal.

In this announcement at businesswire we see that Emburse, a 2014 startup out of Los Angeles that specializes in expense management and accounts payable automation, is launching new payables to be integrated with their existing Chrome River Invoice product. 

The new solution is called Emburse Pay – B2B Payments, and adds automated ACH, check, and virtual card processing through a partnership with WEX.  Readers will have read about how the pandemic has placed the automation of financial operations at the forefront of many corporates’ priority lists, but apparently, adoption has a long way to go.

“Despite the massive push toward digital transformation during the pandemic, most organizations continue to pay vendors using physical checks. In addition to it being an incredibly inefficient and error-prone process, finance teams are missing out on huge cost-saving opportunities through early payment discounts and card rebates,” said Rajeev Subramanyam, general manager of Emburse Pay. “Our Emburse Pay suite of solutions was designed to streamline what has traditionally been a time-consuming and inefficient process – manually reconciling corporate payments. In B2B Payments, we have taken what has traditionally been a very cumbersome process and integrated it into our AP solutions’ workflow.”

So the many collaborations continue as fintechs further realize the value of integrated services and corporates recognize how they can benefit through convergence and improved delivery of many existing capabilities. We have been pointing this out to members through reports for some time, and don’t expect anything but continued expansion of digital operations. 

WEX is more broadly known for fuel cards but has been expanding its footprint into payables automation for a few years now, using both direct distribution and partnerships with other service providers.  The market for electronic payables solutions remains quite large, as millions of checks will be disappearing from day-to-day operations during the next five years.

‘“Adding Emburse Pay – B2B Payments to Chrome River Invoice was a natural next step for us. After seeing the benefits of increased efficiency and error-free payment processing, we were excited to roll out B2B Payments and complete the AP lifecycle in an automated fashion,” said Marissa Navarro, controller at Mitchell Silberberg & Knupp LLP.’ 

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Emburse Pay – B2B Payments to Deliver First Fully Automated Purchase Order-to-Payment Processing appeared first on PaymentsJournal.

Any time we see postings on real-time payments we tend to have something to say, since we’ve closely tracking developments in the U.S. (and globally) for the past several years. Unlike most of the broad commentary found in blog and other posts, we both provide research with estimated numbers, both overall and by use case, including specific B2B member research, as well as ongoing posts and podcasts through this channel.

This particular referenced article is found at CFO and the author provides a bit more depth of information than is usually found in such postings.  The piece is about the growth of the RTP network in the U.S., which is owned and operated by The Clearing House (TCH). 

‘What’s holding up real-time payments? In 2017, the veil was lifted off an interbank payment system providing near-instantaneous settlements instead of next-day automated clearinghouse (ACH) transactions. The real-time payments (RTP) network worked and was ready for adoption by banks, businesses, and consumers….Four years later, the RTP Network can point to several success stories, but nowhere near the adoption rates hoped for when it debuted. About 130 banks are on the network, up from a handful in 2018. Combined, they can reach 60% of demand deposit checking and savings accounts. That’s a far cry from the 4,430 commercial banks, 640 savings institutions, and 5,160 credit unions in the United States.’

Although it has actually only been 3.5 years since the initial RTP launch, the author’s points are valid since bank adoption, particularly in B2B use cases, has been a bit more tepid than expected.  We have reported on the reasons for this in our latest overall member report on the status of faster payments, including factors such as complicated internal systems and process integration efforts to launch a real-time environment, relatively slow integration of RTP by TPSPs (Jack Henry was the first major adopter in 2019), as well as the comparatively low initial transaction limit of $25K (which was increased to $100K in Feb ’20). 

We have reported on the generally accepted expectation for that limit to increase to at least $1 million sometime in the near future. The author adds another factor, which is the general skepticism around the need to adopt real-time payments for a net gain of a few hours (not counting weekends and holidays), which is manageable.  We might add that the Fed announcement of plans to launch a separate real-time payments system (FedNow), likely also delayed some RTP adoption, particularly by smaller asset class banks.

In any event, the article is worth a quick read by those who have some interest in latest developments in this important payments sector, including intentions for various banks and TPSPs to utilize RTP for bill pay (request for pay) and greater use of APIs for B2B use cases. We see a much faster rate of usage during the next three years.

‘Even if all the banks in the world went real-time, Horowitz, the CFO at CareCentrix, remains dubious about the opportunities inherent in a system that limits payments to $100,000….“I can see the opportunity for smaller midsize companies and those in the [business-to-consumer] space where payments are much less, but for companies that do bigger transactions, they’d still have to go through a different mechanism,” Horowitz says….His point may become moot in the first quarter of 2022 when the RTP Network will review a proposal to raise the limit to $1 million. If it gets the green light and more banks join the network, another barrier will be gone….“We’ve seen three times the number of real-time payments in the last year than we saw in the preceding three years,” says Deloitte’s Aron. “I don’t know if Moore’s Law is at play, but I can see momentum building. In five years, this will be par for the course.”  ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Closer to Real-Time for Real-Time Payments appeared first on PaymentsJournal.

This ominous headline is part of a posting that appears in The Fintech Times where the author references a recent payments fintech survey of US and UK SMB business decision-makers about financial process automation.  We have been advising members of the criticality in automating end-to-end payments, for which the pandemic has provided a five-alarm fire-level warning to businesses to get moving or else. 

While that may be a bit dramatic, somewhere in the piece the old inertia issue pops up again, basically restating the lingering traditional business attitude that manual processes work so are not really a problem, until they are. 

‘The last year has been tough for most UK businesses. And now more than ever, companies are streamlining operations and processes to reduce costs and improve workforce management. One key factor preventing the growth and survival of B2B firms is late payments as a result of outdated Accounts Receivables (AR) processes….According to BlueSnap’s recent payments report which surveyed 800 executives, more than 80% of UK executives say the future of their company is threatened by overdue invoices. Yet, whilst the technology is there for B2B businesses to use, modernisation isn’t translating into reality for many. Of those surveyed, 100% said that at least part of their organisation’s AR process remains manual….Reliance on manual AR processes is a significant threat to efficiency, with 31% of businesses continuing to fax paperwork and 39% posting invoices. Meanwhile, 11% of businesses surveyed said they are still accepting payments in cash and 9% continue to take paper cheques….For businesses to remain agile as we come out of lockdown, it is imperative that they modernise their outdated AR processes.’

So while this particular posting focuses on receivables, that being a key set of processes affecting DSO and cash flow, the broader issue in play is really that a failure to modernize cash cycle systems and processes across the board will eventually leave businesses in dire straits versus competitors. This effect shows up in several key areas, include hard costs associated with manual rework, ineffective working capital controls, and the insidious opportunity cost of failing to digitize and use data, given the rapid advancement of technology such as AI. 

We are a bit surprised that so many businesses are still lacking the motivation to automate, but that may be a side effect of the survey timing (late 2020) when many businesses were still knee-deep in survival tactics, so perhaps already 8 months later the message is finally getting out to laggards.

‘UK businesses need to close the gap with B2C payments, where innovation is the norm. When combined with automation, upgrading payment processors can improve a B2B firm’s accounts receivable management, reduce costs, and boost efficiency….AR solutions have begun to leverage comprehensive payment processors to provide full payment services to customers making invoice payments. This means that customers can now open an automated email, click one button to view the invoice, and then pay it off with a variety of payment methods. They can even set up automatic payment processing rules to ensure invoices are never overdue….Ultimately, in order to succeed in today’s market, B2B businesses must modernise their payment solutions to suit the needs of their company, employees, and consumers. Failure to adopt new payment and Accounts Receivable (AR) technologies will hamper business growth on a massive scale, and these firms run the risk of being left behind in the movement towards automation.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post BlueSnap: A Failure To Automate Payments Threatens B2B UK Businesses appeared first on PaymentsJournal.

This release can be found at businesswire and speaks to a new partnership between Paystand, the Silicon Valley fintech that provides cloud-based billing & payment platform for B2B companies, and Sage, the accounting software firm. 

Paystand utilizes a blockchain-based architecture for its’ PaaS capabilities and the integration is directly with Sage Intacct, so businesses using this solution can access the Paystand payments services.

‘For the first time, Sage Intacct customers will be able to create a “self-driving money” experience for their customers and receive payments instantly across Paystand’s zero-fee bank network. The Paystand Sage integration also gives Sage Intacct customers a modern Payments-as-a-Service model, which moves them off the legacy banking infrastructure and provides a cloud-based payment platform that unlocks scalability and helps finance teams improve margin and operating cash flow….Delivered as a native integration to Sage Intacct, Paystand’s technology lets customers:

• create smart invoices with embedded payment options and a branded, next-gen payment experience
• streamline cash flow management with automatic reconciliation of daily bank transfer data
• save time through automated cash application and the ability to easily reconcile deposits, refunds, disputes, fees, and adjustments.’

This is another example of the accelerated trend towards end-to-end automation of financial operations, with a more recent recognition of the value in strong receivables/reconciliation capabilities.  Corporate banks have a need to modernize their infrastructure as ongoing challenges such as these will continue growing.

‘“Blockchain has created the blueprint for decentralized finance, and money is now software,” says Jeremy Almond, CEO of Paystand. “Yet, in 2021, businesses and finance teams are still held back by pre-internet infrastructure and monopolistic banking practices that limit their full potential. Our integration with Sage Intacct gives an entire class of companies access to a new payment network that unlocks growth and puts businesses first – not the card networks.”…“Our goal at Sage is to help businesses improve productivity, make effective decisions, and optimize efficiency through automation,” said Melody Williams, VP of Sales Strategy and Operations at Sage. “Partnering with Paystand is a way to make this goal a reality, and we’re excited to work with an industry pioneer that shares our vision of helping businesses scale faster, drive growth, and increase ROI.” ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Paystand and Sage Partner to Make B2B Payments Instant, Intuitive, and Cashless for Sage Intacct Users appeared first on PaymentsJournal.

The excitement and hype around Buy Now, Pay Later (BNPL) in the consumer world is undeniable. Affirm went public in early January with a market cap of about $24 billion. Klarna recently raised $1 billion and is now valued at over $30 billion. PayPal, AfterPay and a slew of other companies are also generating big buzz in the space.

Now, we are starting to hear rumblings of BNPL in the B2B world. And why not? The B2B eCommerce payment market — $4 trillion and growing — is ripe for transformation. Business buyers want the same digital experience they get as consumers and business merchants are looking for every opportunity to make their customer relationships stickier, increase average order size, and capture a larger share of wallet. The market is grossly underserved and there is a huge opportunity for the right solution.

Arguably more important is that small business buyers need access to affordable credit and financing options. Financing has always been a challenge for small and medium-sized businesses (SMBs), and COVID has only exacerbated the problem. According to the Biz2Credit Small Business Lending Index, overall loan approval rates in December 2020 were down over 50% vs. December 2019.  Big banks only granted 13.1% of SME business loan applications vs. over 28.2% in December 2019.  Over the same period, small bank lending dropped even more dramatically, from over 50.6% of loan requests to just 18.2%. It’s hard to know if such precipitous declines will ever reverse themselves. 

