Categories: B2B Payments

How ‘Smart Bank Transfers’ Can Help Streamline B2B Payments

The pandemic has exposed the pain points of all verticals when it comes to payments, and especially when it comes to transacting in person, in a tactile environment, with cash, and where banking conduits are limited.

Nowhere is that more true than in the legal cannabis industry where regulations are still evolving.  Banks have been inching into the space; cash still remains a hallmark.

For one firm, AeroPay — focused on bringing payment services to underserved markets — the cannabis market is but one that can benefit from the great digital shift for payments done in person or online.

Founder Dan Muller described his company in an interview with PYMNTS as “a payment platform based on the concept of a smart bank transfer.” And “platform,” he told PYMNTS, translates into flexibility — namely through taking the core foundation of the company’s software and implementing it in various ways, depending on the use case of the business (and enabling payments though AeroPay’s service).

“The ways [smart transfers] are rendered can — in a visual sense — can be different, but the same core functionality allows it to work in the same kind of seamless ways, achieving the business benefits that you’re aiming for,” he told PYMNTS. Those benefits can extend to users in the form of cost savings tied to payments and processing, or speedier processing times.  Security and fraud risk is also reduced, he said.

The emergence, and embrace, of platforms, he said, can help bridge the great divide between the in-store, hardware laden (via terminals and NFC readers) and online payment processes, which revolve around tokenization, card not present transactions and other digital hallmarks.

The seamless benefits of smart bank transfer can reduce cash management for cannabis firms, for example, contended Muller.

“The largest of enterprise cannabis businesses are still transacting in many cases in cash,” he told PYMNTS. “Large B2B wholesalers, distributors, cultivators delivery platforms are all transacting in large amounts of cash.”

He noted that AeroPay has partnered with Safe Harbor Private Banking, a division of its partner Colorado Credit Union, to provide a digital bank-to-bank payment option for larger cannabis firms. That’s important because “non-plant-touching” firms may be able to transact using traditional means (like wire transfers), but dispensaries and others cannot.

AeroPay recently said it had closed a seed funding round for an undisclosed amount led by Continental Investors. And in looking ahead at the near term roadmap, Muller noted that taking a scalable, flexible approach to the platform can help improve money movement in other markets (including nonprofits. Where AeroPay’s offering can help eliminate convenience fees). The company will look to hire additional staff tied to product and operations support.

Looking Toward Underserved Markets

“Our opportunity in going to market is most apparent in underserved markets that happen to be considered high risk by things like credit card processors,” he said, pointing to gaming, live events and travel — where traditionally there have been high chargeback rates.

On-premise businesses (traditional or otherwise), in the age of COVID-19, have also become riskier, and there have not been as many options to allow affordable contactless payments. Speaking generally, he said that platform model makes onboarding easy, eliminating some of the steps tied to signing up for payments processing such as paperwork or signing up for payments gateways.

“What we’re trying to get away from is anything that’s manual,” Muller told PYMNTS. “Checks and cash aren’t going to work in this day and age. That’s really where we see ourselves in B2B.”

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The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.