8 advances in B-to-B payments
April 28, 2017 10:02 AM
The B-to-B payments market is ripe for digital innovation. Here are some of the most recent moves to bring B-to-B payments up to speed.
David Paul Morris/Bloomberg
Visa teams with Amazon
Visa has formed a new partnership with Amazon to provide Visa commercial card customers with a comprehensive view of transaction data from Amazon Business purchases.
Visa's U.S. commercial card customers at supporting banks may now search, compare and buy products from various suppliers on Amazon Business, with the ability to track and analyze purchases using full line-item details, Visa said in an April 10 announcement.
Bank of America Merrill Lynch, Citi and PNC Bank are the first three banks to offer the new service to customers who use Visa commercial cards to buy supplies from Amazon Business, with the goal of enhancing end users’ ability to manage expenses.
The new service supports straight-through processing, which is becoming a requirement for many businesses, said J. Christopher Ward, executive vice president and head of product management for PNC Bank treasury management, in the release. “PNC’s ability to collaborate with Visa and Amazon on this initiative will enable us to deliver to our customers richer data attached to each transaction, resulting in more efficient processing and a better understanding of purchasing activity.”
Visa's U.S. commercial card customers at supporting banks may now search, compare and buy products from various suppliers on Amazon Business, with the ability to track and analyze purchases using full line-item details, Visa said in an April 10 announcement.
Bank of America Merrill Lynch, Citi and PNC Bank are the first three banks to offer the new service to customers who use Visa commercial cards to buy supplies from Amazon Business, with the goal of enhancing end users’ ability to manage expenses.
The new service supports straight-through processing, which is becoming a requirement for many businesses, said J. Christopher Ward, executive vice president and head of product management for PNC Bank treasury management, in the release. “PNC’s ability to collaborate with Visa and Amazon on this initiative will enable us to deliver to our customers richer data attached to each transaction, resulting in more efficient processing and a better understanding of purchasing activity.”
Sergey Nivens - Fotolia
Vantiv buys Paymetric
The
Terms of the deal, announced April 25, were not disclosed. Vantiv has also made recent moves to improve its
"Acquiring Paymetric builds upon our strategy to expand into high-growth channels and verticals," said Charles Drucker, president and chief executive officer of Vantiv, in a release. "Paymetric's deep system integration and workflow automation expertise will enhance our already-leading e-commerce technology capabilities."
David Paul Morris/Bloomberg
PayPal and Oro
PayPal has created a fully integrated payments solution for Oro's open-source website, OroCommerce, to handle the process for buyers to pay for, track and receive goods and services, the companies announced in March.
Oro's CEO is Yoav Kutner, who was a co-founder and chief technology officer at Magento, an open-source e-commerce platform launched in 2008 that eBay Inc. acquired in 2011 for $180 million. In 2010 Magento inked a
Small merchants want in
The majority of small and medium-sized businesses in the U.S. and Europe express an interest in real-time payments, but very few are aware of the current options being tested and brought to market.
A recent ACI Worldwide study finds that 81% of businesses in the U.S. have not heard aboutThe Clearing House real-time payments scheme, and 80% in Germany are not aware of plans to develop the pan-European SEPA Instant Credit Transfer system.
But this is the reality of operating a small business, a sector that tends to be "relatively underserved by the banking community, and they tend to find out about things last," said Barry Kislingbury, director of solution consulting and immediate payments at ACI Worldwide.
Smaller businesses don't have solutions designed specifically for them, as they tend to get "a cut-down version of what is given to larger businesses, or a slightly souped-up version of what retailers use," Kislingbury said. "In that regard, they sit in the middle somewhere and are under-loved."
The desire for real-time payments at the small-business level is more significant in Italy, where 90% of those businesses said they would switch providers if banks offered real-time payments, compared to 75% in France, 58% in Germany and 65% in the U.S.
"Some of these numbers are quite large and pretty significant, when talking about 90% in Italy," Kislingbury said.
A recent ACI Worldwide study finds that 81% of businesses in the U.S. have not heard about
But this is the reality of operating a small business, a sector that tends to be "relatively underserved by the banking community, and they tend to find out about things last," said Barry Kislingbury, director of solution consulting and immediate payments at ACI Worldwide.