In this environment, the need for liquidity and access to capital have never been greater. Small businesses need more flexible alternatives to traditional business loans that are better suited to their specific needs.

Solutions like Affirm, Klarna and others have dramatically expanded the ability for consumers to finance purchases – approaching 80% eligibility. These players may very well decide to turn their sights to B2B. But first, they, or anyone else targeting the space, have to adapt to the significant differences between B2C and B2B commerce.

Until COVID, a surprising percentage of B2B commerce still took place partially or entirely via traditional channels such as in-person sales, assisted selling, distributors, and phone. In fact, approximately 80% of B2B payments continue to be made via check. And 40% of businesses report that online purchases are more complicated to make than traditional purchases.

Not surprisingly, many B2B sellers were unprepared for the dramatic shift in customer preferences toward online purchasing (whether exclusively online or in conjunction with assisted selling). In addition, B2B-only sites have sometimes tended to function more as electronic catalogues than true selling engines.

Now, with the dramatic shift to online buying, the B2B merchant community has made strengthening their eCommerce presence a priority.  But the ability to incorporate automated financing “in purchase” for B2B transactions is fundamentally different vis-a-vis BNPL for consumers:

• B2B customer relationships are significantly more complex. The marketing and selling process is longer and often involves multiple channels that include some level of managed sales. There is more customization in offerings and accompanying services. Account management and payment requirements are important components as well.  
• SMB transactions that are financed tend to be larger (ranging from a few thousand dollars up to several million) than consumer purchases, which average closer to $1,000. Needless to say, the price of making the wrong financing decision is much higher.
• Approving financing for B2B purchases in real-time is highly complex. The array of data available to alternative lenders demands a specific type of risk-predicting expertise. The algorithms for approving consumer credit simply don’t apply.
• Larger purchases require more financing options – in terms of rates, length of time, payment schedule, etc. — and consideration of customer relationships, inventory turnover cycles and purchase history are important requirements.
• The fraud, legal, and compliance requirements are also more significant – from Know-Your-Customer (KYC) to Know-Your-Business (KYB) to Beneficial-Ownership (UBO). There are also prohibited industries.
• Integrations with financial systems and data reconciliation are more complex and mission-critical.

In-purchase financing (‘IPF’ for short) offers B2B merchants all the benefits of BNPL and much more, including:  

• Seamless checkout experiences that improve the customer experience, increase average order value (AOV), and allow for money-saving automation for the merchant.
• Easy integration with existing systems. B2B merchants cannot afford disruptions to their business that involve high-ticket, key customer transactions
• Incorporating well-vetted underwriting and scoring models based on much broader datasets, business history and other predictive metrics.
• Serving the needs of all of the merchant’s business customers – small, medium and large.
• Teaching B2B merchants how to use different financing offers to sell more product, e.g., which terms drive the most action, higher average sales, etc. 

The web is tailor-made for B2B commerce — always on, 24/7 availability, self-service, nearly unlimited choice. But when the customer is ready to buy, can they afford the cost? Do they have room on their personal or business credit card?  Most businesses need another financing vehicle that can flex with their needs.

By automating the offering of in-purchase financing, B2B merchants have the opportunity to significantly enhance customer loyalty, increase average order value, reduce risk, streamline revenue recognition, improve cash flow, and create important operational efficiencies on the backend. Maybe most importantly, it frees B2B merchants up to focus on growing their business instead of managing payments and financing

The post Is Buy Now, Pay Later Right for B2B? appeared first on PaymentsJournal.

For over a year, it seems COVID-19 is all that anybody talks about. While news topics and phone conversations have grown stale because of this, the payments industry has been anything but stagnant. The quick and unexpected digitization of the bill pay market took industry professionals by surprise, forcing them to work overtime to adapt to the needs of their clients and those clients’ respective customers.

To further discuss the digitization of financial operations systems and the benefits of an order-to-cash cycle, PaymentsJournal sat down with Rick Scholz, Director of Payment Advisory at Deluxe®, Beth Bourgoin, Receivables Product Manager at Deluxe, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

What is an order-to-cash cycle?

COVID-19 certainly made it clear that the commercial enterprise payments space would need to continue to make progress in the digitization of solutions that impact the cash cycle. In late 2019 and into 2020, however, it was clear that the existing capabilities weren’t going to cut it. “In other words, it seemed that companies were not necessarily taking advantage of the rapidly advancing technology improvements that we’ve had,” explained Murphy.

Once the pandemic hit, the companies that had never addressed the technological shortcomings of their financial operations went into a low-grade crisis mode. Over a year later, more of these organizations are proving that financial operation systems and processes—end-to-end, order-to-cash, and receivables management—have become vital to the assessment process.

“That whole [order-to-cash] process from ordering, selling, invoicing, accepting payments, posting the cash to the general ledger, and then completing that entire cycle over and over again, is really an interconnected thing,” added Murphy. It’s how a business receives, processes, manages, and completes the orders their customers.

Since the global pandemic, the importance of managing this process has undoubtedly made its way back to the forefront of the minds of financial professionals.

Digitizing financial operations systems

Deluxe’s clients are always looking to further digitize their payments . According to Beth Bourgoin, “Speaking most broadly in what we’re seeing is, anywhere you’re hearing the word mail, like printing and mailing being used, especially in a billing process today, businesses want to change that to click.”

What exactly does this entail? Instead of having to rely on physical things—envelopes and other office supplies and mailing service providers—clients want the ability to send bills and other invoices virtually: Click, send, and now it’s done. Cutting out manual printing, mailings, and office materials is also a cost efficient and time saving approach. Digital correspondence is also more trackable compared to traditional post and can provide more options to pay.

By sharing ACH payment information through electronic invoices, businesses are setting the precedent of digital payments: I’ve sent your invoice digitally, so please send payment to us in the same manner. “That really is what makes the collection process that much easier,” said Bourgoin. “It’s easier for the buyer or the payer to go in and click on a web page. It gets [the funds] to the company who’s collecting the payment [faster]. And really it brings more benefit to the application part.” Application is a crucial step in the process. It’s where the client can see which invoice data is available and subsequently offer a new website for its customers to make digital payments.

Another benefit of digitizing is the accessibility of this invoice data. However, remittance data itself also needs digitization. To use electronic payment data effectively, businesses need to be incorporating technology. If the technology isn’t there, FIs and other businesses will undoubtedly run into struggles with the growing number of people who are working remotely and finding ways to apply faster payments. Electronic bill payment sites (EBPP) can really help to support digitization.

“It really depends on [the client’s] industry, [and] it depends on the industry vertical, whether an EBPP site is even a viable option. So no matter what the payment source, there’s then all different potential pathways a payment can take,” concluded Bourgoin.

Moving in the right direction: an ‘end-to-end’ view of the order-to-cash approach

There are a number of scenarios that demonstrate the difficulties companies perceive when considering an ‘end-to-end’ view of the order-to-cash approach. The more difficulties that arise, the harder it becomes to standardize the process.

“But that doesn’t mean you can’t do anything about it…and the opportunities really are in controlling that apply link in the chain,” said Bourgoin. She believes the easiest opportunity for the client to gain some control over the process is by understanding the internal processes across that entire chain. For example, what are the people who are operating on that chain doing when it comes to billing, collecting, applying, and managing revenue and liquidity? This understanding is crucial when considering one’s own pain points, as well as comprehending how a particular link is impacting other areas during application and vice versa.

There is also concern about the handling of exceptions. If a cash application team member decides to apply a payment to reach their goal, even though they know it cannot be handled, what happens to the funds afterward? Can the funds be used, or do they sit in a suspended account? Are there then false collections happening because of improper application? These are all valid concerns contributing to the difficulties that lead to hesitance in adoption for many companies.

What it comes down to is businesses having an understanding of their current end-to-end processes. An awareness of gaps and risk factors will allow these businesses to then seek out solutions and vendors that are so particular that they can choose to fix one problem area, such as collections or invoicing.

“The biggest reason that it’s difficult to do an end-to-end review is organizational,” added Scholz. “We find way too often that the different pieces of the chain are all managed by different parts of the organization.” The solution is to pull together people from each different area of the chain and create a dialogue that centers on the financial well-being of the company as a whole.

New technologies that impact the effectiveness of accounts receivables automation

New technologies are hitting the payments market all the time, creating opportunities for businesses to implement these technologies today, regardless of their strategy or what they offer as payment options. The technologies that these businesses choose will depend on the types of payments they accept and their industry vertical.

Fortunately, there are accounts receivables automation opportunities available, regardless of payment type or vertical. This is where mapping technology comes into the picture. “It’s that technology that aggregates the data [and] creates the normalized views for the data,” explained Bourgoin. “And it’s not just the payment data, but it has the remittance data available and images. It’s really a one-stop shop for all of your information.”

This same technology can also be easily leveraged to automatically update ERP systems. It can eliminate most manual functions, such as employee keying and manipulating reports. There are many differences between digital and paper, but this is not something to be intimidated by. Rather, Bourgoin suggests business owners ask themselves this question: how much technology do I need? The answer to this is both flexible and scalable, and it depends entirely on the specific corporate and industry needs of the client.

Takeaway

New technologies are beneficial in a digitized world, and they can even positively impact some older technologies. Within the payments industry, customers are expecting seamless transactions and access to their bill pay documents and other data, while businesses are looking to provide a faster, more on-demand experience. Deluxe’s main goal is to help their clients maintain a streamlined order-to-cash cycle so that the company is able to both preserve and enhance profitability, as well as grow its business.

The post Maintaining a Streamlined Order-to-Cash Cycle appeared first on PaymentsJournal.

As readers will know, the topic of modernizing financial operations is front and center at just about any FS vertical event (all of which to date continue to be remotely delivered).   

So this posting in Dataquest is nothing new but does serve to highlight the topic in a developing market and for a specific vertical; that is India and ‘organized retail.’ The author is an exec at the India-based fintech named PayEX, which provides solutions for companies across cash cycle operations, such as A/P, A/R and supply chain finance.

‘Even as organized retail has brought the advantage of accessibility and scalability to corporates sellers by leveraging the power of the digital marketplace to reach end-consumers, it has also manifested operational complexities, a lot of which is thanks to the traditional and manual of order to cash (O2C) cycle processes. This is a big issue when the corporates’ customers are large retail chains, e-commerce companies, Government institutions, other OEMs, etc….Can you imagine the time and effort spent by an FMCG brand just to track all of the multi-product orders from a popular eCommerce platform and corresponding account receivables? Now imagine the challenge of doing this across many ecommerce platforms and large retail chains! The work is tedious, error-prone and cumbersome. Any inefficiency impacts working capital, customer relationships, and core financial metrics. Resultant write-offs, delayed/unapplied cash etc. have deeper implications on the financial health of the company.’

