B2B Payments

Blockchain Tech Disrupts The Corporate Payments Status Quo

Blockchain seemed to be stuck in pilot phase in 2017, but in 2018, the financial services industry finally saw a stronger flow of real-world, working blockchain applications — many of which targeted pain points in B2B payments, including the time and lack of transparency in cross-border transactions.

Industry heavyweights like Mastercard and American Express have taken steps in recent months to explore the use of blockchain in commercial payments.

In September, for instance, Mastercard filed several patent applications with the U.S. Patent and Trademark Office, which describe the use of blockchain technology to enable high-volume B2B transactions and enable digital signatures on individual payments.

American Express filed several of its own patents this year related to blockchain technology in B2B transactions, while the company has also partnered with Ripple to deploy the RippleNet global payments network, built on blockchain, for cross-border corporate payments.

But it isn’t only industry giants investing in blockchain for the B2B payment use-case. One B2B payments company that has invested in distributed ledger technology for several years now is PayStand, which announced in July that its blockchain B2B payments network is now in development since joining the Silicon Valley Bank and First Data Commerce.Innovated accelerator program.

“We are one step closer to realizing our vision for a more seamless, open commercial banking system,” said PayStand CEO and Founder Jeremy Almond in a statement at the time. “As an innovator and disruptor in the commercial payments space, teaming up with Silicon Valley Bank and First Data empowers us with access to their respective networks so we can explore additional growth opportunities. The ability to strategize and collaborate with these industry visionaries takes our platform to another level of credibility and visibility.”

Almond recently gave PYMNTS a few predictions for how blockchain will continue to disrupt the B2B payments ecosystem in 2019. Check out what he envisions for the ecosystem, and how the commercial payments industry will continue to resist the status quo of high fees and clunky infrastructure, while still needing an industry leader with trusted technology to guide the evolution.

 

“Demand from payers and ecosystem partners to use more convenient, secure, and less expensive means of payment will continue to drive adoption of digital payment processing. Continued focus on corporate margins in our current economic environment (tariffs, trade pressure, etc.) will drive finance departments to find ways to process and accept payments via means other than traditional card processors with high fees.

“Despite the incumbents in the B2B Payment industry’s — banks, bank-specific, and card networks — best efforts to maintain the status quo, B2B digital payment companies will chip away at incumbent money movement taxation by offering added value financial services such as collections, factoring, subscription management, auto pay, load facilitation, data integration, etc. and exposing ‘money movement’ for what it really is: offsetting entries on both parties books.

“Blockchain will begin to emerge as a meaningful technology in use cases like auditing and approval workflows, where strict corporate processes must be adhered to for payment authorization.

“The industry comes back down to earth on Amazon QLDB [Amazon Quantum Ledger Database] a bit. Think about blockchains and crypto technologies, as there may potentially be an opportunity to commoditize some of the features that QLDB provides. That being said, as Amazon points out in the naming of the technology, this is merely an evolutionary step from regular database technologies. There are no radically new concepts like seamless, trust-less exchange of value and value creation like Bitcoin introduced.

“Much like Linux needed Red Hat to deliver working open source software to the enterprise, commercial payments will need a company to deliver the end-to-end value chain. In 2019 we will see the commercial payments industry’s ‘Red Hat’ emerge.”

— Jeremy Almond, PayStand CEO and Founder 

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Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 Mobile Order-Ahead Tracker, serves as a monthly framework for the space. It provides coverage of the most recent news and trends as well as a provider directory that highlights key players across the mobile order-ahead ecosystem.

 

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