Despite making major strides in functionality, legacy payment rails like ACH still come with their challenges — especially when facilitating B2B payments.
Innovators have turned their attention and energy toward mitigating those points of friction, either though solutions that sit on top of existing payment rails, or through building entirely new infrastructure from the ground up.
While both have resulted in ways to connect businesses to accelerated, more affordable, and more efficient payments, the fact is most companies will need access to a range of payment networks and services that cannot always be addressed by one solution provider.
Patricia Montesi, CEO of B2B payments company Qolo, told PYMNTS that the current B2B payments ecosystem can fall short of what organizations need in more ways than one. With technological innovation happening at lightning speed, even tools only a decade old can fail to meet the needs of companies that participate in the digital economy.
According to Montesi, the inefficiencies that result can expose firms to significant threats and slow down their own innovative business trajectories.
Friction Near and Far
One of the biggest challenges in the B2B payments landscape today, said Montesi, is a lack of a streamlined, integrated platform that can address every B2B payment need a company may have.
"What we were seeing in the industry was a lack of cohesive, holistic solutions," she said. "You could go for a bigger [payments] player that has all capabilities under one roof, but frequently are sitting on disparate platforms managed by different teams. It's a struggle to have a seamless experience."
The alternative is to turn to more modern payments technology companies, but according to Montesi, these newcomers more often specialize in one core function that must be "stitched together" with other specialty players. That means a mix of payment processors, card issuers, acquirers, foreign exchange, cross-border payment services and others.
For businesses, this creates a complex, fragmented ecosystem that requires specialty knowledge to optimize. Without experts in the back office, organizations can't understand what might be considered competitive pricing, will struggle to integrate these functions together, and can elevate their exposure to risks like fraud.
"You have to bring people in-house to manage multiple vendors, which creates security and fraud risks," said Montesi. "There are vulnerabilities that exist with a single supplier, and you multiply that every time you have a different integration point with another set of codes or specs to integrate. Everything becomes much more complex to manage."
Modernizing B2B Payments
Qolo recently announced its debut as a B2B payments platform with an emphasis on operating as an "all-in-one" provider, enabling firms to access an umbrella of B2B payment functionality via an application programming interface (API) set without having to sacrifice technological agility.
For older firms with legacy B2B payment models, Montesi admitted that they may be reluctant to overhaul their current workflows and tools in favor of a new technology provider. But for FinTechs and other companies that operate within the new economy, and that view payments as a critical part of their business model, implementing modern B2B payments infrastructure is crucial.
"Even the so-called modern processors are 10 years old," she noted. "One year of technology today is a lifetime ago. If you built your platform in 2010, that was before Uber or DoorDash."
Understanding the legacy of B2B payments and being able to improve upon older technologies, yet approaching the market with a ground-up mentality, is a balance that can support the needs of modern companies that must work with legacy tools like ACH and wire, but need the integration, fraud protection and efficiencies they struggle to achieve.
It's easier said than done, of course. But as Montesi noted, companies today are "frustrated" with what's been available on the market, and it's time for the B2B payments arena to join the new economy.
"We embrace traditional networks and bank systems, but we see where they fall down or where they can be improved," she said.