B2B Payments

PayPal Ups The Ante In B2B Payments

PayPal’s announcement about its Next Day Settlement Pilot is another sign that it intends to capture a leading position in both B2C and B2B payments. This “Express Lane” for businesses reduces the time that it takes to get access to those funds by as much as 75 percent.

PayPal announcement this week that it had created a Next Day Settlement (NDS) pilot program, allows eligible U.S. businesses to transfer money from their PayPal accounts to their bank accounts within 24 hours. This is a reduction of up to 75 percent since previously, organizations would have to wait three to four days for funds to become available.

In an email to PYMNTS, PayPal explained that there’s no charge for a business to move  money from its PayPal account to their local bank account. Those funds will be available within 24-business hours as long as the transfer is made by 5 p.m. local time. The service is free to PayPal accountholders. Additionally, the payments company explained that it has worked with its banking partners to “optimize processes on both their end and ours so that we can offer 24-hour transfer.”

PayPal Lead Product Manager for Money Management Steven Chien wrote on the company blog that PayPal has been listening to what its customers and business partners want so that it can address real issues head on.

“And, our business partners have been telling us that they want more control over their money. So, we’ve heard you,” Chien said.

While Chien did not specify in the blog post which U.S.-based businesses are eligible, he did explain that eligible businesses have “received notifications informing them that they can opt-in to the program.”

This announcement comes in the midst of an industry-wide effort to deliver “Same Day” or “Real Time” funds availability. A big impediment to delivering that proposition is that the existing bank settlement systems are unable to accommodate a settlement in ‘real time” or even the same day. In order to offer that service to consumers or businesses, the funder has to be willing to take the risk to guarantee funds availability and often a fee is charged for expedited funds availability. When PYMNTS asked about the rationale to offer “Next Day” as opposed to “Same Day” or “Real Time” PayPal also responded that “there are still banking partner and internal policies that have to be met, so in order to meet these criteria, we are offering Next-Day Settlement.”

Getting Paid With A Click

The NDS program is not the only innovation PayPal is bringing to SMBs. Also this week, PayPal announced its new Group Invoicing feature. According to a company blog post, companies will be able to send up to 100 invoices at once. The process involves entering up to customer email addresses to any PayPal invoice and then “click send” to transmit. The buyer can then pay the amount due from the invoice.

“PayPal is making sure businesses get paid fast,” PayPal Director of Product Management and Invoicing Kristen Schumacher wrote in the blog post announcing the feature. “Each emailed invoice contains an online payment button where customers can choose to pay with a credit card or their PayPal wallet, and it offers the ability to track payments in the invoice management dashboard (reminders can also be sent to customers when needed).”

Overall, PayPal is working to streamline its options for businesses, while also expanding globally. Last month, PayPal doubled-down on that proposition, announcing that it would no longer be offering a mobile check deposit feature, stating, “checks have become a less common way to pay for things.”

Just a few days later, PayPal stated that the service was available in 200 markets, which will help give businesses across the globe more opportunities.

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