#pymntsTop5

In today’s top news in digital-first banking, SWIFT has announced that its international platform will be updated to let financial institutions (FIs) provide instant transactions, and VSoft has rolled out its new Bread merchant services network. Plus, Acumatica has introduced features for its Acumatica Cloud ERP technology, including electronic banking feeds.

SWIFT to Create New Cross-Border Real-Time Rails

SWIFT announced that its cross-border infrastructure will be revamped to let FIs provide real-time transactions. The cooperative said the effort will offer transaction management services. It is anticipated that the next-generation digital platform will harness an application programming interface (API) and cloud technology.

VSoft Debuts Merchant Network for Real-Time B2B Payments

VSoft has launched its novel Bread merchant services network to allow small and medium-sized businesses (SMBs) to have faster and less costly transactions. Payments on the network are directed between institutions, while a middleman does not hold the funds. Instead, funds are moved directly from a sender to a receiver’s account once a Bread user pays.

Acumatica Debuts Automated Spend Management Tools

Acumatica has launched the Acumatica Advanced Expense Management and Electronic Bank Feeds for the Acumatica Cloud ERP technology. The cloud technology firm will provide safe connections with over 11,000 FIs with different authentication processes and tokenization technology for the electronic banking function. Live activity downloads will be available, in addition to smart-matching to current transactions.

Jonathan Vaux Named General Manager of i2c Europe

i2c Inc. has brought Jonathan Vaux on board as general manager of its operations in Europe. The new general manager will report to the firm’s President James McCarthy, and will work to create alliances with FinTechs, FIs, payment service providers and retailers across the continent. Vaux previously worked at Visa for more than 20 years, where his work was geared toward commercial payment offerings and generated growth, prior to joining i2c.

Backers of a new group vying to buy the U.S. operations for TikTok want to craft an agreement giving U.S. interests a majority stake in an attempt to appease the Trump administration's fears of foreign surveillance, The Wall State Journal (WSJ) says.

Oracle and Walmart are planning to own a large stake of the video sharing app together, sources told WSJ. If they combine with the existing American interests, U.S. interests would have a majority of the shares in the company, with Walmart CEO Doug McMillon expected to take a board seat if that ends up happening.

Under that plan, TikTok would file for an IPO in the U.S. in around a year.

The Trump administration, voicing concerns that TikTok could be a way for Chinese officials to spy on the U.S., has been pushing for the U.S. to take a majority ownership of the country. Microsoft has also been favored in recent months to complete a deal.

Trump said on Thursday (Sept. 17) that the White House had been speaking with Oracle and Walmart earlier in the day. He said he guessed Microsoft was still involved, but offered no other details except to say that the company would “make a decision.”

PYMNTS reported that Microsoft’s offer to buy TikTok’s U.S. operations was turned down, the company confirmed on Sunday (Sept. 13).

A deal between TikTok and Oracle could face a difficult road, PYMNTS wrote, if it goes the way of TikTok parent ByteDance. ByteDance’s plan would make Oracle a “trusted technology partner.” The proposal would make it so that ByteDance retained the majority global ownership while establishing a new U.S. office. That proposal is being reviewed by the Treasury Department, but the Trump administration isn’t likely to go for that, preferring an outright sale.

China said it would also have to approve any prospective deal involving TikTok.

Most office buildings are still dark in the U.S., six months and counting since the pandemic started, The Wall Street Journal (WSJ) reports.

Brivo, which provides access control systems for workplaces, had data that the “unlocks” at offices — meaning when someone enters a workplace via their credentials — were down 51 percent in August as compared to February.

But visits to manufacturing and warehouse locations were down by only a third. That can be chalked up to the fact that fewer manufacturing types of jobs can be done remotely.

Location has a bearing on the return to work, with tourism-dependent places like Miami seeing as much as a 92 percent return to the pre-pandemic occupancy, whereas cities like San Francisco and New York have hedged bets on reopening, with warehouses, offices and retail locations still at well below 50 percent occupancy, WSJ writes. And then there are those cities in between, including Chicago and Washington D.C., where offices are still half-empty but manufacturing and warehouses have returned to roughly 75 percent capacity.

And going forward, most employers expect there to be a much higher rate of employees choosing to work from home. That could mean it could be years before offices return to pre-pandemic levels of occupancy.

