From a lack of supplier acceptance of electronic payments to outdated infrastructure within accounts payable (AP) departments, the B2B payments ecosystem still has much room for improvement on multiple fronts.
Moving the needle in the journey away from paper checks isn't a one-sided battle, either. Indeed, solving some of the biggest AP challenges increasingly requires aa strategic focus not just on the payer, but on the supplier accepting that transaction.
That's the crux of Visa's and Billtrust's strategy behind the Business Payments Network (BPN), their collaborative B2B payments solution. Launched in 2018, the BPN tackles friction by enhancing connectivity between buyer and supplier, enabling both sides of a transaction to seamlessly execute the movement of both funds and data.
But as B2B payments digitization pressures grow as a result of the pandemic and corporates' accelerating mindset shift to embrace modernization, it's becoming clearer than ever that tackling friction in this arena will take a collaborative effort.
Now, as Visa and Billtrust move to scale the solution, they're doubling down on the concept of network connectivity. With the announcement that BPN is expanding to include support for ACH and wire transactions as well as card payments, Visa and Billtrust are casting a wider net of collaborators.
Kevin Phalen, Visa's head of global business payments, said the expansion isn't only about providing greater payment choice for buyers and suppliers; it's also about bringing in more financial institution (FI) partners.
"As we bring in that FI channel, they in turn bring in their corporates, both from a buy-side and a supply side," he told Karen Webster
An Ecosystem Approach
With the coronavirus crisis accelerating corporates' digitization journeys, B2B payments have increasingly been the target of modernization initiatives thanks to the inability for AP clerks to cut checks while working from home — and the inability of accounts receivable (AR) professionals to be in the office to accept them.
It's driving rising adoption of the BPN, said Phalen, making the current market climate an opportune moment to expand the service to support more payment methods.
"Ultimately, we believe that if you digitize all forms of payments, whether it's card, ACH, or wire using Visa B2B Connect or Visa Direct, we should help facilitate that without putting the burden on the supplier — or, to that effect, on the buyer," he noted.
Key to expanding the BPN ecosystem is the inclusion of more FIs within the network to support these various payment methods. In addition to helping banks and other FIs add value to their commercial clients, FI participation in the network can streamline onboarding of both buyer and supplier and expand accessibility of the B2B payments service to more businesses.
Scale, noted Phalen, is key to successfully building out any network. Although Phalen said Visa and Billtrust have seen growing adoption across verticals as the pandemic further fuels B2B payments digitization initiatives, participation among B2B verticals, players in the healthcare arena, and even government entities have been bright spots in BPN's growth.
Also driving adoption is a gradual shift among businesses from focusing on the immediate future to looking a bit further out as organizations explore what the new normal could be. Large enterprises have announced plans to support a remote staff well into 2021, while some are embracing a potentially permanent shift to at least part-time remote working opportunities. Phalen said this has encouraged companies to ramp up their efforts to ditch the paper check.
But organizations can't do it alone.
With industry collaboration key to a seamless transition to digital B2B payments, Phalen said Billtrust and Visa will continue to focus on the value of the network model of cooperation and connectivity to further expand. That not only means adding more FIs, corporate buyers and suppliers into the network, but also inviting participation from other AP providers within the BPN as well.
As the network explores how to tackle even more friction in B2B payments, Billtrust and Visa will also be exploring how to augment the solution to address key challenges like data integration to automatically support custom payment terms or reconciliation processes. This will be particularly valuable to driving use cases of the BPN beyond traditional procurement and into long-tail, ad-hoc corporate spend, which often involves a one-off payment to small businesses (often in the form of a check), Phalen noted.
"One of the things that we've got to help address is how to help a small business supplier become an easy acceptor," he said, noting that while the BPN has seen adoption among middle-sized vendors, small- to medium-sized business (SMB) participation will be imperative to further scale the service.
It will also be imperative for providing those SMBs — as well as larger vendors and even FIs — with a competitive edge in an increasingly volatile economic climate. Acceptance of commercial cards or other electronic payment methods means making it easier for a customer to do business with you, a further reflection of the importance on a collaborative, multi-sided approach to B2B payments modernization.
"You can't just take an accounts payable view of things," said Phalen. "You've also got to take into account the suppliers ... You've got to make it easier on both sides. And in today's need for digital payments, if you can do that as a supplier, it will make you more attractive to the buyer."