No one payment rail can solve every point of friction in B2B payments.
Instead, new research suggests embracing multiple rails can drive revenue. This week's look at payment rail innovation explores how corporates and FinTech providers embrace variety to ease friction in card acceptance, employee payroll and invoice payments.
Payroll Rails Offer Employee Relief
While paper checks have been the go-to tool to facilitate payroll payouts, organizations that are shifting away from the paycheck — and even direct deposit — are finding that new payment rails are enabling them to extend support to struggling employees.
Reports in CNBC said businesses' use of payroll cards, PayPal and other electronic payment methods is on the rise as employers explore ways to more quickly connect workers to cash. Adoption of one early wage access tool, DailyPay, has risen 400 percent in just three days, reports said, with professionals demanding more flexible payroll options from their employers — with potential long-term ramifications after the coronavirus pandemic crisis eases.
Ripple Targets SCB's Corporate Customers
Thailand-based Siam Commercial Bank (SCB) announced an expansion of its partnership with blockchain technology firm Ripple to expand its cross-border payment capabilities for business customers. In a press release, Ripple said it will enable SCB to expand its existing Ripple-powered mobile app, which facilitates global payments for consumers, to its corporate users in an effort to connect small businesses to real-time, cross-border payment capabilities.
Although the solution was initially designed for migrant workers to move money abroad more easily, the mobile app, which uses a QR code to facilitate global payments, could address global payments friction in a B2B context as well, the companies said.
Mixing Payment Rails Drives SMB Revenue
No single payment rail can solve all B2B payment problems, and new research from business solution provider Weave suggests that small- to medium-sized businesses (SMBs) embracing a mix of payment rails are better off. In a new survey released this week, Weave found that SMBs that offer a variety of payment methods on their invoices are able to increase revenue.
According to the data, mixing payment rails can promote customer satisfaction, with more than one-third of SMB customers interested in paying via text — yet only 4 percent of SMBs said they offer this option. Further, only 16 percent of survey respondents said they offer more than three payment method options. For the companies that accept at least four different payment methods, their annual revenues are up to seven-times as high as those SMBs that accept fewer than four payment options, Weave found.
GrainChain Unites Banks And Blockchain
While blockchain as a payment rail is often wielded in an effort to bypass the traditional banking system, B2B payments and trade finance solution provider GrainChain, which targets the farming sector, is using Symbiont's Assembly blockchain to incorporate financial institutions within its blockchain solution. In a recent interview with PYMNTS, GrainChain Founder and CEO Luis Macias said blockchain promotes the security and privacy traditional banks demand from any solution, while smart contract technology mitigates risk and promotes trust in B2B payment and trade finance transactions.
Plastiq Eases Card Rail Friction
In B2B payments, commercial cards are typically considered more beneficial to the buyer than to the supplier, with card acceptance a critical barrier to corporate card adoption. B2B FinTech Plastiq offers a solution aimed at enabling businesses to make payments via card, while enabling vendors to accept payment in a more preferable method.
The company has secured $75 million in venture capital funding for its solution, with the Series D investment led by B Capital Group, according to a press release. The company said it will continue to expand its SMB customer base and support SMBs' access to capital via card products.
U.S. Faster Payments Council Names New Leadership
The U.S. Faster Payments Council has named Reed Luhtanen as its new executive director. He joins the council after serving on the Federal Reserve's Governance Framework Formation Team, which created the Faster Payments Council, as well as working for the Corporate Advisory Group for the Clearing House's Real-Time Payments System.
"I'm excited about the opportunity to lead the FPC and further its commitment to advancing the path to a faster payments future in the United States," he said in a statement.
Crypto.com Enables Crypto Invoice Payments
Cryptocurrency platform Crypto.com wants to make it easier for businesses to get paid in cryptocurrency and has launched a new solution that allows businesses to receive crypto when issuing invoices. Crypto.com Pay allows sellers to generate crypto-friendly invoices that allow customers to settle with a range of cryptocurrencies, including Bitcoin. For the seller, the payment is then converted to fiat currency based on a fixed exchange rate.
TrueLayer, ANNA Money Embrace Payments Initiation
Although bank transfers are a staple for many payment scenarios — B2B payments included — the payment method isn't without its challenges. Among the most friction-filled is the need for payers to manually input their bank account information into a form, while sellers have to manually retrieve that data and re-key it into their own systems, opening up risk to errors and security breaches.
In the U.K., open banking regulations have created Payments Initiation capabilities, a feature that FinTech ANNA Money and API facilitator TrueLayer recently announced they would wield for B2B payments. TrueLayer's API connectivity will enable business users of ANNA Money accounts to initiate payments via QR code, which initiates bank transfers without the friction of manual data entry.