The pandemic shut down offices all at once in March and April. Since then the recovery been uneven across the country, with offices in New York having hit a low of 21 percent of visits in April and only recovering moderately since then. In retail-rich Miami, employee visits to stores were steady at 84 percent and above, including in mid-July when coronavirus cases saw a resurgence.

Adam Johnson, founder and portfolio manager at Bullseye Brief, the New York City newsletter that tracks up to 50 publicly-traded companies, told NPR he enjoys going into his office in midtown Manhattan. But his sixth floor space in the 35-story art deco building is a lonely place.

“I am the only person who's been coming in here since April 1st,” Johnson told National Public Radio (NPR), noting the floor lacks desks and chairs and a giant conference room is empty. “This is what happens when people move out. I come in here and I do yoga.”

Victor Calanog, head of commercial real estate economics at REIS, the New York-based commercial real estate data company, told NPR that because office tenants tend to have multi-year leases, breaking it to trim costs only works if a downturn is long enough to justify it.

Reis has forecast rents will drop by 21 percent drop in New York City this year. During the 2008-2010 financial crisis, rents fell by 19 percent.

The transition away from primarily commuting to workplaces, not likely to subside any time soon, will have other ramifications for the economy as people stop buying gas for their cars as much, stop making random other purchases on the way to and from work and spend less on professional attire to wear to offices.

Online marketplaces are the digital storefronts helping small to mid-sized businesses survive — but adding real-time settlement into the mix can help them thrive.

To that end, joint research between PYMNTS and Visa, in a study titled Marketplaces as Retail’s New Front Door, found that 60 percent of surveyed businesses that are not currently using online marketplaces would like to do so. And 60 percent of surveyed firms selling across online marketplaces would take their business to one that offers real-time settlement. Another 62 percent of businesses and 78 percent of individual sellers in the study (which included more than 1,000 businesses and individuals generating up to $10 million in sales) reported that they use marketplaces to reach more customers.

In an interview with Karen Webster, Mike West, head of global commercialization for Visa Direct, noted that enterprises — particularly smaller ones — have been evolving their strategies to keep pace with the rapid shifts in how consumers work, shop and pay. But getting funds settled more quickly into their accounts can make all the difference in giving them the cash cushions they need to expand, weather economic shocks and even get their suppliers paid in a timely manner.

Along the way, these companies that are embracing eCommerce have seen an increasing percentage of sales derived from digital payments.

Digital payments — and specifically, card-not-present transactions — may be convenient for consumers, but can impact the very operations of the retailers serving them. Card payments go through a number of steps, as transactions are authorized through acquiring banks, authorization requests are sent to issuing banks and, eventually, funds are deposited in merchants’ bank accounts.

“That means [there is] a gap between when you get your sales and when you get paid out — and we know cash flow is the lifeblood of a small business,” said West. The settlement wait can be several days in length, with even longer lag times over a holiday weekend.

As a result, Visa and PYMNTS found that 76 percent of the surveyed Main Street businesses reported having cash flow shortages. Roughly 27 percent of surveyed firms report waits of between three to five days.

Real-time settlements — where funds are transferred quickly between banks, such as those facilitated by Visa Direct — can help close those cash-flow gaps as these smaller firms navigate the day-to-day challenges of buying inventory, paying bills and covering shipping costs.

“We’re seeing really strong adoption from a lot of marketplaces now” that are realizing the value of real-time settlement, said West, as companies seek to have working capital available to meet new challenges and opportunities as they arise.

The potential for turbo-charged commerce, done with speed, is vast. Visa and PYMNTS found that marketplaces can capture a collective $82 billion to $141 billion per year by adopting real-time settlement options. Call it a greenfield opportunity, as only 3.5 percent of all Main Street businesses report using online marketplaces.

West said marketplaces could find value in offering fast settlements to small and medium-sized businesses (SMBs) — both as buyers and sellers — as speedier settlement improves cash coffers and transactions’ visibility.

Moving beyond the mere ability to list goods and services for sale, and settling those sales quickly, said West, “can be a real motivator to bring those businesses along” with positive ripple effects across supply chains. The merchant who gets cash faster can, in turn, spend money on new inventory (or pay workers) even more quickly.

The Increasingly Digital SMB 

Businesses and sellers that opt to ply their trade across multiple marketplaces are increasingly comfortable doing so, said West, as they run their operations digitally end to end. PYMNTS/Visa found that 72 percent of surveyed SMBs have improved upon or added digital capabilities since the pandemic began, and have increasingly transitioned online to conduct their everyday financial activities.