The point of the posting is to remind organized retailers in India (and other markets of course) to get their financial operations organized as well, especially receivables, which is something we covered in recent member research. The problems associated with paper processes in bulk payments and disassociated remittance data are substantial and only get in the way of business growth instead of keeping the cash flowing more freely. 

The author goes on to point out some of the pitfalls of non-automation as it relates to other interconnected processes, including purchase orders, goods acceptance, and reconciliation. So an interesting theme, and one that is being repeated across the globe.

‘Smart AI/ML and deep domain reconciliation platforms can bring significant benefits to buyer and seller organizations in the AR/AP processes – they are faster, far less expensive and highly accurate. These solutions help accelerate revenue recognition, lower write-offs, provide complete audit trails and assist in dispute resolution improving stakeholder satisfaction in the ecosystem….To conclude, India’s B2B landscape is fast evolving and digital transformation in many traditional sectors has been fast-tracked by the global pandemic. Ecommerce and modern trade, in that sense, is driven largely by technology on the consumer front. However, on the B2B side, it is still shackled in manual and time-consuming processes or caught up in fragmented technology systems. Companies can reap significant benefits by unlocking their working capital if they leverage the power of intelligent automation, not just as a piecemeal solution, but across the entire O2Ccycle.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post The Great B2B Hack: Intelligent Automation to Solve AR/AP Challenges of Organized Retail Customers appeared first on PaymentsJournal.

This announcement is in business wire and likely not a surprise to most readers given all the cross-border payments activity we have been (and will continue) seeing.  Google Pay has added the Western Union network for its users, starting in the U.S., and able to initially send to India and Singapore. 

The release suggests that full global availability is upcoming.  So this is a clear play for P2P remittance, and perhaps the timing is somewhat attuned to pandemic-related difficulties in India, although there is no direct mention of such.

‘Commencing today, Google Pay users in the U.S. will enjoy a seamless peer-to-peer in-app experience when sending cross-border payments to family and friends through Western Union’s global financial network of bank accounts, wallets and retail locations throughout India and Singapore. Users may fund their transactions using a Google Payⁱ bank account or card….Google Pay users in the U.S. will be able to send money to their family and friends globally by year-end. Upon worldwide activation, they can choose to send funds to billions of bank accounts, millions of wallets and cards, as well as more than half a million retail locations in 200 countries and territories in minutesⁱⁱ. ‘

As far as we can tell, there is no B2B target here, but surely C2B merchant payments are in play to start and we would expect further announcements down the road, given Western Union Business Solutions capabilities.  We’ll keep an eye on that one, but for now, a new and easy experience through a phone app.  Western Union benefits by embedding its capability within a large user base.

Google Pay’s user base includes 150 million people in 40 countries. The company’s redesigned Google Pay app (Android and iOS) gives people a safe, simple and helpful way to pay and manage their finances.

‘ “Cross-border payments are not just a lifeline for loved ones; they form the financial backbone for many economies,” said Josh Woodward, Director of Product Management, Google Pay. “For many people with families abroad, sending money home is something they do as frequently as every month. By teaming up with Western Union, we are providing a way for Google Pay users to send money quickly, safely and reliably from the Google Pay app.”…Swanback adds, “This collaboration demonstrates the demand and accelerated need for our advanced payment capabilities. Our platform services offered through digital partnerships allow us to serve more customers globally and continue to advance Western Union’s growth strategy.”  ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Western Union Launches Cross-Border Payments on Google Pay appeared first on PaymentsJournal.

One of the re-learnings during the pandemic is the importance of getting paid on time, which is a key reason that those companies with paper-laden financial processes have been scrambling to find better electronic solutions. There is also the opportunity cost of reliance on paper, since companies then lose the ability to capitalize on digital information to even further improve cash flow. 

We have been pointing this out for many years in various forms of member research, but now that AI is more easily deployed and prevalent, it is not only becoming an obvious benefit, but also a competitive lever. This indicated posting is found in International Banker, penned by the CEO of a UK fintech startup named Previse, which specializes in software that optimizes the pay cycle through the use of AI. 

As one might easily imagine, the cash flow issue hits small businesses like a sledgehammer, and late payments become an existential threat.

‘As Open Banking continues to reshape the B2C payments landscape, now is the right time to take the premise of open data sharing and apply it to the B2B world. Open data sharing could go a long way to helping solve the slow payments problem and help bring B2B payments into the twenty first century….A problem looking for a solution….Many of the issues that have tipped small businesses over the brink in the past year are chronic pain points which pre-date the pandemic. Slow payment of suppliers is a major one, but it is also one that can be solved. Suppliers to a large buyer often have to wait and chase for weeks or months to get paid, which results in real financial strain….To put the scale of the issue into perspective, it is estimated that as of January this year, UK SMEs are chasing £50 billion in late payments, according to research from Tide. The Federation of Small Businesses estimates that this slow payment problem causes 50,000 SMEs go out of business every year, taking with them jobs and investment which are needed more than ever as the economy starts to rebuild….To add to this, recent research from the Institute of Directors shows that two in five businesses are now facing an increase in overdue commercial debts, with nearly one in ten stating that late payment problems had become significantly worse.’

So the increasing use of electronic payments and systems across the cash cycle feeds into the growing digital ecosystem, spurred on by open banking and customer demand, which in turn geometrically expands the availability of data that can be used for machine learning efficiencies. 

Matching up data for faster payment decisions, as well as earlier positive action on broken or problem payments, provides businesses with a vastly improved ability to control their working capital, thereby creating improved cash flow opportunities that can eliminate the need for costly short-term loans. Banks can of course be central to the solution as well.

‘Despite the immense promise technology can bring to solving slow payments, it is not useful on its own. FinTechs need access to the ERP data of large corporates so that their algorithms can assess payment patterns and unlock instant payment for suppliers.  

Banks have an important part to play in this cycle too and can change financial markets for the better. By helping SMEs to access cash locked in the working capital cycle as early as possible, businesses can trade from a stronger position. Data makes it possible for a business to access cash as soon as their invoice is issued, removing the wait for lengthy payment terms and the uncertainty of whether the payment will be made on time. …This route to approaching sustainable finance is also another way for banks to put their money where their mouth is when it comes to fulfilling ESG commitments. It’s a financing solution which is sustainable and beneficial for all parties. …Using a rigorous risk control framework to release capital from invoices can make businesses more resilient and strengthen supply chains. That isn’t just good for suppliers, it’s good for banks, businesses and the wider economy, too.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Powering a New Era of B2B Payments through Open Data Sharing appeared first on PaymentsJournal.

It has been rumoured for some time that PayPal was interested in implementing a stablecoin that could be used for payments, perhaps initially for moving funds between its international bank partners. The question is, will it create its own stablecoin or perhaps use its partner’s existing stablecoin?

Paxos is already used by PayPal and Venmo for its crypto brokerage services but the company also has a  U.S.-dollar backed stablecoin called the Paxos Standard (PAX).  On April 29^th Paxos closed a $300 million Series D round that included participation PayPal Ventures which invested in earlier rounds as well:

“One of the stablecoin developers that PayPal had talked with is Ava Labs Blockchain Company, while the remaining protocol developers that the payments services provider had discussed with remain unknown.

According to BlockchainNews, an unnamed PayPal spokesperson disclosed that as a global company working with regulators and industry partners in shaping the next generation of financial systems, they are in “frequent conversation about the technologies that enable these goals.”

Not an in-house project

One of the sources has indicated that the company would rather work with an outside developer rather than have the stablecoin as an in-house project because doing so would make the process faster.

The company’s primary concern is to have a product out in the market at the soonest time possible.

Rumors about the ambitious plan of PayPal to launch its stablecoin have long circulated and, as a matter of fact, are considered as the best-known secrets in the cryptocurrency industry today.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post PayPal Remains Interested in Establishing Its Own Stablecoin appeared first on PaymentsJournal.

This blog posting at Finextra has an enticing title and leads one into a discussion around how digitization in business payments trails that of consumer apps and that the pandemic has boosted activity for a B2B catch up. Suggesting that it is not being talked about we suppose is a matter of where one has been looking, since this trend is covered on a daily basis on these pages as well as CEP member research.

The author is a senior at a UK-based cross-border payments fintech and the overall point of the piece is certainly on target.

‘Inertia and friction in the different systems between accounts payable and receivable have allowed these out-dated ways of doing things to persist longer than they should have. But the pandemic has driven this to a halt. How can you fax a document while working from home and the fax machine is in the office? Where do you mail a check when offices are deserted? Centralised offices were created to deal with increasing mounds of paperwork, but businesses and financial institutions have suddenly been thrust into a distributed remote working world.’

So while companies are now confronting the inertia that led to frenzied operational adjustments during the early days of the pandemic, that deep breath taken after pushing through the crisis should be leading to a more sober and strategic assessment of the true end-to-end needs for digitalization of financial processes. 

That of course includes banks, who have been to traditional go to source of solutions for these companies. However, if banks don’t have modernized infrastructure themselves, it may indeed have given many of them an impossible task, and John Wick is not waiting off screen to help out.  So as we have been saying for some time now, the collaboration and cloud approach will assist in this necessity.

‘Traditional financial institutions will start to bring in payment portals and other features that mimic the consumer experience, but for most, the task is too great to do in-house. This will create opportunities for another cohort of fintechs that can provide the critical digital infrastructure they lack, leading to a flourishing of Software and Banking as a Service (SaaS and BaaS) business models in payments….Once commercial transactions go digital, this will give financial institutions and businesses alike far more control over their money. Payments will no longer just be money, but rich data that can be analysed and provide insights that give organisations far greater control and transparency over their finances.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post B2B Payments: The Real Digital Revolution No One’s Talking About appeared first on PaymentsJournal.

SAN ANTONIO – Chargify, the leading billing platform for B2B SaaS, announced the release of its Chargify Business Intelligence product on May 4. The self-service analytics suite enables users to create custom dashboards with real-time billing and revenue management data. Third-party data can also be streamed-in to analyze alongside Chargify data. Early Business Intelligence users report optimizing nearly one month of productivity by saving up to four hours a week, or 25 days a year, by using the new product.

Historically, subscription businesses have been constrained and limited by the standard pre-built reports and metrics that nearly all billing platforms provide. Chargify Business Intelligence starts users with out-of-the-box reports and dashboards, but then provides the ability to clone and customize these out-of-the-box metrics, as well as build custom metrics from any available data. For the first time in the billing and subscription space, users can even stream-in data from across their business stack, such as Salesforce or Stripe, for cross analysis with their billing data, eliminating the need for clunky, manual processes.

“We’re really excited to be the first subscription management platform to bring the business intelligence functionality into the billing space,” said Paul Lynch, CEO of Chargify. “When you look at every other billing platform, like Zuora or Chargebee, their analytics are all very prescriptive and they’re telling customers what metrics they think they should look at. With Chargify Business Intelligence, we’re handing over the keys and giving our customers the control to analyze the specific data they know will be most beneficial to grow their unique business.”

