Visa and Billtrust today (Nov. 5) announced the launch of the Billtrust Business Payments Network (BPN), an open buyer/supplier payments platform that Billtrust CEO Flint Lane said will do what other B2B payment platforms have struggled to do: put paper checks on the path to extinction by streamlining and digitizing payments between businesses — and doing it at scale.
In the world of consumer payments, the check isn’t quite dead, but it’s beating a pretty hasty retreat. In the world of B2B payments, it’s a different story — there, the check is alive, well and still dominating. As of 2018, somewhere between half and two-thirds of all B2B payments are still made by check.
The reasons for that, Lane noted in a recent conversation with Karen Webster and Visa’s Taira Hall, VP of U.S. partnerships and new initiatives for Visa Business Solutions, isn’t because anyone in B2B payments loves using checks, or even really likes them. Checks, he noted, are easy to send and receive. The only thing the buyer needs to know about the supplier to deliver the payment via mail with a check is their physical address. Checks might be slow and inefficient, but they work consistently and don’t require much of the buyer or supplier other than patience.
When it comes time to consider moving to a digital payment, Lane said, things get much more complex. It becomes harder for the buyer to know how the supplier likes to be paid — cards or ACH, for example — or how to route that transaction once they do know. Buyers also need to know much more about how to make that payment, including an email address, remittance data or a bank account number — the list goes on, depending on buyer/supplier pairing, he said.
Regardless, the underlying issues are the same. It’s hard to get up and running with digital payments for businesses — and every new relationship usually comes with a new complicated integration.
“That is why we are swimming in paper in 2018, because no one has solved that last-mile problem for the delivery of payments to the supplier,” he said.
At least, no one has solved it yet — though many have tried for the last two decades. As of today, Billtrust and Visa are collaboratively throwing their hats into the ring with their version of a new solution. The new Billtrust BPN, an open supplier network that Lane said they hope will push the industry forward in a big way toward finally killing the check.
How It Works
For the last two decades, as a supplier-focused payments solution, Billtrust has compiled a supplier-side directory of payment preferences and methods for the 2,000 or so largest suppliers in the U.S. That serves as the basis for BPN, which Lane told Webster is, first and foremost, a transparent registry of all those suppliers that accept digital payments and what types of digital payments they prefer. The second, and most important, thing it provides is a way to connect those supplier preferences to the buyer so that the payment can be pushed through the BPN.
How that works in practice, Lane said, is pretty straightforward.
Let’s say that a buyer wants to pay Staples, an enterprise supplier that is already part of the Billtrust supplier platform today. BPN network members can access the information about how Staples accepts electronic payments — card or ACH. From there, the account payables (AP) provider — either a bank or an independent software company — can then send payment instructions through the BPN to pay the supplier using that payment method. BPN never exposes those account details to the AP provider or the financial institution (FI), but instead uses those instructions to route those funds over its network and across that last mile to the supplier.
The buyer, he noted, is under no obligation to send their payment through the BPN, but is simply offered what Lane called a “better highway to drive their payments on." That highway, Lane added, is one that provides instant and friction-free payments access to the largest supplier merchants in the U.S.
For buyers, it creates the kind of critical mass that has kept other buyer/supplier payment networks from getting off the ground. Suppliers, Visa’s Hall emphasized, are already on board; BPN is about enabling the payment from buyers to those suppliers. Whether a bank or software platform, buyers don’t have to change providers or processes — with BPN, she said, they now have a portal to push their payment instructions through.
“Staples doesn’t want to put its information on file with 500 different vendors,” Lane noted, but it does want to be in an easy-to-discover single location, as it lets the company be paid when and how it wants, without a lot of other heavy lifting. The real benefit, she added, is for suppliers to convert a growing percentage of the paper payments into digital payments, without having to integrate with “the hundreds of private networks of supplier information being built by accounts payable vendors to make that happen.”
The Path Forward
For the last 20 years, Lane noted, Billtrust has focused on the supplier side of the B2B payments world. BPN marks its first jump into the accounts payable space, opening up a whole new world of opportunity for Billtrust and the network it has now built.
“Phase one, which is starting today, is about getting it up and running — from here, there are many additional services we can layer on,” he said.
That might mean, for example, allowing suppliers to offer specialty pricing for payments made either in a specific way or at particular payments thresholds. It might mean a future where suppliers offer incentives for instant payments when that makes dollars and sense. However, the glue that will make those ecosystem-oriented improvements possible is a real connectivity between all these B2B payments platforms, so that joining the world of digital payments doesn’t require buyers or suppliers to “make an expensive and complicated set of changes” to get access to an ecosystem’s worth of services.
Both Lane and Hall noted that checks have a powerful hold in B2B and still make up the majority of payments in the segments. Making the shift to digital via the BPN network will take time. One of the gating factors that they learned coming out of beta, Lane mentioned, is that the IT bandwidth of some of the software vendors on the AP side is tight, and making it so that those players can tap easily into the BPN and directly route their payment instructions through the system might take a little time.
To get started, like most minimum viable products, BPN is using a somewhat less elegant system, including email with virtual card payments to ignite this buyer/supplier payments network. It may not be the cleanest way to do it, Lane said, but it works — and much more efficiently than paper checks via the U.S. mail.
For now, BPN’s goal, is to start onboarding AP software providers and FIs onto the platform. Lane doesn’t expect a tough sell since BPN brings instant volume and the largest suppliers in the U.S. as part of the ask.
However, that doesn’t mean that Lane underplays the challenges of getting such a network off the ground. The world has been trying to get this kind of network up, running and pulling in both sides of the platform without much success over the last two decades, and for many valid reasons. The hope and the play is that the scale Billtrust has built on the supplier side — amplified by Visa’s massive partner network of banks, acquirers and software platforms — will bring enough critical mass to both sides of the platform to ignite it.
“We have been thinking about this for quite some time now,” Lane told Webster, “and this is the first of many things we are going to be bringing to market. I think B2B is becoming a very interesting place to watch.”
So, watch this space.