B2B Payments

Payment Rail Innovators Go After Traditional Bank Friction

It’s an innovator’s job to look at the status quo and disrupt what has always been done in favor of progress.

For payment rail innovators, that can sometimes mean exploring new ways to help traditional banks and their clients loop into existing rails in an effort to lower the barrier of accessing an array of legacy payment networks and systems.

Increasingly, however, payment rail innovators are also introducing ways to bypass traditional banks altogether, with many in favor of distributed ledger technology to move money between businesses and across borders.

This week’s look at payment rail innovation explores how B2B payments players are embracing technologies that either ease friction for banks, or offer corporates an entirely new alternative to their financial institutions (FIs).

ATCE Sews New Payment Rail Seeds

ATCE Holdings recently announced the launch of its EtudePay Payment System and the EtudeDigital core banking apparatus, initiatives that see the company developing a new payment rail from the ground-up — with the agriculture industry the first to test the technology.

In a recent conversation with PYMNTS, ATCE Chief Innovation Officer Wade Murray explained the agriculture industry’s high volume of high-value transactions makes it an ideal user of the firm’s new payment service, which aims to bypass the traditional interbanking system in favor of faster, more efficient cross-border payments, without the fees associated with more expensive rails.

The service is developed on blockchain using stablecoin virtual currency pegged against the U.S. dollar.

But while the tool aims to offer an alternative to traditional payment rails, Murray explained it is not intending to challenge the banks by enabling payers and payees to transact without services of FIs. Rather, FIs can loop into the payment service for their own customers, with Credit Nexus the first to deploy the technologies for its corporate customers in the agriculture industry.

“One of our points of value is to say we built this for the banks,” he said. “Not to sit outside, and not to challenge them, but to enable them better.”

Tribe Payments Eases Payment Rail Access

Tribe Payments is another FinTech exploring how to address the pain points of traditional payment rails accessed via banks, although it has instead opted to design a new tool that can tackle friction of legacy payment rails.

The company recently announced bulk payment company Telleroo is the first to adopt Tribe Payments’ Bankbox service, a technology that enables businesses to integrate directly into payment rails. Telleroo is deploying the solution to enable bulk payments for bookkeepers and accountancy firms conducting accounts payable and payroll transactions on behalf of their clients.

Bankbox enables end-users to initiate payments from directly within an accounting platform like Xero, the company explained in its announcement.

“Gaining access to banking systems can be a nightmare in terms of technical integration and the reams of paperwork,” explained Telleroo MD and Co-Founder Michael Riedler in a statement. “We felt it shouldn’t be this hard to get access to the banking systems that can make a real difference to accountancy firms and the [SMBs] they serve.”

Paystand Collaborates on New B2B Payment System

Targeting the Japanese market, blockchain commercial payments company Paystand announced a collaboration with payments company JCB. Together, the companies are developing a proprietary end-to-end digital B2B payments platform for JCB clients.

According to their announcement, Japan’s B2B payments market sees $10 trillion in annual volume, much of which occurs in cash. Only 1 percent is made via commercial credit card, and even fewer are conducted via bank transfers.

The companies are focusing on reducing Days Sales Outstanding with real-time fund verification, lowering the risk of fraud, and promoting efficiency into B2B payment workflows, they noted. They did not reveal when their new payment platform will launch.

Tradeshift Finds Cost Savings in DLT

Distributed ledger technology continues to be a focal point for many payments innovators looking to disrupt B2B payments by embracing an entirely new payment rail.

Among them is global commercial payments company Tradeshift. Reports in Coindesk last month said the company is embracing Ethereum to reduce costs of cross-border transactions through its innovation unit Tradeshift Frontiers.

The company is reportedly using proprietary FlowTokens, which are tokenized invoices between buyers and suppliers that can be settled in on-chain fiat currency, the publication explained.

Tradeshift is collaborating with Monerium and will soon begin piloting their technology for cross-border transactions in an effort to address the fees associated with traditional bank transfers.

While the development of a payment service on a new payment rail like Ethereum can certainly disrupt the traditional banking industry, Monerium Co-Founder and CEO Sveinn Valfells told the publication that the companies “are deliberately going slow and trying not to break things, which is how it should be in finance.”

One of the greatest benefits to blockchain, he added, is that it “really doesn’t care about whether or not that is [a] cross-border or domestic transfer, so the settlement cost is going to be the same.”



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