Smaller businesses don't have solutions designed specifically for them, as they tend to get "a cut-down version of what is given to larger businesses, or a slightly souped-up version of what retailers use," Kislingbury said. "In that regard, they sit in the middle somewhere and are under-loved."
The desire for real-time payments at the small-business level is more significant in Italy, where 90% of those businesses said they would switch providers if banks offered real-time payments, compared to 75% in France, 58% in Germany and 65% in the U.S.
"Some of these numbers are quite large and pretty significant, when talking about 90% in Italy," Kislingbury said.
Rattling big-biz payments
With big companies frequently set in their ways for how they make cross-border payments, most innovation is targeted toward smaller shops that make fewer payments to foreign suppliers.
But that isn't always the case.
Big companies also suffer from the sluggishness of legacy systems, and may be receptive to change if the right business case comes along, according to Jason Kolbeneyer, managing director of the Bonita Springs, Fla.-based CSI globalVCard.
"B-to-B does lag behind consumers when it comes to payment innovation, but it's a harder market," said Kolbenheyer. "You can't just send a few bucks to your buddy across the office like Venmo."
CSI has generally processed B-to-B payments in the U.S., but plans to have a presence in most of the world by the end of the year, an effort that started with an office in London that opened in March. CSI is collaborating with Edenred, a company that's 30% owned by Mastercard, to issue and process virtual cards and wire transfers.
CSI is hoping to capture business from clients who wish to execute B-to-B payments in the local currencies of each party. The market is sizable: Paystream Advisor's 2017 Electronic Payments Report pegs the B-to-B market at $550 billion, noting half of companies make up to 50% of their payments to foreign suppliers.
While CSI serves businesses of all sizes, it has a particular interest in using its new London office to reach larger corporates. Paystream estimates organizations with more than $2 billion in revenue make a substantial amount of payments to foreign suppliers. And across all business segments, checks are still the largest mode of payment.
"There's still lots of room for growth here," said Kolbenheyer. "Things are just getting started."
But that isn't always the case.
"B-to-B does lag behind consumers when it comes to payment innovation, but it's a harder market," said Kolbenheyer. "You can't just send a few bucks to your buddy across the office like Venmo."
CSI has generally processed B-to-B payments in the U.S., but plans to have a presence in most of the world by the end of the year, an effort that started with an office in London that opened in March. CSI is collaborating with Edenred, a company that's 30% owned by Mastercard, to issue and process virtual cards and wire transfers.
CSI is hoping to capture business from clients who wish to execute B-to-B payments in the local currencies of each party. The market is sizable: Paystream Advisor's 2017
While CSI serves businesses of all sizes, it has a particular interest in using its new London office to reach larger corporates. Paystream estimates organizations with more than $2 billion in revenue make a substantial amount of payments to foreign suppliers. And across all business segments, checks are still the largest mode of payment.
"There's still lots of room for growth here," said Kolbenheyer. "Things are just getting started."
Luke Sharrett/Bloomberg
Supercharging consumer tech
Businesses are using consumer-style technology for business purposes, and the fit isn't right.
But the business and consumer worlds aren't as far apart as many would think, according to Scott Noyes, the manager of purchasing and IT for C.E. Smith, a Greensboro, N.C.-based company that manufactures a range of travel and outdoor goods.
The company is using the same e-commerce software for its B-to-B operation as its consumer direct operation, and with its migration about two thirds complete has found an effect on productivity and sales. The company is privately held, but says sales this year are on pace to jump about 25% from 2016.
"Our initial goal was to tie our back end to consumer sales, but we've also focused on covering business to business clients that order on a regular basis through our website," Noyes said.
C.E. Smith's clients, which include retailers such as Bass Pro Shops, Cabela's, Academy Sports, Tractor Supply and Amazon, require electronic data interchange for B-to-B payments. C.E. Smith found that by integrating EDI with enterprise resource planning, a move that's similar to e-commerce merchants pairing mobile payments with inventory management and staff scheduling, it was able to redeploy about six of its 55 total employees away from fulfillment and reduce processing times from a few days to the same day.
But the business and consumer worlds aren't as far apart as many would think, according to Scott Noyes, the manager of purchasing and IT for C.E. Smith, a Greensboro, N.C.-based company that manufactures a range of travel and outdoor goods.
