The B2B payments market is already enjoying a solid year, thanks to some of the biggest names in payments and FinTech taking a solid stance in the space.
However, it wasn't just the mergers and acquisitions of B2B finance players, or the enhancements of services to cater to corporates and small businesses, that grabbed the world's attention this year. Regulatory disruption — think GDPR and open banking rules — shook up the business financial services market, while blockchain continued to dig deeper into use cases like trade finance and global payments.
PYMNTS takes a look back at some of the most popular B2B payments stories of the year so far.
Visa Buys Fraedom
February's announcement that Visa would acquire long-time expense management partner Fraedom was the latest in a string of B2B payments initiatives for the credit card company. Fraedom had already been powering Visa's IntelliLink Spend Management Platform, but Visa's Head of Global Business Solutions Kevin Phalen told PYMNTS' Karen Webster that a takeover of the firm enables Visa to take Fraedom's existing spend reporting and management capabilities to a broader stage.
Beyond scaling up Visa's corporate spend management capabilities, however, is the company's deeper strategy to strengthen its commercial payments presence.
“I think there is a perception of simplicity, but the reality in commercial payments is that there are many parties, there is a lot of friction,” Phalen said. “And once you go global, it creates more problems. Ultimately, what you have to do is attack each component of that complexity, rather than assume there is one answer to everything. You have to do so in a thoughtful way, one bit at a time, versus either assuming the answer is simple or assuming the market is complex and there is an easy answer.”
Mastercard Sent Steps Into B2B
Mastercard, too, has been making deeper inroads in the commercial payments space. Last May, the company explored how its Mastercard Send solution, which began as a peer-to-peer (P2P) push payments tool, would break into the B2B market.
As part of that effort, Mastercard enabled push payments to small businesses from other companies via the Send solution. For instance, the tool can be used by insurance firms to push payouts to small business policy holders, adding funds to a client's small business debit card.
On-demand payroll is also emerging as a top use case for Mastercard Send, according to Shari Krikorian, senior vice president at Mastercard Worldwide.
“On-demand payroll is big,” Krikorian told PYMNTS. “It reflects where the world is going in terms of freelance workers and 1099 workers.”
As Mastercard looks to broaden Send throughout the globe, Krikorian explained that the firm will also introduce new capabilities for the solution, including disbursements and micro-loans.
GDPR Trips Up Businesses
Among a flurry of regulatory changes in the payments market, t he Global Data Protection Regulation (GDPR) made a quiet — but long-lasting — impact. GDPR rules, which came into effect this year across Europe, introduced new requirements for businesses in how they manage, store and send customer data.
Just weeks before the May 25 GDPR deadline, research from McDermott Will & Emery, in collaboration with Ponemon Institute, found just how ill-prepared U.K. businesses were for the new rules. Only 52 percent of companies surveyed in April said they would be ready for the May 25 deadline, while 40 percent said they will be compliant sometime after that deadline passed.
Analysts pointed to one particular area of GDPR that poses one of the biggest challenges for corporates: data breach notification rules. Eighty-three percent of companies surveyed said this was the most difficult aspect of GDPR to address.
American Express's Blockchain Patent
Reports in March revealed American Express filed a patent application for technology related to blockchain and faster payments. According to reports at the time, the filing describes a blockchain-powered tool to receive payment requests that can be approved or rejected — payment transfers would occur between digital wallets of sender and receiver, enabling payments to occur on the blockchain platform itself.
According to the filing, American Express described "a payment network based on peer-to-peer payments [that] may be used to facilitate most functions of traditional card payment networks and to enable additional services and functionality."
It's uncertain exactly how American Express would apply the tool, but the company has been experimenting with blockchain technology for several months. Last November, the company joined RippleNet, with B2B payments as a particular focus of the firm's efforts to use blockchain to accelerate payments.
Bank of America Gets PSD2-Compliant
With open banking regulatory initiatives — like open banking in the U.K. and PSD2 across Europe — coming into effect this year, top financial institutions (FIs) debuted their API technologies to facilitate data sharing between platforms.
Bank of America made headlines when it launched its API gateway in January, focusing on commercial financial services with the portal. The gateway supports direct integration into corporate ERP and treasury management system vendors, as well as other third-party FinTech firms, the FI explained.
“We want to embrace the innovation opportunities presented by APIs and work with industry providers to give our clients an expanded, secure experience that helps them grow and prosper,” said Bank of America Head of Global Transaction Services (GTS) Faiz Ahmad at the time. “As the pace of technological changes accelerates, expectations accelerate in tandem. Clearing systems, regulatory mandates and banking channels are evolving to support real-time interactions with unbundled banking services. Our clients will expect to integrate these directly into their business processes and applications. The experience will be easy, more secure and seamless to end users.”