While it is easy to criticize B2B payment for being slow to change, its not always so easy to create products that offer something for all side of the transaction. B2B Payments are different, American’s Express’s Rob Alcock told MPD CEO Karen Webster, and need an approach to services that “not just recoloring the piece of plastic.” Instead, Amex is focused on providing efficiency and focusing on the needs of both sides of the transaction.
KW: Amex is giant in the corporate card side of enterprise payments. What is American Express’s interest beyond the corporate card space when it comes to B2B payments?
RA: American Express has had an interest in the B2B side of payments for a number of years. Like most of our products, they originate based on client demand. As an extension of the T&E (travel and entertainment) card we offer to the marketplace, clients were looking to utilize that same kind of functionality for B2B payments. They wanted the ability to separate travel payments from B2B payments.
When we emerged in the B2B space, with our purchasing card program, it was built on the premise that we would be treating the card very differently – not just recoloring the piece of plastic – but adding additional value to the card based program. That provided us with areas of opportunity where we’d be able to capture additional data fields that were applicable to how the client would reconcile that transaction. We came out to market with a product that we could use different industries like logistics to ship to a zip code. We’ve gone from the days of using the card as a small method of walking into a store and being able to capture additional data fields to now having integrated solutions where they can go into accounts payable systems. We continue to look at this a big opportunity for the company moving forward.
KW: Are the verticals you’re targeting beyond travel leverage your corporate card legacy?
RA: There’s a combo of customers that have used our T&E products that are looking for the benefits that a credit card could provide in a B2B type of transaction. In some of the verticals where we are strong, there is more of a need in the industry due to the destressed relationship of a buyer and a supplier. Some of those verticals are interested given the reality of the world in which those buyers and supplier operate as well as the customers who have used the T&E program who also want to use that process in the B2B space. While it’s still very broad in nature we do have a large footprint of corporate customers who continue to use the T&E cards and who also utilize the benefit of that in B2B.
KW: What other forms of stress or tension are you seeing in B2B payments and where do you see these becoming more acute?
RA: There are a few primary areas that we look at and there are opportunities to provide efficiencies when processing a payment. Invoicing has been a challenge as companies try to consolidate their supply base – the reality is the tail is still very long. In supply chains we look for the stress points that make products relevant to the market place that make processes easier not only in providing financial value but streamlining a process.
KW: Who is the most difficult to persuade to adopt something like you just described – is it the buyer or is it the supplier?
RA: I think in some cases there is a significant value to both parties. What we try to do inside our product set is to look for areas of opportunity that provide value to both side but make the economics of the product we use in the environment work for both sides. From the supplier perspective it’s the cost of acceleration and integrate seamlessly into their process. The buyer is looking at the problem in their process and we’re looking how to benefit both their environment. One of the unique things about American Express is that we have the opportunity at times to focus in on both sides of the conversation. Not every transaction is created equally. We can really target what is the right fit for the buyer and the supplier. It’s trying to find the right the right balance point to make the financial value and the process work.
KW: So, how do you do that in a way that can scale?
RA: We try to look at the buyer and the supplier relationship as fluid. Card acceptance in this industry works at times – even if a client or supplier accepts a transaction it doesn’t mean that they accept every time. There’s the cost and the size of the transaction to consider to make that transaction work. We look at if they supplier accepts for that value and what is the value that is being provided to the supplier to make that transaction work.
KW: The enterprise side of payments has been criticized for taking its time to get its innovation mojo, well behind the consumer side. Why do you think that is?
RA: You have treat corporate transactions differently from consumer transactions. As a consumer you have ability to make decisions. As corporations move into their tech process, there is a very different equation of how payments work in a consumer vs corporate space. In corporate a lot of B2B transactions originate with a process, which historically is someone going out with a preferred list of suppliers and then receiving the goods before they make a payment. Technology is driving the experience. If you look at the consumer space, you can make a spot decision on your own. When you think about the payments on the back end, the experience is very different because of the front end of the process. Corporations want security in how payments are done, but don’t want to do so until the proper process is in place. It’s difficult to look at payments in a consumer landscape and compare it to corporates because the landscape is very different.
KW: So you don’t see a future where we’re all zooming around enterprise payments on the bitcoin protocol?
RA: In terms of the corporate landscape there is a security and safety of the regulated rails on how money moves. If certain currencies become regulated I think you’ll see a greater adoption of them by the corporate landscape.
To hear Rob’s perspective on technology innovation at work and to give your two cents on the future of B2B payments, register to attend our “What’s Next in B2B Payments” event in NYC on October 15th. Register today!