The drive of payments innovation, security and speed in B2B payments is fueled by more than the basic buyer-supplier commodities transaction. There are other niches of B2B payments — like enabling a third-party solution provider to receive payment from a corporate client or reconciling employee travel expenses — that complicate the needs of businesses when they're the ones doing the paying.
Beanstream is a payments technology firm that is the latest to enter the U.S. market, and it's stepping into some of the less-obvious spaces in the corporate payments arena, like providing payment solutions between businesses and their third-party software vendors and easing payments for companies organizing conferences, events or fundraisers that have to collaborate with both individuals and B2B service providers.
But the firm is entering the U.S. market within an era of massive change for FinTech, said Beanstream's Ryan Stewart, head of product development for North America.
"The U.S. is such a busy space," he said in a recent chat with PYMNTS. "There are lots of players and a fair bit of noise. It seems like there's something new every day."
The firm is burrowing within an industry rife with disruption from these many market players, so as Beanstream sharpens its game plan for its U.S. launch, Stewart explained that it will simultaneously be watching several trends in the commercial payments sphere.
In just the last decade, he said, there has already been a seemingly simple, yet seismic, shift in small and medium-sized businesses' payment habits: mixing payment rails.
"We're starting to see crossover where we used to see, just five-plus years ago, it would be one [payment rail] or the other," Steward explained. "We're starting to see businesses that need a bit of both. In most regions, I would say that's a fairly common theme for small and medium-sized enterprises — starting to crossover these payments rails."
He pointed to a client that, for example, may need to coordinate some type of event and needs to accept card payments from event registrants but also facilitate payments via ACH to event organizers.
"It's not the most innovative thing in the world," the executive admitted, but it doesn't make it any less impactful for the FinServ industry. "You're starting to see small businesses not asking for the innovation but asking for additional payment types that can help the business."
Another evolution that has surfaced in just the last decade or so, said Stewart, is the demand among small and medium-sized firms for value-added fraud prevention and security solutions.
"In B2B and small to medium-sized businesses, you really had a difficult time, five to 10 years ago, offering a value-added service for fraud," he explained. "There wasn't a large appetite. Now, I feel like that's shifting."
He said that the demand for payments security among SMEs first emerged in Europe and quickly crossed over to North America in recent years.
But in a departure from the sentiments of some other B2B payments players, that need for security isn't necessarily stemming from the approach of faster payments. Stewart described the faster payments initiatives of the U.S. and the company's home base of Canada — along with other markets — as "exciting" and leading to new use cases for various payment rails, like ACH, in the world of B2B transactions.
"Where you might have seen payments via ACH or BACS used in a particular use case for, let's say, paying employees or expense remittances, you suddenly can now utilize that for paying invoices," the executive said, adding that he predicts FinTech companies will be some of the most eager to adopt Same Day ACH and other faster payments capabilities for new B2B payment uses.
"All of these additional trends will emerge from that now that you have a more acceptable payment timeline," Stewart added.
But, he added, an appetite for faster payments and an appetite for greater payments security are not necessarily conjoined among SMEs. That's because, he said, companies are generally trusting of any payments innovations that are born and bred within the existing banking infrastructure.
"Naturally," he said, "you're going to find that anything that's really bank-to-bank still resonates with businesses as being secure," and that includes ACH or Canada's EFT electronic payments rails.
When it comes to B2B card payments, however, SMEs are calling on the industry to adapt more secure solutions, even as, also over the last decade, the sensitivity towards accepting card payments has waned a bit, according to Stewart.
With innovation testing the barriers of what a business will and won't trust, however, the hunger for secure payments is likely to spread across verticals, geographic markets and payment rails. And as a new market entrant to one of the most saturated, innovative and busiest markets on the planet — the U.S. — Beanstream will certainly need to keep a watchful eye on how its SME client base reacts to faster payments, new payment rails and payment security measures.
"Will there be more security around faster payments? That's probably a good question," Stewart said. "It's confined within the bank's ecosystem, but it depends on how those FinTech players plug into it. That will likely be where the security trends and focus will be."