According to B2B payments startup Finexio, about half of B2B payments in the U.S. are conducted via paper check due to high fees associated with other payment rails, as well as friction associated in the onboarding process of ACH and card networks.
On Monday (Aug. 8), Finexio revealed it had raised $1 million in seed funding to help businesses navigate the process of choosing a payment rail and enrolling onto the correct networks.
The firm uses its technology to automatically find the payment rail that is most affordable for companies, with its network integrating into existing accounts payable and procurement platforms.
In a statement, Finexio CEO and Founder Ernest Rolfson pointed to the challenge of virtual cards for both buyers and suppliers.
“Having spent years as financial processes consultants and working at large ‘FinTech’ and payments companies, we experienced firsthand the paper-based, slow, manual delivery of ‘virtual credit cards,'” he explained. “These cards are currently mindlessly printed on tens of thousands of pieces of paper monthly, then mailed or faxed to suppliers.”
“Not only are these suppliers forced to undergo a costly manual effort to receive their money, but they are also forced to pay a 3.5–5 percent fee for processing costs,” he continued. “We knew there was a better way to both pay and get paid, as tens of thousands of suppliers, many of them small businesses, deserved better.”
James R. Heistand led the seed funding round, which also saw participation from Loeb.nyc and angel investors, according to reports.
The startup connects with various payment and billing aggregators, merchant acquirers, payment processors and other networks to identify where paper-based payment processes, like paper checks, can be moved onto an electronic payment rail.
With the seed funding, the startup said it will focus on building out its payment platform and develop new integrations to reach more suppliers.