Users of the new Business Intelligence product can also export custom CSVs for easy access to raw data. Data is streamed to Chargify Business Intelligence in real-time, enabling users to uncover actionable insights and respond to business challenges faster. Users also have the ability to define their own metrics to segment and dive down into their data for granular insights. Chargify Business Intelligence Intelligence provides a central source for Chargify users to access their billing and revenue management data alongside all other relevant business data.

“By using Chargify Business Intelligence, every key stakeholder in the business, not just the analysts, can meaningfully understand the state of their business and uncover where they’re winning and losing,” said Laith Dahiyat, Chief Strategy Officer for Chargify. “This new feature will positively impact each and every one of our customers by providing them with unlimited reporting capabilities.”

Chargify’s latest development aims to empower B2B SaaS companies with an accurate, 360-view of their business so they can make data-informed strategic decisions. Customers who piloted the technology have already seen very positive results.

“Chargify’s new BI tool has taken our speed-to-calculate and accuracy of MRR and financial metrics and reduced it down to a mere dashboard refresh with 100% accuracy,” said Jenny Leman, President of CareerPlug. “This saves our operations and finance teams a combined 2-4 hours per week of manual work. CareerPlug is just barely scraping the surface of what this tool is capable of, but I am a raving fan already!”

“With the new Chargify BI we can measure and develop our specific KPI’s with several hours saved every month and be more data driven analyzing churn, growth and customer loyalty,” said Per Ingman, Founder of Smakbox.

“Chargify Business Intelligence is extremely powerful, yet simple to use,” said Adam Saye, Co-Founder of PT Distinction. “The sharable dashboards are a game changer for getting the right data to the right people securely.”

Business Intelligence is powered by the data analytics and event streaming capabilities of the Chargify-owned Keen.io software. Chargify acquired the software in March 2020 to provide customers with real-time, data-driven billing and analytics solutions. Business Intelligence is the latest innovation released by Chargify aimed to disrupt the largely unchanged subscription and billing industry by leveraging the powerful Keen.io technology. Chargify previously made waves in 2020 with the release of its ground-breaking Events-Based Billing technology which uses Keen.io to create a multi-dimensional, pay-as-you-go billing functionality.

Chargify’s latest product innovation comes after a year where the company saw record-breaking revenue growth despite the COVID-19 pandemic. Chargify has also invested in growing its team across the United States and Europe and has increased its workforce by 26 percent over the past year. Earlier in April it was announced that Battery Ventures, a global, technology-focused investment firm, led a combined growth-equity investment of more than $150m in Chargify and SaaSOptics.

Chargify will begin rolling out Business Intelligence to current customers over the coming weeks and will host a series of global virtual events May 4 – 5 to announce how the feature will impact B2B SaaS businesses with a recurring revenue business model. Visit www.chargify.com to learn more.

The post Chargify Business Intelligence Delivers Massive Productivity Improvements for B2B SaaS appeared first on PaymentsJournal.

Funding from Invictus Growth Partners and existing investors will support expansion of sales, marketing, product development and global strategic initiatives

NEW YORK, May 4, 2021 — Boost Payment Solutions (“Boost”), the leader in B2B payments optimization, which has processed over $10 billion in card payments for over 15,000 enterprises across five continents, today announced the closing of a $22 million Series C funding round led by Invictus Growth Partners (“Invictus”). The proceeds will be used to accelerate the company’s global growth across multiple verticals, including healthcare, telecommunications, manufacturing, freight & logistics and real estate. William Nettles, Co-Founder and Managing Partner at Invictus, will join the Boost board of directors.

As the only FinTech acquirer focused exclusively on the B2B market, Boost works closely with institutional and corporate buyers, suppliers, commercial card issuers, and card networks to cure the pain points commonly associated with commercial card use and acceptance.

“Boost’s unique positioning in the industry and the vast addressable market in B2B payments has led to tremendous growth that we expect will accelerate over the next several years,” said Dean M. Leavitt, Founder and CEO at Boost. “Invictus is the perfect partner for us, bringing not only capital, but also operational expertise, a broad network, and differentiated machine learning capabilities that will enhance our platforms and business. We are truly excited to have them as a partner.”

The global B2B payments marketplace is estimated at more than $120 trillion, yet it is still dominated by antiquated payment methods that are time consuming, HR-Intensive and produce inadequate reporting data for the trading parties. This large market opportunity and lack of B2B payments digitization has created significant growth opportunities for Boost as virtual card products continue to gain traction with parties looking to capture both working capital and operational efficiencies.

Boost’s technology provides a seamless, secure and cost-effective way for commercial trading partners to enable credit card transactions.  The Boost Intercept STP (“Straight Through Processing”) platform automates the entire onboarding, credit card transaction and reconciliation process for buyers and suppliers, thereby eliminating what is typically a cumbersome and manual process.

Boost also offers its customers its Dynamic Boost platform, which provides flexible pricing constructs via proprietary interchange rates, while also enforcing any acceptance rules established among the trading partners.  Boost’s groundbreaking “Acceptance on Your Terms” approach to the enablement process has changed the entire conversation with suppliers by empowering them for the first time to be part of the solution.

“B2B card payments provide many benefits for enterprises and this is one of the most attractive and fastest growing segments within FinTech,” said William Nettles, Co-Founder and Managing Partner at Invictus Growth Partners.  “Dean and his leadership team have created a world class global organization that is built to scale and lead the space.  We are honored to partner with Boost and look forward to working with them in a collective effort to achieve their mission.” 

Boost’s existing Investors, including Mosaik Partners, INGWE Capital and North Atlantic Capital, also participated in this financing round.

About Boost

As the leader in B2B electronic payments, Boost optimizes how commercial card payments are initiated, processed, received and reported. Boost’s technical innovations have transformed commercial cards into a cost effective, scalable and secure alternative to traditional checks, wires and ACH. Boost features a global footprint that serves a broad spectrum of industries across 37 countries in North America, South America, Europe, Asia and Australia. Boost was founded in 2009, and is headquartered in New York, NY. Please visit us at www.boostb2b.com.

About Invictus Growth Partners

Invictus Growth Partners is a growth equity and buyout firm which invests in bootstrapped and capital efficient, automation-enabled cloud software, cybersecurity and fintech companies which seek capital and strategic resources to accelerate their growth. The firm and all of their professionals are based in San Francisco, CA. Please visit us at www.invictusgrowth.com.

The post Boost Payment Solutions Raises a $22 Million Series C Round Led by Invictus Growth Partners to Accelerate the Use and Acceptance of Digitized B2B Payments Globally appeared first on PaymentsJournal.

This piece is posted at TearSheet and is an overview of a 2016 New York-based fintech startup named Petal, which issues credit cards using alternative methods of credit underwriting and has reported funding above $500 million. 

Petal looks at the cash flow of potential borrowers rather than traditional credit scores to assess creditworthiness, targeting underbanked users who lack the formal statistics to prove they will pay back. To date this has been a consumer proposition only.

‘Petal is one of those fintech companies raising lots of money that hasn’t gotten a lot of press. It’s not because the company isn’t interesting — it is doing some really cool things around consumer credit. Petal may not be getting the ink it deserves because the story revolves around financial data. Financial data is definitely valuable — it’s just not sexy. The underwriting machine is the story here and the story now becomes more complicated with news that the firm is going B2B….Petal is a credit card company that uses cashflow information from bank account data to make underwriting decisions. More than 50 million people lack credit scores in the U.S. and by looking at banking history, the firm has found a way to provide access to credit for thin file/no file consumers.’

The new twist is that the company is launching something of a broader offering that can be applied to perhaps a wider variety of credit products, which they call Prism Data. 

The article gives an enterprise B2B lead-in but goes on the describe more of a B2C offering description.  The idea is to use the platform’s capability to analyze lots of data into a more effective tool to make credit decisions, regardless of the specific product.  One could surely see a small business application here.  Those interested can browse through the full piece.

‘“Prism Data takes raw data from financial providers and transforms it into useful information that those providers can rely on, giving them greater insight into credit risk, identity, financial status, and more,” said Jason Gross, Petal’s co-founder and CEO, who will assume similar responsibilities at Prism Data. “We believe financial providers need actionable insights — not raw data — to create bold new solutions.”…Banking history is full of messy data. It’s inconsistent and frequently mislabeled and categorized incorrectly. Since launching in 2016, Petal has spent significant time in market cleaning up and restructuring the data so that it can be used to make credit decisions….WebBank was Prism Data’s first client. Managing the Petal Card program, the bank used this data and approach to cash flow to facilitate access to hundreds of millions of dollars of credit to underserved consumers.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post ‘Financial Providers Need Actionable Insights, Not Raw Data’: Credit Card Company Petal Spins Off B2B Data Unit, Prism Data appeared first on PaymentsJournal.

• Instant Bank Pay leverages the unique combination of the GoCardless global bank debit network and open banking technology
• The feature provides merchants a low-cost, seamless and convenient way to collect instant payments from new and existing customers through a single platform
• Although half of Americans have “no clue” what open banking is, the introduction of open banking payments helps address their day-to-day annoyances, such as updating their payment details every time they get a new credit or debit card

NEW YORK – April 26, 2021 – GoCardless, a leading fintech for bank-to-bank payments, today launched Instant Bank Pay, a new open banking feature directly integrated into its global payment platform. With Instant Bank Pay, merchants can take instant, one-off bank-to-bank payments from new and existing customers while still reaping the benefits of bank debit for their recurring payments.

The announcement marks the first milestone in GoCardless’ journey to accelerate its open banking strategy, for which it received $95 million in funding at the end of 2020. By combining open banking technology with its existing global bank debit network, GoCardless can offer its more than 60,000 merchants a new low-cost, seamless and convenient way to collect instant payments that works for any revenue model.

“We’ve specialized in bank-to-bank payments for over 10 years, with bank debit being the primary payment method. And, while it provides many advantages to consumers and businesses, speed of payment authorization is a drawback,” said Hiroki Takeuchi, co-founder and CEO of GoCardless. “Instant Bank Pay addresses this pain point by giving merchants the best of both worlds: open banking will provide instant confirmation of payment authorization, enabling them to have immediate visibility of their one-off payments, and bank debit will continue to offer the cash flow, cost and retention benefits business owners have come to expect.”

With the introduction of Instant Bank Pay, GoCardless will expand its offering into the adjacent e-commerce market, where it can take on both one-off and card-on-file payments.

Takeuchi added, “By enabling businesses to take any kind of payment through GoCardless, we can challenge the dominance of cards and move beyond collecting subscriptions, invoices and installments. The launch of this open banking feature means we can now serve any merchant, regardless of whether they have an ongoing or one-off relationship with their customers.”

Benefits for businesses

While it can be used in many scenarios, Instant Bank Pay addresses an issue that is particularly acute for recurring revenue businesses. According to research from GoCardless, 85% of merchants with this business model have a need for collecting additional one-off payments. Examples include collecting a payment upfront at the start of a subscription, purchasing additional goods or services, or adding money to an account outside of a customer’s regular payment schedule. 

