CFOs and treasurers are re-assessing the benefits of technology and what it can do for them, he said, moving beyond the confines of simply cutting down on buyers stuffing envelopes, dropping payments in the mail and suppliers waiting for them to arrive.
“We’re moving beyond simply ‘kill the check,’” he said of B2B payments, “which is where we were just a few years ago.”
And amid the current, and sustained, backdrop of higher-for-longer interest rates, Edwards noted that Ingo “is getting a lot of interest from clients and partners in the marketplace around the question of turning [payments] into a money maker as opposed to a cost center.” Treasurers and other finance professionals, he said, are weighing the costs of issuing and accepting paper checks versus other faster (and online) payment options such as virtual credit cards and push-to-card transactions.
The overarching goal of these forward-thinking clients has been to create experiences that not only delight their own end customers, but to maximize earnings on their balances, while creating new revenue streams from interchange sharing and card issuance, he said. Finance teams and treasury departments, he said, are working ever more closely with product development teams in an effort to rethink how they take money in and send it out — all while forging new commerce ecosystems in industries such as gaming, restaurants and hospitality.
There’s significant room for improvement, especially for smaller firms.
As Edwards noted, most of the innovation in business payments has been centered around what he termed “large B to large B accounts payable outsourcing and automation.” The movement has been for these larger firms to transition their bill paying functions to B2B marketplaces, he said, which in turn have directories to pay enterprises with virtual credit cards and other digital options.
“But in B2B, there’s still much to be done for the ‘massive tail’ of ad hoc payments,” Edwards said.
Ad hoc transactions are the B2B payments that happen less frequently, Edwards said, perhaps fewer than a half dozen times a year, tied to 20% of dollar volumes paid to an estimated 80% of receivers.
As it stands now, the default option for ad hoc payments remains the check, he noted. But, pointing to the insurance industry as an example — with digitized claims payouts — the tide may be shifting a bit to more technologically-enabled channels.
The ad hoc payments are difficult for the traditional B2B platforms to handle, Edwards said, and in fact are better suited to B2C or B2B micro platforms, as offered by Ingo. The platform model is especially advantageous for smaller firms that make the bulk of ad hoc payments, and operate more like individual consumers (with limited resources and relatively smaller dollar payments) than their larger B2B brethren, he said.
Asked by PYMNTS whether faster payments — via the RTP® Network that’s been around for six years and the more recent introduction of the FedNow® Service — will impact commercial transactions, Edwards contended that that speed will be a game changer for B2B payments.
The RTP and FedNow services, he said, exist as “yet another set of rails — tools for people that are offering payments choices.”
The shift to real-time options will mirror what’s been seen already with ad hoc payments made in consumer-facing interactions. The majority of consumers — 70% of them — have enthusiastically embraced the option, electing to have funds pushed to their debit card (an alias with which they are familiar).
“The debit card rails work for consumers, and they can work for small businesses,” Edwards said.
No conversation about the role of technology in services of the transformation of B2B payments would be complete without discussion of artificial intelligence (AI).
As Edwards noted, Ingo is already using AI and machine learning in its fraud mitigation efforts, spotting anomalous behavior and leveraging human intervention on a limited, as-needed basis. Looking ahead, he said there’s significant automation that can occur around smaller dollar and lower risk transactions, improving information flows and customer service.
“We’ve already seen the impact and the power of what AI can do in a controlled business environment,” Edwards said.
As 2024 dawns, the CEO noted that the FedNow Service, RTP network and subsequent payments schemes will improve the efficiency and speed enjoyed by payers and receivers in the market. But at the end of the day, he said, there may be no dominant payment method.
“Payments choice is the only way to achieve true ubiquity,” he told PYMNTS, “and that’s always been our message.”