The company is using the same e-commerce software for its B-to-B operation as its consumer direct operation, and with its migration about two thirds complete has found an effect on productivity and sales. The company is privately held, but says sales this year are on pace to jump about 25% from 2016.
"Our initial goal was to tie our back end to consumer sales, but we've also focused on covering business to business clients that order on a regular basis through our website," Noyes said.
C.E. Smith's clients, which include retailers such as Bass Pro Shops, Cabela's, Academy Sports, Tractor Supply and Amazon, require electronic data interchange for B-to-B payments. C.E. Smith found that by integrating EDI with enterprise resource planning, a move that's similar to e-commerce merchants pairing mobile payments with
gorvik - Fotolia
Tuition takes off
The surge of students seeking an overseas education in recent years powered rapid growth for Flywire , a Boston-based payments technology firm that handles cross-border tuition payments. It must now test whether the global network it built can serve the B-to-B market as well.
The international tuition payments market is getting more competitive, not only fromGeoswift and others in the international tuition-payments niche but startups aiming to cut the cost and hassles out of cross-border payments. Flywire earlier extended its reach to healthcare payments, giving it a small glimpse of the broader B-to-B ecosystem.
Based on its own analysis of annual export dollars for products and services in markets where Flywire’s tuition and healthcare operations are centered—the U.S., Europe, Japan, Singapore, South Africa and Australia—Flywire estimates more than $6 trillion in cross-border B-to-B payments are suited for streamlining.
“Corporations face a lot of the same problems that plagued the international tuition market, where their senders face slow and unpredictable processing times that hurt recipients' cash flow, and fees vary and may include unpredictable foreign exchange rates,” said Jeff Althaus, executive vice president and general manager of Flywire B-to-B.
The international tuition payments market is getting more competitive, not only from
Based on its own analysis of annual export dollars for products and services in markets where Flywire’s tuition and healthcare operations are centered—the U.S., Europe, Japan, Singapore, South Africa and Australia—Flywire estimates more than $6 trillion in cross-border B-to-B payments are suited for streamlining.
“Corporations face a lot of the same problems that plagued the international tuition market, where their senders face slow and unpredictable processing times that hurt recipients' cash flow, and fees vary and may include unpredictable foreign exchange rates,” said Jeff Althaus, executive vice president and general manager of Flywire B-to-B.
An eye on errors
The process of making cross-border payments to global suppliers is a hodgepodge of technology, banking systems and other factors that can lead to high error rates. And for most companies, such payments occur too infrequently to invite improvements to the process.
Nearly 65% of businesses do not make payments to global suppliers as part of their standard payment run, instead making separate runs, often with different banks, according toresearch from payments automation provider Tipalti Solutions Ltd.
San Mateo, Calif.-based Tipalti conducted research of 400 businesses across a variety of industries and market segments last year through software research firm PayStream to determine accounts payable automation capabilities.
The payments industry has sought to improve the status quo of business-to-business payments throughdigital advancements , use of common standards and common coding . Despite those efforts, the PayStream research revealed that inconsistent global payment processes or using separate banking partners were correlated with higher rates of errors.
"Every single country's banking system has its own payment field, format and syntax requirements," said Chen Amit, CEO of Tipalti. "If any of these pieces of information are provided incorrectly, an error likely will occur."
Considering there are more than 26,000 variations in payment field and format requirements around the world, the most common cross-border payment errors often relate to electronic payments such as global ACH, Amit said. "But there are certainly errors that occur commonly with options such as checks, with bad addresses, or bouncing, and things like PayPal with wrong e-mail addresses," he added.
Nearly 65% of businesses do not make payments to global suppliers as part of their standard payment run, instead making separate runs, often with different banks, according to
San Mateo, Calif.-based Tipalti conducted research of 400 businesses across a variety of industries and market segments last year through software research firm PayStream to determine accounts payable automation capabilities.
The payments industry has sought to improve the status quo of business-to-business payments through
"Every single country's banking system has its own payment field, format and syntax requirements," said Chen Amit, CEO of Tipalti. "If any of these pieces of information are provided incorrectly, an error likely will occur."
Considering there are more than 26,000 variations in payment field and format requirements around the world, the most common cross-border payment errors often relate to electronic payments such as global ACH, Amit said. "But there are certainly errors that occur commonly with options such as checks, with bad addresses, or bouncing, and things like PayPal with wrong e-mail addresses," he added.