Bank debit is not suitable for some one-off payments because it doesn’t provide instant visibility of payment authorization. This has forced many merchants to turn to card payments, often with high fees attached, or time-consuming manual bank transfers. Instant Bank Pay is a fast and easy way for customers to make a one-off account-to-account payment. Instant confirmation provides better visibility of payments, eliminates costly credit card fees, and reduces late payments, thanks to a seamless payer journey.

Merchants can build the Instant Bank Pay option straight into their checkout flow or simply send a payment request with a link to pay. Similar to a mobile wallet payment, payers are seamlessly connected to their bank and can authorize a payment directly from their bank account in just a few taps.

Benefits for consumers

According to research from GoCardless, open banking is still a nascent concept in the US. Half of Americans (52%) say they have “no clue” what open banking is, and, of those who have heard of it, over a third (37%) reveal they “think of it like 5G – I know it’ll benefit me but don’t know what it is.”

Regardless of whether open banking is well known, the technology will solve problems that consumers currently face.

Seven in 10 Americans (70%) indicate they would be annoyed if they had to pay for goods or services using multiple payment methods. One example is paying with a card for on-the-spot access when they join a new gym, then needing to fill out forms to set up another payment type for ongoing transactions. Instant Bank Pay would eliminate this extra step by offering a single payment sign-up process, delivering a seamless customer experience.

Furthermore, 61% of Americans believe it’s a hassle to update the payment details for all of their regular expenses, such as streaming subscriptions, when they get a new credit or debit card. Using open banking payments means they won’t have to – their payment details stay the same unless they switch bank accounts.

The post GoCardless Launches Open Banking Payments, Offering Businesses a New Alternative to Taking One-off Payments appeared first on PaymentsJournal.

Board of directors unanimously vote to approve Rengachari as a new member of the board advisory group; Rengachari to speak at NACHA’s Smarter Faster Payments conference

CHARLOTTE, N.C. – April 26, 2021 – Finzly, a fintech provider of modern banking applications for payments, foreign exchange, trade finance and digital account opening, announced that the company’s CEO and founder, Booshan Rengachari, has been named a new member of the U.S. Faster Payments Council’s Board Advisory Group. In this role, Rengachari will advise the FPC’s board of directors and staff on perspectives outside those represented on the board, in addition to supporting the FPC in capitalizing on — and responding to – emerging trends in the payments ecosystem.

“The need for faster payments is long overdue, and the U.S. Faster Payments Council is actively working to establish a world-class payment system that allows any person or organization to safely and securely pay anyone, anywhere, anytime” said Booshan Rengachari, founder and CEO, Finzly. “As an original faster payment proposer and former member of the U.S. Faster Payment Task Force, I have always been an advocate for transforming the industry’s payment infrastructure. I am pleased to be part of the FPC’s Board Advisory Group and look forward to playing a larger role in the industry’s education and advancement of faster payments.”

Rengachari is also slated as a speaker for NACHA’s Smarter Faster Payments 2021 conference as part of its Remote Connect sessions. The panel session, “Embedded B2B & B2C Payments in Corporate Systems & ERPs,” will cover how technology can help FIs enable an embedded B2B and B2C payments experience, and will be held virtually on August 23 from 12-1pm ET.

About Finzly

Finzly connects financial institutions with customers through a modern digital banking experience and an efficient, real-time payment services hub. Freeing financial institutions from core system limitations, Finzly’s open, cloud-based bank operating system, BankOS, enables transformation and innovation at the speed of fintech. With freedom to adopt solutions from Finzly and third parties of choice, financial institutions can implement apps in three simple steps – subscribe, try and launch. Serving customers across North America, Finzly has been modernizing international banking and treasury management solutions since 2012. For more information, visit www.finzly.com.

The post Finzly CEO Booshan Rengachari Named to U.S. Faster Payments Council’s Board Advisory Group appeared first on PaymentsJournal.

Marquee Equity, a fintech platform has helped a Florida-based B2B Payments company, Qolo.io, close its seed round.

“We reached out to Qolo to explore if we could be of help because they popped up on our ‘companies to watch list, an internal tool we use to scout interesting early-stage companies. We found Qolo to be an exciting company led by Patricia Montesi, an entrepreneur with a superb background in the space, and they were kind enough to give us a chance with their seed round” said Ash Narain, Founder & CEO of Marquee Equity.

Marquee Equity’s proprietary investor discovery algorithm identified a list of investors which their execution team then curated and once approved by Qolo, investors were approached.

“Qolo experienced immediate positive traction on our platform and quickly received information and call requests from several top-notch angel and institutional investors. Great quality companies and founders always quickly receive investor interest and before we knew it, Qolo was in the process of closing their round!”, adds Kabir Narain, Founder & CTO of Marquee Equity.

Over 750 companies use Marquee Equity each year to raise capital and commenting on their raise, Patricia Montesi, Founder & CEO of Qolo said, “We could not be more thrilled with our decision to use Marquee Equity to reach out to potential investors. One of the investors that we met through Marquee had participated in the latest raise and we got many calls and leads from the outreach conducted by Marquee. I would associate with them again and recommend anyone in need of mass reaching investors in a professional and efficient way”.

Marquee Equity was started with the mission of giving any entrepreneur access to the best investors in the world. It operates as a no-judgment, technology-driven platform, that opens up the world’s investors to entrepreneurs wanting to raise capital.

“We wanted to democratize access to capital. Investment bankers are interested in large ticket deals, leaving early-stage companies without access to good advice to raise capital. We work with companies across the board – from idea, stage to pre IPO – from $100k cheque sizes to multi-billion dollar private equity funds raising capital from Limited Partners. We also charge a fraction of what an investment bank of the same quality would charge. This is because of our technology replacing a lot of the manual functions at an investment bank”, added Ash Narain.

“Founders need to approach fundraising as a funnel-based process. You begin with a large pool of interested investors and funnel them down to the few that you close around with. Marquee Equity is a great service to help you build your funnel. They’re quick and get you on the phone with the right group of targeted investors”, says Patricia Montesi.

About the company:

Marquee Equity is a SaaS (Software as a Service) platform, aimed at making investor access a cost and time-effective process. Started in 2016, it connects the entrepreneurs/startups looking for funding and financial guidance with the right kind of investors and helps them grow. With expertise in four lines of business,900+ facilitated raises and a global investor pool of 32,000 investors, Marquee is proud to call itself the world’s most efficient and effective fund-raising service.

Marquee helps access the most relevant investors, tailored to the clients’ requirements, thus opening a portal to connect with the world’s best angels, super angels, venture capitalists & private equity firms. The team also provides services to help clients (founders, VCs, PEs, etc.) exit business/ investments which do not align with their portfolios and connect with a network of buyers to exit investments at strong multiples.

About Qolo.io:

Qolo, founded in 2018, is the B2B payments hub for the New Economy with a mission to help businesses navigate today’s complex payments and financial transactions landscape. The platform empowers businesses to manage payments efficiently with an eye toward growth and reduced expense.

The post Fintech Platform Marquee Equity Helps Qolo.io Raise Their Seed Round Marquee Equity Adopts a Tech-Driven Capital Raising Approach to Help Clients Identify and Reach Out to Investors appeared first on PaymentsJournal.

Zip Co enables Magento’s network of merchants to offer flexible digital payment options seamlessly at checkout 

SYDNEY and NEW YORK, April 22, 2021: Zip Co Limited (ASX: Z1P), a leading player in the digital retail finance and payments industry, has strengthened its relationship with Adobe (NASDAQ: ADBE) and furthered the global expansion of Buy Now Pay Later (BNPL) by becoming an Accelerate partner in the Adobe Exchange Partner Program. Zip  is committed to providing flexible, digital payment options to Magento’s network of merchants. 

Magento is a robust commerce platform that blends digital commerce, order management, and predictive intelligence to enable online shopping across a wide array of industries and business models (B2C, B2B and hybrid). Adobe offers an enterprise-level, cloud-hosted application, Magento Commerce, as well as a free ecommerce solution, Magento Open Source and serves the needs of companies  of all sizes with flexible, digital commerce solutions to successfully sell across channels. 

With more businesses able to offer consumers flexible payment options, BNPL is helping retailers reach new heights. As an Accelerate partner, Zip’s transparent BNPL financing solutions will be marketed directly to thousands of Magento merchants around the world. 

Zip offers point-of-sale credit and digital payment services to industries including retail, home, health, automotive and travel. The company has operations across Australia, New Zealand, South Africa, the United Kingdom and in the U.S. and Canada via Quadpay, a Zip Co. company. 

“Adobe is a global leader in digital commerce and this collaboration will help us reach thousands of merchants and their customers with our better way to pay. With partners like Adobe, we are well on our way to making Zip the first payment choice, everywhere and every day,” saidPeter Gray, Chief Operating Officer and Co-Founder of Zip. 

“While brands are looking for ways to engage customers with new, exceptional experiences, the realities of COVID-19 have catapulted digital commerce technologies to the forefront of the market,” said Jason Woosley, Adobe’s Vice President, Commerce Product and Platform.

“Consumers love installment payment solutions because they’re fast, fair and interest-free. Zip enables Magento merchants globally to implement these capabilities effortlessly at checkout, improving cash flow, increasing order value, and keeping customers coming back again and again.” 

Zip’s installment payment platform is available now in Australia, New Zealand and South Africa, U.K. and U.S. Retailers can register for the new digital payment capabilities here.  

The post Zip Co Becomes Accelerate Partner within Adobe Exchange Partner Program to Power Installment Payments Globally appeared first on PaymentsJournal.

Yet another piece on the hot topic of cryptocurrencies and how exactly they fit into payments ecosystem in the long run. This particular posting happens to be in Forbes and headlines the cross-border aspect of the conversation, which we just commented upon in these pages a couple of days ago.  

The author in this case is an entrepreneur and cross-border payments specialist.  The newly public Coinbase is one reason crypto is popping up daily on the radar and so the ‘asset versus payments practicality’ question is a logical one for review. And as we have stated before, not all cryptos are the same. In this case, the authors stick to the decentralized cryptos as the central point of comparison.

‘Entering the market with a $76bn valuation, Coinbase is the largest cryptocurrency exchange in the US, and a key proxy for the growing success of crypto more widely. When it was founded in 2012, such digital currencies were predominantly being used for illicit online payments, but now currencies such as bitcoin and etherium have become increasingly popular trading assets for institutional investors….However, crypto’s use is increasingly extending to the payments world, where some are extolling its benefits for cross-border transactions, arguing that it does not require conventional currency conversions, bringing speed and cost benefits….“Trading and speculation were the first major use cases to take off in cryptocurrency, just like people rushed to buy domain names in the early days of the internet. But we’re now seeing cryptocurrency evolve into something much more important,” said Coinbase CEO Brian Armstrong in a letter included in the company’s filing documents prior to its public listing….“People are using cryptocurrency to earn, spend, save, stake, borrow, lend, vote and perform many other types of economic activity.” ‘

As one looks at what has occurred during 2020, with the increasing facilitation of crypto utility through the card networks, Paypal and so forth, it is really still about conversion back to fiat currency and not the purist vision of decentralized cryptos (i.e.; bitcoin) as the actual currency of value.

