Though FinTech has, in many ways, heated up the competition with banks, traditional financial institutions (FIs) widely began to realize in 2018 that their best strategy to remain competitive in today’s financial services landscape is often to collaborate with (not against) those FinTech firms.
In B2B payments and corporate finance, it wasn’t only bank-FinTech collaboration that made headlines in 2018. Partnerships, joint ventures, as well as merger and acquisition (M&A) activity between banks, startups, payments firms, technology conglomerates and everyone in between became a popular strategy for tackling friction.
Here are some of the biggest stories of B2B payments collaboration from 2018.
Visa Acquires Longtime Partner Fraedom
Payments technology giant Visa decided to take the M&A route with its FinTech partner of nearly a decade, Fraedom, as Visa continued to press further into the B2B payments space. The company announced in February that it would acquire the expense management Software-as-a-Service (SaaS) firm that already underpins Visa’s IntelliLink Spend Management platform, designed for commercial and small business (SMB) customers.
At the time, Visa said the takeover would “strengthen and expand Visa’s business suite of solutions to meet the rapidly evolving needs” of the B2B payments industry.
In a statement, Visa Global Head of Products and Solutions Vicky Bindra said, “Increasingly, businesses are replacing inefficient paper-based payment systems with digital tools. This strategic acquisition allows Visa to offer a more comprehensive business solution to our corporate clients that is innovative, global, highly configurable and intuitive for their employees.”
Square Links Up With Handshake
Payments company Square took further inroads into the B2B space, particularly through its Square Capital solution, strengthening its position in corporate customers’ back offices. Last June, the company announced a partnership with B2B eCommerce platform Handshake to further that initiative.
Businesses procuring goods on the Handshake Direct eCommerce website and mobile app are now able to use major credit cards to make their payments, while vendors selling on the platform can see those funds deposited into their accounts within two business days, with transactions powered by Square.
“As more and more B2B payments shift to credit card, and more B2B orders migrate online, manufacturers and distributors are looking for ways to combine seamless customer ordering with a modern payment experience, which supports the specific workflows of B2B commerce,” said Handshake CEO Glen Coates at the time. “Square and Handshake share a common viewpoint on the importance of both in-person and online payments. We are committed to driving more sales success and speeding up cash flow for Square and Handshake customers with this easy-to-deploy integration.”
Wells Fargo Divests Corporate FinServ Assets
Wells Fargo endured a difficult 2018, but the company’s efforts to regain customer trust and remain in good standing with regulators has resulted in changes to its B2B services, most notably with M&A activity. The biggest story in this arena was payroll company Asure Software announcing in April that it reached an agreement to acquire Wells Fargo’s payroll assets, including the Wells Fargo Evolution payroll platform.
Billtrust, Flywire Join Forces For X-Border
Accounts receivable solution provider Billtrust and global payments company Flywire announced their joint venture in May to tackle friction in cross-border B2B payments, including the high fees and long waits typically associated with the process.
“When we talk about pain points,” Flywire CEO Mike Massaro told Karen Webster and Billtrust CEO Flint Lane in a conversation about the partnership earlier this year, “we have actually seen these same three things pop up over and over again. We keep seeing firms wanting to go faster and move to scale, and really needing to be able to collect and process payments in new regions.”
Microsoft, KPMG Enter SMB Management
Technology conglomerate Microsoft entered into a partnership with KPMG Australia in July to develop a small business management suite of solutions that includes accounting, inventory management, banking and other processes. Dubbed WIISE, the solution aims to empower small businesses in the country not only with technology that can help them run their businesses, but with the ability to obtain data from back-end systems for sophisticated business analytics and intelligence.
“As businesses mature, they need business applications that make their business simpler to run and faster to grow, but without the complexity of deploying large, expensive ERP solutions,” stated Alysa Taylor, corporate vice president of Microsoft Business Applications and Industry, at the time. “With WIISE, we’ve brought together [Commonwealth Bank of Australia’s (CBA’s)] strength in financial services, KPMG expertise in business consulting and the technology platform of Microsoft Dynamics 365 Business Central to offer a business management solution that can scale and grow.”
The WIISE solution is rolling out in 2019, and will undoubtedly be joined by another year of joint ventures, mergers and partnership as various players in the B2B payments space introduce new innovations.