B2B Payments

Innovation Eases The Friction Of Global Payment Rails

This week's examination of the latest in payments rails innovation finds financial service providers innovating on top of existing rails to address the friction of ACH, checks and other bank transfer infrastructure.

Western Union is targeting speed and globalization, while OpenPayd explores the opportunity for corporates to reduce their reliance on banks to access a variety of payment networks. One FinTech, meanwhile, throws blockchain into the mix of legacy rails.

Western Union Expands Real-Time Capabilities

Western Union has been diversifying its payment rail portfolio in recent years, having recently adopted the Visa Direct rails as well as innovating on its own payment rails through other partners like M-PESA.

Most recently, Western Union announced an expansion of its real-time cross border money transfer capabilities. With President and CEO Hikmet Ersek pointing to the importance of fast, safe global money transfer capabilities amid the pandemic, Western Union is also targeting businesses with the ability to seamlessly make cross-border payments.

"As we expand from our roots in consumer remittances, we're positioning ourselves as the platform of choice for next-generation payments businesses and financial institutions and their diverse cross-border payments needs," Ersek said.

ACH Gets A Boost In The Public Sector

With in-person payments for fines and fees no longer possible, government entities at the local and state levels are seeing a surge in ACH volume, according to Jeff Thorness, president of Forte Payment Systems, a CSG company.

Thorness recently spoke to PYMNTS about the role that ACH plays in public sector payments, with business-to-government (B2G) payments also embracing the digitization and affordability that ACH offers over other payment rails.

"On the government side, I feel they have been even more successful at implementing ACH, whether it be G2B or B2G payments," than the private sector, he said.

But as innovation targeting the ACH network accelerates, there will continue to be challenges ahead for the public sectors. Namely, the emergence of Same Day ACH and, eventually, real-time ACH will challenge government entities' ability to combat fraud before transactions are cleared. ACH transaction data standardization will also be important for reconciliation and reporting, said Thorness.

Invoiced Tackles The Friction of Check

While B2B payments innovation has opened up the opportunity for businesses to send and receive funds via cards and other payment rails, the paper check remains commonplace with some FinTechs choosing to innovate on top of check systems in lieu of forcing firms to move to different rails.

In addition to its new cash application capabilities, accounts receivable technology provider Invoiced recently announced a virtual lockbox solution aimed to address the friction of paper checks. The technology automates check scanning and deposits, enabling businesses to seamlessly accept check payments and add that data into their back-end systems.

In a statement, Invoiced said the tool enables physical checks "to be digitized and applied automatically."

APIs Connect Corporates To Payment Rails Directly

While corporates traditionally rely on their banking providers to access a variety of payment rails and networks around the world, APIs are able to connect those businesses to payment rails directly, with the potential for several benefits.

That's according to OpenPayd Chief Product Officer Adam Bialy, who spoke with PYMNTS about the company's recently announced ability to loop clients directly into the SEPA payments scheme.

Corporates are managing a lot of data and login interfaces with their multiple banking partnerships, Bialy explained. Using a unified platform with direct access to payment networks, businesses are able to initiate transactions domestically or across borders in a single portal, regardless of which payment network they use.

"The strategy to connect to as many payment schemes directly as possible is to have control and not rely on banks," he said. "Doing business with banks is really slow."

Gilded Eyes Blockchain For Corporates

Business payment and accounting firm Gilded is targeting the friction associated with legacy payment rails, instead embracing blockchain to facilitate global transactions in digital currency. Bitcoin, Ethereium and other digital currencies support real-time global transfers, the company said in a recent press release, highlighting the challenges of delays and transaction fees common in the traditional inter-banking system.

While Gilded lowers barriers for corporates to adopt blockchain, the company also noted the importance of offering a mix of payment rails, with the company able to integrate with other payment channels, including credit cards and wires.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.