Therein lies the issue with cryptos as a means of exchange, especially in B2B uses and even more so as a cross-border vehicle.  Remittances are one thing, but mainstreaming of cryptos for business is quite another. There is still the conversion issue.  Worth a few minutes to read.

‘Notably, such developments are not confined to consumer-facing businesses. Some B2B cross-border payments companies have also began to make moves in the space, citing interest from customers for access to the technology….One such company is UK-based Equals Group, which recently added support for cryptocurrencies in global payments through a partnership with Tap. And for CEO Ian Strafford-Taylor, adding support for cryptocurrency doesn’t represent an entry into a brave new world so much as adding support for “an exotic” in much the same way as for an unusual fiat currency….“We don’t take positions, we’re not traders, we’re flow enablers, and there’s a demand for this stuff,” he says. “We should try and provide it and we should understand it.”…However, not all payment companies are so keen. Adyen CEO Pieter van der Does, for example, told CNBC that it had no plans to add crypto payment methods, arguing that the volatility of cryptocurrencies such as bitcoin made it “more of an investment asset than a payment method”. ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Cryptocurrencies and the Payments Ecosystem appeared first on PaymentsJournal.

This brief release can be found at The Fintech Times and is announcing the expansion of the Mastercard Track Business Payment Service into the UAE.  Readers of these pages may recall previous postings on these pages about the service, which was originally announced back in Q3 2018 as a trade platform built on Microsoft Azure. 

There have been gradual additions to the platform to include the execution of various payment types. This UAE implementation is being done initially through HSBC.

‘The latest collaboration will result in the launch of Mastercard Track Business Payment Service in the UAE. With partnerships across all regions around the world, Mastercard Track Business Payment Service helps companies simplify and optimise how they pay and get paid through a global open-loop network. Businesses have greater control of their payments with rich data exchanges and the ability to automate payments across multiple payment rails. Among the benefits for businesses are the ability to scale, improved security and control, cash flow efficiency and digitisation of existing manual processes’

As we have reported before, Mastercard’s solution provides a business directory, parameter-driven preference settings, and richer data for reconciliation.  There is also now access to card, ACH, real-time and cross-border payments. 

This is one of the ways that the payments technology company is executing its strategic move to further provide B2B payments modernization, which has been a priority for Mastercard and other networks now for several years given the size of the value flows in global wholesale goods and services as compared to consumer spend. 

‘ “The launch of Mastercard Track Business Payment Service is a game-changer for the Middle East and Africa region. We are seeing a structural need to digitise and automate B2B payments across all our markets, accelerated by the global pandemic, and Mastercard Track allows us to fully take advantage of this opportunity. We are thrilled to have partnered with HSBC to further deliver on modernising the business payment ecosystem by delivering a better payment reconciliation experience for HSBC business customers in the UAE,” “said Girish Nanda, Country Manager, UAE & Pakistan, Mastercard…In November 2020, Mastercard announced the addition of global Card payment capabilities to Track Business Payment Service and Account-to-Account functionality in the United States, with plans to scale globally.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Mastercard Partners with HSBC in UAE to Help Modernise MEA’s B2B Payment Ecosystem appeared first on PaymentsJournal.

As the global economy becomes more “borderless,” one of the hardest things for businesses to do when expanding internationally is getting paid. In fact, a new survey of finance professionals commissioned by Flywire, a global payments enablement and software company, found that complexities with collecting cross-border payments is impacting their ability to scale their business internationally. Furthermore, 9 out of 10 respondents who have a role in handling the inbound payments at their companies said global expansion efforts could accelerate if businesses could deal with foreign exchange rates in an easier way. These same respondents report revenue loss due to operational inefficiencies with receivables processing.

For its new report, Accelerating International Business Growth Through Simplified B2B Payments, Flywire surveyed 301 CFOs, VPs of Finance, Controllers, and other executive-level finance professionals to better understand the challenges and opportunities when it comes to receiving business payments. The respondents work at middle-market organizations with an international footprint across the manufacturing, technology, consumer goods and professional services industries.

“As a global payments company serving B2B businesses, we know that when used effectively, payments can be a key enabler of global expansion. However, the status quo for many international businesses is still legacy infrastructure, old-school payment methods, and complexity with processing incoming payments,” said Ryan Frere, executive vice president and general manager of B2B at Flywire. “Our survey unveils the critical success factors for organizations to overcome the common pitfalls when it comes to transforming payments into an opportunity to achieve operational efficiency and scale.”

Inefficient Receivables Process Costing Companies Time and Money

Businesses are leaving money on the table due to antiquated payments infrastructure. As many as 55% report monthly revenue losses of between 4% and 5% due to operational inefficiencies related to their current payment processing system, and almost a quarter (23%) say they lose 6-10% of revenue.

More specifically, the majority (89%) said they lost money because of time spent on dealing with accounts receivable, with over half (54%) stating they spend 6-10 hours each month managing inbound payments that could be spent on more strategic endeavors.

Having more transparency into the receivables process can enable finance professionals to be more strategic about growing their business. In fact, more than half (51%) say the visibility into the status of incoming payments is critical for budgeting and/or managing working capital.

Concerns for Finance Professionals Span Beyond P&L

Beyond accounting, finance professionals have concerns that span security, dated infrastructure and the impact of the new administration on their business.

Cybersecurity is the leading business concern for respondents with worries around fraud (90%), being hacked (88%) and money laundering (85%) topping the list. Additionally, finance professionals cite problems with the integration of technology (90%), scaling into new regions (88%) and dealing with legacy technology (88%).

Looking ahead, business professionals are alert to the changes in political climate and have perceived notions of how it may affect their company. Eighty percent of respondents believe the Biden Administration will have an overall positive impact on their business. Despite that, respondents have concerns; 86% have regulatory concerns on how it may impact their company, and 83% are concerned about open borders and the free flow of trade.

With concerns spanning well beyond P&L, finance professionals would like to see a shift in their role and responsibilities. Over 9 in 10 finance professionals say their role needs to change from being focused on payments to more strategic activity.

“Finance professionals are increasingly tasked to do more with less; however, they often spend time on the wrong things, such manual reconciliation of payments, shoring up the security of their systems, or dealing with compliance issues,” adds Frere. “By embracing modern technology that automates the payments process with greater visibility into FX rates and receivables, finance professionals can spend more time focusing on optimizing the bottom line and strategically growing their business internationally.”

Flywire’s complete report can be found here.

Survey Methodology

Flywire commissioned Regina Corso Consulting to conduct a survey of finance professionals who work in manufacturing, technology, consumer goods or consulting/professional services to understand how they feel about the payments processes at their companies.

This survey is among 301 finance professionals who are at least a director, work in A/R, A/P, Finance, the Controller’s office or the CFO and work in a company that has between $100 million and $1 billion in revenue. All respondents also say their company has offices or subsidiaries in other countries. This survey was conducted online between February 3 and 11, 2021.

About Flywire

Flywire is a global payments enablement and software company. We combine our proprietary global payments network, next-gen payments platform and vertical-specific software to deliver the most important and complex payments for our clients and their customers.

Flywire leverages its vertical-specific software and payments technology to deeply embed within the existing A/R workflows for its clients across the education, healthcare and travel vertical markets, as well as in key B2B industries. Flywire also integrates with leading ERP systems, such as NetSuite, so organizations can optimize the payment experience for their customers while eliminating operational challenges.

Flywire offers its 2,250+ clients more than 250 payment methods and processes payments in more than 240 countries and territories around the world. The company is headquartered in Boston, MA, USA with global offices. For more information, visit www.flywire.com. Follow Flywire on Twitter, LinkedIn and Facebook.

The post Majority of Finance Professionals Say Difficulty with Collecting Cross-Border Payments Slows Global Expansion appeared first on PaymentsJournal.

adds some of the biggest names in tech as strategic investors to address $125T B2B payments market opportunity

SAN FRANCISCO–Routable, the simplest way to send and receive business-to-business payments, announced today that the company has raised $30 million in Series B funding. The round was led by Sam Altman, CEO of Open AI and former president of Y Combinator, and Jack Altman, CEO of Lattice. Additional investors include Flexport as well as angel investors, including Max Mullen (Instacart), Joe Gebbia (Airbnb), Aaron Levie (Box), Marc Benioff (TIME Ventures), Gokul Rajaram (DoorDash), Lachy Groom (formerly of Stripe) and Scott Belsky (Behance). Having already become the B2B payments platform of choice for fast growing mid-market companies that need to regularly send a high volume of payments, Routable will use this funding to scale its team to expand upmarket into the enterprise space.

Making B2B payments is time-consuming, costly and mostly still an arduous, manual process that doesn’t easily scale. Routable’s modern enterprise finance software combines 15 discrete AP/AR functions to automate 95% of the manual payments processes, such as updating accounting systems, processing compliance in bulk, and more, allowing companies to focus their engineering and finance talent on the tasks that matter most.

Routable’s foray into the enterprise market aims to replace internal tooling built for custom business payment flows. Since its launch from stealth in August 2020, Routable has grown revenue by 380% in addition to making strategic moves to position itself for the enterprise. The company recently hired Brian Walerius as VP of Engineering, who brings enterprise experience from previous roles at Total Expert and Open Systems International. As part of Routable’s API-first approach, Routable has already established integrations with Xero, QuickBooks, and NetSuite to support payables workflow and reduce manual intervention and will look to accelerate integrations to additional financial systems of record.

“There’s a huge market opportunity for us to address here with the B2B payments industry projected at approximately $125T, with ACH, Cash & Check representing about $122T of that market opportunity,” said Routable co-founder and CEO Omri Mor. “We’ve intentionally partnered with a new roster of investors from companies like Box, OpenAI, Instacart, Salesforce, DoorDash and more, with deep enterprise and high-growth experience. With their guidance, we will scale our team to build the best solution for high volume enterprise business payments.”

“The explosion of the gig economy over the past several years and the more recent boom in the creator economy are leading to a massive rise in the volume of both payments and payees creating a real business payment headache,” said Sam Altman, lead investor and former president of Y Combinator. “Routable has built an incredible product and team to tackle these pain points and has quickly become the backbone of some of the fastest growing businesses. With the addition of enterprise capabilities, we think this can lead to an enormous business and we’re thrilled to be supporting them as they scale.”

For more information about Routable, visit https://routable.com/.

ABOUT ROUTABLE

Routable is the simplest way to send and receive business-to-business payments. The secure invoice and bill payment platform helps companies speed up their business payments. The company was founded in 2017 by Tom Harel and Omri Mor and has raised $46 million to date. Routable is primarily a remote team, with headquarters in San Francisco and Seattle.

The post Routable Raises $30M to Expand Modern Business Payments to the Enterprise Company appeared first on PaymentsJournal.

The payments function is at a unique inflection point, under pressure from several influences.