“That includes whether they access capital through online banking, or manage payroll, send invoices, accept payments and receive settlements digitally,” said West. In the meantime, Visa Direct’s network effect has the capability to touch billions of bank accounts as well as debit cards globally. Digital sellers leverage the online marketplace in what is anything but a passing phenomenon, with 65 percent of surveyed companies using it as a digital storefront to complement their online sales.

“It’s going to be a new normal,” said West of the digital shift, “whether launching an eCommerce site or changing POS technology to set up an omnichannel presence.”

Looking at the technology roadmaps that lie ahead, West said that while COVID-19 has forced marketplace platforms to pivot to prioritizing investments (and settling sales quickly), “the good news is that marketplaces are waking up to the demand and opportunity, and are starting to offer real-time solutions.”

Launching into an emerging market can be a risky move for any global business.  While spend in developing markets isn’t typically as high as, say, in the U.S., consumers in these geographies are quickly opening up lucrative possibilities for global merchants thanks to the availability of lower-cost smartphones and wireless broadband, the ongoing adoption of eCommerce and the move on the part of many countries to innovative their national payments infrastructure.

What this ecosystem evolution means is the payments technology is ready to support global merchants’ needs to facilitate payments for consumers regardless of their location. Yet as these businesses expand across borders, their cross-border payment strategies must prioritize a local experience for the end-user, says Sebastián Kanovich, Chief Executive Officer at dLocal.

Speaking with Karen Webster, Kanovich described why multinational enterprises need to understand the unique payment needs of customers depending on where they reside and how they shop. It’s key to driving adoption of electronic payments, he said, and to helping global merchants succeed in markets they had previously shunned.

The Emerging Market Opportunity

For organizations based in Europe, China and the U.S., Kanovich said he’s seen emerging markets become more of a priority within the global growth roadmap. That wasn’t always the case, however — and only a few years ago, even Kanovich said he didn’t expect to witness the kind of growth in some emerging geographies that he’s seen.

“Only a few years back they would have said they don’t feel confident enough,” he said of organizations’ consideration of emerging markets. “But for instance, Nigeria has to be our fastest-growing market. And to be completely honest, we didn’t see that coming two years ago.”

These regions can be invaluable to organizations seeking growth — but in order for them to succeed in these markets, businesses must localize the payment experience for the end-user.

Cash remains king in many areas, for example, but that doesn’t mean that merchants cannot innovate. Traditionally, it takes 48 hours to confirm a cash payment to a merchant. Now, that confirmation can happen in real time.

“So the user is still paying with cash,” said Kanovich, “but the whole experience changes. And the fact that the confirmation is instant opens up a whole new set of use-cases.”

Working with — not against — customer payment habits is an essential component of finding success in new territory.

Encouraging The Digital Payments Shift

Cash is sticky, but Kanovich said he’s seeing a shift in how consumers pay. That can be due, in part, to high mobile phone penetration and growing adoption of online commerce — but for companies like dLocal who facilitate these cross-border transactions for firms like Spotify and Facebook, one of the most valuable changes in the payments landscape has been innovation of national payment infrastructures.

He highlighted India’s UPI specifically as a particularly sophisticated payment scheme, and one that signals how emerging markets’ payment infrastructures are quickly surpassing those of their more developed neighbors.

“In all of these emerging markets, a lot of them are leapfrogging and are now ahead of the U.S. and Europe, from a purely payments perspective,” he said. “UPI is definitely a much better product than ACH, for instance.”

As these infrastructures grow more sophisticated, the opportunity for payment technologies to integrate into national schemes and facilitate global transactions widens. But the principle remains the same, said Kanovich: don’t focus on educating a consumer on a new payment technology. Rather, make that payment technology so easy to use that consumers adopt them regardless of their understanding.

Amid this ecosystem of payments innovation, competition is growing. For dLocal, which recently raised $200 million, that competition is a positive thing — though Kanovich acknowledged that the market remains highly fragmented. Remaining “payments agnostic” to support any kind of payment method is important to remaining competitive, particularly as merchants face the prospect of “provider fatigue” amid more payment service providers stepping into the space.

What will win out in the end is common sense in order to provide ease-of-use, drive adoption and meet the payments needs of both merchant and customer.

“Payments, it’s not rocket science,” noted Kanovich. “You obviously need to be good in technology, have a great product — but at the end of the day, it’s accumulation of common sense, and you need to build one block on top of the other.”