First, business buyers are themselves consumers, and they expect the same quality of payment experience as they see in their consumer lives. That means they want seamless, digital payments.

Second, the COVID-19 pandemic has made paper processes all but impossible. When offices are closed, who is there to cash a check? It has highlighted the unnecessary effect of manual work on already under-resourced payment teams.

And then there is the evolution of the subscription-based business, where payments are not just core to profitability, but a key touchpoint with the customer. In recurring payments businesses, payments are a key part of customer service. Combined, these forces are accelerating digitalization within the payment landscape.

To find out how US business leaders are dealing with these seismic changes, Forrester Consulting surveyed 297 payment decision-makers in US B2B and B2C firms or B2B-only firms. Forrester then released a thought leadership spotlight, called Recurring Payment Friction in the US: Rethink Your Payment Strategy to Save Your Customers and Your Bottom Line. Here are some of its main takeaways.

The pandemic highlighted the need for payments modernization

COVID-19 amplified the urgency to modernize payments, as paper check payments became even more burdensome in the largely remote workforce environment. A majority (70%) of B2B decision-makers are embracing bank debit more than check payments.

But operational challenges continue to hinder progress in the United States payments landscape. Firms processing recurring payments are largely still relying on multiple technologies to do so, such as CRM, billing, and accounting systems.

Almost 85% of survey respondents reported having more than 20 full-time equivalents (FTEs) managing payments. Administrative costs, manual processes, and slow payment intake pose major challenges to streamlining payments. Payment failures plague the bottom line.

Payment failures have major consequences on recurring payment businesses

Payment failures are a common occurrence in the recurring payments world. In fact, half of U.S. survey respondents said that at least 7% of their payments failed in the past year. For B2B exclusive firms, this figure is even higher.

A shrinking bottom line, bad debt, and customer churn are three major consequences of payment failures:

1. Shrinking bottom line: When payments fail, profits decrease. A shrinking bottom line limits growth and hinders innovation.
2. Bad debt: At a certain point, credit extended to a customer is no longer collectable. This expense is called bad debt. Two-thirds of the surveyed U.S. B2B exclusive payment leaders reported that at least 11% of failed payments result in bad debt.
3. Customer churn: Nobody wants to lose customers. But payment failures result in voluntary or involuntary churn, hurting profits.

Recurring payment solutions can mitigate these challenges

Fortunately for firms processing recurring payments, having a carefully planned and modernized payment strategy can mitigate the challenges mentioned above. Payment modernization translates into greater payment success and customer retention, globalization and adherence to compliance, and improved operations and optimization of cost and cash flow.

“Businesses have embraced the subscription model because when the checkout process including the payment itself is frictionless, they gain a predictable cash flow and stronger ties with their buyers. The inverse is true too, however. When the payment process is not handled well, businesses lose customers frustrated by the process, incur losses through unpaid purchases, and have higher expenses trying to remedy unsuccessful transactions,” said Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group. 

Firms need to continuously evolve their payment method portfolio to fully reap the benefits of modernization. This means looking for payment technology that has recurring payments in its DNA and choosing payments partners that have global expertise relevant to their unique business needs.

Access the Thought Leadership Spotlight

The Forrester Consulting Thought Leadership Spotlight, commissioned by GoCardless, presents additional findings and statistics on the state of recurring B2B payments and offers insight into the steps firms are taking to improve their payment strategies.

Download the spotlight, Recurring Payment Friction in the US: Rethink Your Payment Strategy to Save Your Customers and Your Bottom Line, by filling out the form below. 

The post Report: Recurring B2B Payments are Driving Payment Modernization appeared first on PaymentsJournal.

Readers may not be aware of fintech unicorns outside of North America, Europe and Asia, but this release, which we found in Bloomberg, is about funding for a 2016 Uruguay-based payments fintech startup named DLocal, which has apparently reached a valuation of $5 billion after a new funding round. 

The company is a 360 payments technology platform designed to handle mass online payments in emerging markets across LATAM, APAC, and EMEA, according to one posting.  The cross-border craze continues.  One could say that companies in the competing fintech space include firms like Adyen, Payoneer, Paysafe, etc.

‘The Montevideo, Uruguay-based company also raised fresh capital from investment firms Bond, D1 Capital Partners and Tiger Global. DLocal, which processes cross-border payments, separately appointed Sumita Pandit, a former JPMorgan Chase & Co. banker, as chief operating officer, confirming an earlier Bloomberg News report. DLocal’s former COO, Jacobo Singer, has been named president…..“This new investment combined with our strengthened leadership team will allow us to further focus on our customers’ success,” Chief Executive Officer Sebastián Kanovich said in a statement. Pandit will help the firm serve global merchants that are seeking to access consumers in emerging markets, Kanovich added.’

The piece does not go into use cases but a quick review of the website provides a glimpse of C2B and B2C uses in e-commerce and payouts, which in some cases could be interpreted as B2B, although mostly to contractors, but could include small suppliers. 

The mass payout space has been hot given the expanding gig economy across the globe (was expanding anyway) and of course since the pandemic there has been some relatively strong growth in e-commerce, where x-border payments in local currencies can be advantageous to merchants, hence the appearance of these new generation fintechs. We’ll continue to track as more will come.

‘“Emerging markets represent some of the fastest growth opportunities in digital payments, underpinned by a rising middle class and the rapid growth of e-commerce,” Deepak Ravichandran, general partner at Alkeon Capital, said in an emailed statement. “DLocal’s unique platform empowers merchants with a single integrated payment solution, to reach billions of customers, accept payments, send payouts, and settle funds globally,” he added.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Uruguay’s DLocal Valued At $5 Billion after Alkeon and Tiger Invest appeared first on PaymentsJournal.

Readers of these pages and the x-border payments topic may recall a recent posting here that discusses blockchain in the space, including the company in the subject posting today at KrAsia.  It seems that Ripple is having some success in the Asia Pacific region with remittances using their blockchain network and XRP cryptocurrency.  

Therefore they went ahead and agreed to acquire a Malaysian company named Tranglo that specializes in cross-border payments.  Readers may also know that in the U.S. Ripple has some challenges with the SEC regarding the definition of XRP as a security versus a currency.

‘Blockchain payments firm Ripple, which is known for helping develop digital currency XRP, has acquired a 40% stake in Malaysian cross-border payment startup Tranglo to gear up for its expansion in Southeast Asia, the firm announced on its website on March 30. The investment took place even as Ripple has an ongoing legal fight with the Securities and Exchange Commission (SEC) in the United States….Although it is unclear whether the acquisition is going to be realized in cash, equity, or via cryptocurrency, the partnership allows Ripple to capture burgeoning demand of cross-border remittance in the region and expand the reach of its On-Demand Liquidity (ODL) product, which uses XRP as a medium of exchange to facilitate cross-border money transfers.’

We recently also wrote member research on the B2B x-border space, but this particular acquisition is more about expanding access to the consumer cross-border landscape across Asia, where Ripple seems to be able to expand despite U.S. challenges.  

The B2B challenge for decentralized cryptos with highly volatile floating FX is that corporates and banks shy away, given the regulatory scrutiny and risks.  That is why stable coins (and now CBDCs) are gaining adoption in blockchain scenarios.  It does not seem to be a hindrance in APac for these B2C or P2P transactions however. 

‘With an extensive payment network in more than 100 countries and offices in Singapore, Jakarta, Dubai, and London, Tranglo’s steady reach will add fuel to Ripple’s ambitions in the region. The blockchain payment firm’s transactions in Southeast Asia increased tenfold in 2020….Tranglo, which was founded in 2008, also secured a partnership last year with Alipay and WeChat Pay’s Hong Kong service, enabling users to transfer money back to Indonesia and the Philippines. As of September 2020, Tranglo has processed USD 6.91 billion worldwide, according to the company’s website….“This [partnership with Tranglo] allows Ripple to strengthen its foothold in the cross-border payments industry in Asia, where there are many countries that suffer from a lack of liquidity and very large spreads in their respective currency markets,” Popli said.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Unimpeded by SEC Lawsuit, Ripple Is Set to Supercharge Southeast Asia’s Cross-Border Remittances appeared first on PaymentsJournal.

In an announcement from Visa which we picked up at Finextra, the payments company has launched an expanded version of Visa Direct platform that allows for additional use cases, including x-border disbursements. 

We recently covered the B2B faster payments space for the U.S. market in member research and mentioned Visa Direct as one of the growing alternatives for B2B cases, and in the release specified business–to-small business as one of the target constituencies for using the service.

‘The Visa Direct Payouts APIs are designed to reduce the complexities often associated with managing and sending money across multiple networks and intermediaries worldwide….Users can move money globally through a single connection to VisaNet, enabling financial institutions, fintechs, remittance providers and corporate banks to capture new payment flows, says Visa….The system supports real-time domestic and cross-border person-to-person, business-to-small business and business-to-consumer use cases, such as insurance disbursements, marketplace seller payouts, providing workers faster access to their earnings, as well as remittances.’

We have not received a detailed briefly on the platform enhancements but it seems likely that it involves further integration with the Earthport capabilities, which Visa acquired back in 2019.  Since Visa’s B2B Connect platform is more targeted for high value B2B, we expect that the new Visa Direct B2B cases are more high velocity and low value, which is more what payouts and remittances are in the first place.

‘Bill Sheley, SVP, global head, Visa Direct, says: “As digital commerce accelerates, Visa is innovating to give financial institutions, governments, individuals and businesses new ways to pay and get paid beyond the card….”The launch of Visa Direct Payouts marks an important milestone in Visa’s expansion of its account-to-account capabilities to now reach an additional 2 billion bank accounts around the world.”  ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Visa Expands Global Money Movement beyond the Card appeared first on PaymentsJournal.

Every member of the supply chain is now impacted by inefficient manual processes thanks to COVID-19. As a result, U.S. businesses are accelerating their plans to move from paper to digital B2B payments. An era of digital transformation has arrived.

To learn more about digital acceleration in the realm of B2B payments, PaymentsJournal sat down with Harry Harnett, EVP of Treasury Payables & Receivables Product Execution at BBVA, Sam Kies, Director of Account Management at Mastercard, and Steve Murphy, Director of Commercial & Enterprise Payments Advisory Service at Mercator Advisory Group. 

The state of B2B payments

In late 2019, various themes that had been building over time were expected to remain prominent in the B2B space. Collaboration between fintechs and banks, globalization efforts, resourcefulness, and risk management were top of mind for banks and businesses looking to succeed.

Then came COVID-19. “As the pandemic was declared and various forms of lockdowns were deployed in most U.S. states and across the globe, the work-from-home phenomenon caused most businesses to revisit their methods of conducting financial operations,” said Murphy. “The most immediate needs of those [businesses], of course, was the basic need to make and receive payments.”

Consequently, digital acceleration became top-of-mind for businesses looking to remain successful in the new world. This was particularly true for businesses that relied heavily on paper and manual processes, which are particularly inefficient with a largely remote workforce.

“We see those trends toward digital really manifesting, and particularly B2B payments with the importance of a digital card,” said Kies. “I think that [the pandemic] is really causing folks to look at their overall structure and [ask] what [they] can bring forward that will make a lasting impact.”

Many B2B business payments are still done through checks

Even though the shift away from manual processes including paper checks has been an area of discussion for some time, plenty of businesses still use them. According to the most recent AFP electronic payments survey, 42% of B2B business payments were conducted via check in 2019.

The pandemic is changing that. “If you take a look at the last 10 years, the decline in B2B check usage is about 2.5% per year, which certainly doesn’t align with the quality of the capabilities that have been out there and [are] being launched, especially in the last five years,” said Murphy. While the official numbers for 2020 are not yet available, “that decline in checks is probably going to be more in the 5% to 10% range,” he added.

Digitization isn’t new, but it is more important than ever

Digital technologies for business payments were already available prior to COVID-19. Organizations such as BBVA have been equipped with the services and technologies to enable digitization for years. “The challenge [of digitizing B2B payments]… is more about increasing client adoption and focusing their prioritization of these services to really become normal business operations,” said Harnett. 

Prior to the pandemic, payment processing inefficiencies were predominantly experienced by buyers. Now, the entire supply chain suffers. “COVID and the whole work-from-home dynamic immediately complicated how invoices are being sent, how they’re being received, how they’re being processed, and even how payments are now being made,” he added.

In other words, the historical ‘if it ain’t broke, don’t fix it’ mindset no longer applies. “[Payment processing] inefficiencies extended to their suppliers, who are receiving these manual paper-based payment types and now receiving them much later than they had anticipated, which presents their own challenges [with] how they’re managing their cash flow, their inventory, and their operations,” Kies explained.

Ultimately, the implications that inefficient manual processes have on both buyers and suppliers are pointing to a widely held belief that the B2B payments industry needs to move beyond checks.

The path to digitization doesn’t need to be intimidating

It’s normal for organizations to feel intimidated by the complexities of digitizing their B2B payments approach. It can be challenging to identify where to invest and where to begin transformation. Businesses need to ask themselves where they want to lie on the innovation curve: will they be an innovator or a fast follower? 

But digitization doesn’t have to be an all-or-nothing approach. Rather, businesses can benefit from incremental changes toward digitization. With a strategic partner, businesses can more easily determine which changes should be prioritized. “As their strategic banking partner, it helps that we are already supporting many of their clients’ cash flow activities,” said Harnett.

BBVA has seen increased interest with virtual cards, integrated payable solutions, and electronic invoicing tools from their clients and prospective clients. In other words, businesses are recognizing the value of digitizing.

“The benefits of payment digitization, they’re wide ranging, including everything from process improvement, revenue generation, and cost savings, even protecting clients against potential fraud threats. I really think the key is for organizations to realize the value and simply prepare to get started,” Harnett concluded.

The post Digital Acceleration Is Table Stakes in the B2B Payments Landscape appeared first on PaymentsJournal.

The Australian market is the place to watch if you follow Buy Now Pay Later (BNPL) lending.  With 25.4 million citizens, Australia is smaller than Canada (37.6 million) and California (39.5 million), but the country was at the epicenter as BNPL took hold.  Indeed, Klarna originated in the Nordic countries, but Aussies quickly formed Afterpay, Brighte, Humm, Klarna, Latitude, Openpay, Payright, and Zip.

Australians carry more debt per household than the United States.  In July 2020.  According to Trade Economics, in the United States, household debt as a percentage of Gross Domestic Product was 78%, compared to a whopping 122.6% in Australia. This disparity shows that Australians may like consumer credit options even more than Americans.

Today’s read comes from the Australian News Channel, which publishes Channel News.  The article covers PayPal’s efforts in the market and indicates that despite BNPL’s rapid and seemingly pervasive uptake, BNPL has not displaced Paypal.

• PayPal is still the number one online shopping payment method in Australia, despite the Buy Now, Pay Later industry raking in a lot of the market share during 2020.
• According to data from BigCommerce, PayPal has already accounted for 41 percent of all transactions in 2021 – up from 40 percent during the whole of 2020.
• Meanwhile, credit cards have accounted for 28 percent of transactions,
  • debit card use is at 19 percent
  • BNPL products such as Afterpay and Zip have accounted for 13 percent of online spending so far in 2021, down from 14 percent.

Now, consider PayPal’s recent announcement to enter the BNPL market in Australia, as IT News Australia reported on March 10.

• The offering will allow consumers to split purchases valued between $50 and $1500 across four equal repayments every fortnight.
• General consumers will see the new ‘Pay in 4’ option at checkout or in their digital wallet, while merchants can integrate the new offering as a payment option on their website.   
• Merchants will also show each installment’s monetary value through a messaging feature, letting consumers know how much to expect each repayment to be.

PayPal’s option looks like it may be more efficient.  BNPL merchant acceptance cost runs between 4% and 6%.  In Australia, credit card interchange is below 1% for credit and half that for debit, according to the Reserve Bank of Australia.  (for information on credit card interchange versus BNPL fees, see here, and to understand Visa’s complete set of posted rates in AU, see here.)

BNPL rates for PayPal in AU look like they will undercut the BNPL market with “2.6 percent plus 30 cents for domestic transactions in Australia.” The transaction is “lower than Afterpay’s fee of around 4 percent plus 30 cents, which may provide PayPal an edge.”

The fundamental difference between PayPal and the cluster of BNPL is PayPal’s scope and breadth.  PayPal’s 4Q20 results indicate 377 million active accounts, with almost $1 trillion in payment volume worldwide.  Most BNPL lenders that Mercator Advisory Group reviewed have yet to show a profit.

In field testing, BNPL, my transaction with PayPal was processed with the speed of a credit card transaction: quick, friction-free, and straightforward.

Here is the big takeaway.  PayPal can overtake the BNPL model.  With offerings in more than 200 countries and regions, PayPal is everywhere. It has the staying power. It has the drive.  And unlike many BNPL lenders, who focus on a single payment stream, PayPal’s transaction offerings, finance options, and presence are diverse.

The firm can react well to rising interest rates, which is a flaw in the current BNPL process.  Stay tuned, and expect the disrupters to disrupt the disrupters.

Overview Provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post In Australia, BNPL is Big, but PayPal is Bigger appeared first on PaymentsJournal.

This piece is posted at TechCrunch and is basically a summary of the $90 million funding round for PPRO, the UK-based fintech that provides local payment infrastructure for online commerce.  The release suggests that this makes PPRO the latest fintech unicorn. 

The participants in this round were JP Morgan and Eldrige, a Connecticut PE firm.  PPRO has been specializing in creating an easy path for e-commerce, especially cross-border, by localizing the payment types, which simplifies acceptance and makes things better for both buyers and suppliers.  We recently covered this general area in member research.

‘PPRO’s core product is a set of APIs that e-commerce companies can integrate into their check-outs to accept payments in whatever local methods and currencies consumers prefer, removing the need for PPRO customers to build those complex and messy integrations themselves. Its business has boomed in the last year as one of the bigger providers of that localized payment technology, with transaction volumes up 60% in 2020 to $11 billion in processed payments.’

As most readers will know JP Morgan is a major player in the merchant services space, having combined Chase Merchant Services into the corporate bank in 2019 to further scale into broader payments services across the globe. So in addition to the investment aspect (the large banks have been injecting capital into the fintech space now for more than five years), this will likely include infrastructure collaboration to expand global acceptance capabilities, perhaps into non-traditional payment tools. 

Given that the e-commerce space has seen some explosive growth during the pandemic, especially B2B, this would also seem like a logical path for further improvements.  Keeping an eye out for developments in this fluid space.

‘“We are extending into payments and we are looking to double down on addressing the needs of our clients and their clients, which can be consumers, suppliers or marketplace sellers,” said Sanjay Saraf, managing director and Global Head of the Integrated Payments Group at JPMorgan Chase, in an interview. “That last mile becomes important from a customer service perspective.”‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post PPRO Extends Latest Round to $270m, Adding JPMorgan and Eldridge to Grow Its Localized Payments Platform appeared first on PaymentsJournal.

The cross-border payment topic is again discussed in an article posted on Raconteur, this time with an emphasis on data as a key to greater adoption and progress going forward.  The catalyst in this case is the messaging standard ISO 20022.  The author suggests that ISO 20022 is a new standard, but in actuality it has been around for more than a decade, although adoption has been generally limited to incorporation with the 50 something domestic instant payments systems that have been launched in a number of foreign markets. 

The current U.S. version is RTP from TCH, which has been around since 2017. We recently released member research about the B2B faster payments space as well, where it is pointed out that Fedwire and CHIPS will be converted over to ISO 20022 during the next few years (exact dates TBD).

A logical ambition is for sovereign domestic instant payment systems to eventually interoperate with each other, and there are efforts already underway to achieve this, such as P27 in the Nordic region, which is a purpose-built cross-border instant payments system, and others we have previously summarized.

‘Making cross-border payments has traditionally been a cumbersome task. A typical transaction could take several days to clear while the recipient’s bank carries out the necessary compliance checks. Delays are common, sometimes payments fail. For global businesses, this can have a negative impact on supply chains and fulfilling customers’ orders….A new international payment standard currently being rolled out, known as ISO 20022, could start to change all that by harmonising payments data around the world…..“This format is the emerging de facto standard for new types of real-time payments systems that are in development globally,” says Aleks Stefanovski, vice president of strategy at Currencycloud, a cross-border payments platform. “That’s important because it enables fintechs to establish connectivity to different real-time payments systems around the world in a way that removes friction and improves the speed and customer experience of cross-border payments, reducing what, maybe ten years ago, took two or three days to just a matter of seconds.” ‘

The author goes on to discuss how exchangeable ISO 20022 data can be used, most fundamentally as part of remittance data which can speed up the settlement of funds by eliminating errors, but also provide additional data for the specific local regulatory regimes. Having a global standard is one thing, but getting everyone to agree on what data to send and how to use it when received are also challenges, so by no means is this a panacea. 

In the member research mentioned earlier, we pointed out that RTP has massively increased remittance data volume capabilities but to date the usage of this messaging feature has been minimal, so more work to be done on this part, which of course is only the domestic theatre, not the more complicated international space. The article mentions a few other things of use so worth browsing through for those interested.

‘Harmonisation doesn’t solve all the problems, but it certainly helps with the ability to accelerate innovation by making certain things easier and more consistent,….This backdrop is already creating opportunities for collaboration across the industry. Modulr, for instance, has used its payments technology to enable challenger bank Revolut to credit its customers’ salaries into their accounts a day earlier than would otherwise be possible…..“The data is only as good as what you do with it,” says Zmuda. “Businesses increasingly need a payments partner that can keep them on the front foot and have the digital infrastructure in place to benefit from these changes.”….Wider benefits of the changes also extend to merchants and consumers. Take payment initiation, a PSD2-enabled service that makes online payments more seamless and secure.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Why Data Is the Key to Unlocking Payments Innovation appeared first on PaymentsJournal.