PYMNTS MonitorEdge May 2024

This Week in B2B: Lending Innovations, AI and Digital Payments 

b2b innovations

The B2B landscape is on the cusp of the next era in payments innovation. 

As PYMNTS readers already know, this new and exciting era is being driven by an ongoing digital transformation of historical processes and an electronic streamlining of traditional workflow hiccups. 

In order to capture the concrete opportunities that exist for B2B businesses to accelerate sustainable growth and establish marketplace differentiation, embracing innovation and doubling down on payments improvements is becoming more imperative than ever. 

That’s why PYMNTS doesn’t take a break when it comes to tracking the latest advances shaping tomorrow’s B2B landscape. The top themes we heard this week were around providing small businesses the access to working capital and financing solutions that they desperately need, the ongoing digitization of the B2B payments space — and the benefits it offers — the rise of artificial intelligence (AI) for B2B, as well as some exciting fundraises and product launches. 

Read more: Workflow Automation, Flexible Financing Top This Week in B2B Innovation

Giving Small Businesses Credit Goes Beyond Just a Pat on the Back

Small businesses are the lifeblood of local economies, a role that has upstream implications for national and even global marketplaces as well. Solving for their needs can have far-ranging repercussions — which is why FinTechs and other innovators are increasingly focused on providing usable solutions for small businesses. 

This, as on Tuesday (April 16), Finmid emerged from stealth and announced it has raised 35 million euros ($37 million) to expand its embedded financing solution to businesses across Europe. 

On the same day, Lendica and EBizCharge partnered to launch an embedded business credit solution for small- to medium-sized businesses (SMBs) in the United States, and Rapid Finance teamed up with Galileo Financial Technologies on a small business financing solution.

Meanwhile, PYMNTS reported Tuesday how the deadline is approaching for compliance with small business data collection requirements for the Equal Credit Opportunity Act (ECOA), as mandated by Section 1071 of the 2010 Dodd-Frank Act (DFA). The new regulatory reporting rules are designed to increase transparency in small business lending, as well as promote economic development and combat unlawful discrimination in financing outcomes.

A day later on Wednesday (April 17), full-stack payment processor Finix launched a solution that allows businesses to onboard merchants for payment acceptance in a streamlined way. The new Merchant Underwriting solution also ensures that the businesses remain current with evolving regulations from governments, card networks and sponsor banks. 

Also on Wednesday, Flatpay raised 45 million euros ($48 million) in a Series B funding round to expand its offering of point-of-sale (POS) systems and payment solutions designed for SMBs,

Driving B2B Payments With Digital Mechanisms

With the Federal Reserve Bank of Atlanta highlighting on Monday (April 15) that the Federal Reserve Banks will adopt the ISO 20022 message format for the Fedwire Funds Service on March 10, modernizing B2B payments is increasingly top of mind for organizations — if it wasn’t already.

Modern technology makes modern business strategies possible. After all, against a backdrop where many firms lack modern B2B payment offerings and rely too much on legacy systems, providing a best-in-class payments experience can frequently mean the difference between bills that are paid in a timely manner and relationships that eventually go south due to an ongoing technical disconnect.

That’s why, as PYMNTS covered, performing a self-assessment is a key first step for firms considering undertaking a digital transformation of their accounts payable and accounts receivable functions. As for the last step? It is a better B2B payment experience — for all parties.

Continuing the industry’s migration of business payments and expense management to digital platforms, Mastercard announced Thursday (April 18) that it is bringing its commercial cards to mobile wallets.

According to Chad Wallace, global head of commercial solutions at Mastercard, the primary use case for the app will be expense report and reconciliation processes for corporates and their employees. It also provides new technology and services that FIs can extend to their business accounts. But he’s not expecting its use to be limited to the frequent business traveler.

Read moreDigital Wallets Can Transform B2B Payments — But Will They?

“We’ve had our virtual card platform for quite some time, usually for procurement use cases,” he told PYMNTS. “And a lot of those are B2B transactions. They’re integrated into various different industry verticals such as online travel agencies being able to pay hotel chains and airlines, all on virtual card. Then we started to take a closer look at some of the different use cases that we could use virtual cards for.”

Digitization is increasingly revolutionizing the B2B landscape with streamlined procurement processes, and even better payments workflows.

Don’t believe it? Look no further than the U.S. government, the world’s single largest buyer, which is expanding its $6 billion eCommerce initiative to include more online marketplaces — opening up a potentially lucrative revenue stream for America’s over 33 million small businesses.

“We were thinking, just as governments have a big platform for their big contracts, what if they had a big platform for their small procurement needs: anything that doesn’t need to go into bidding or any purchases agencies can do with their credit cards,” Paola Santana, CEO at Glass, told PYMNTS.

Still, despite the prevalence of digital alternatives, checks continue to be a preferred payment method for many organizations.

PYMNTS Intelligence research underscores this trend, revealing that checks constitute a significant portion of business-to-business (B2B) transactions across various industries. In real estate, nearly 21% of B2B transactions involve checks, while retailers rely on checks for 15.2% of their B2B payments.

According to How Instant Ad Hoc Payment Costs Impact Small SMBs,” a PYMNTS Intelligence and Ingo Payments collaboration, the cost of system upgrades remains a deterrent to businesses that could benefit from them the most. 

AI is Coming for the B2B Landscape 

With the news Tuesday that Intel, working with several other industry partners, is collaborating on a Sandbox Project called the Open Platform for Enterprise AI (OPEA) that aims to accelerate secure, cost-effective GenAI deployments for businesses, putting AI into action is increasingly top of mind for enterprise.

And this was followed by the news Wednesday (April 17) that Google CFO Ruth Porat is restructuring the tech giant’s finance team as the company looks to redistribute resources toward AI, underscoring that the impact of embracing a more technology-driven approach is top of mind for the finance functions and chief financial officers of enterprises both large and small. 

And for the “AI Effect” series on Thursday (April 18), PYMNTS sat down with MJ Jiang, chief strategy officer at Credibly, and Ryan Rosett, Credibly’s co-founder and CEO, to discuss how artificial intelligence (AI) is reshaping the landscape of SMB underwriting.

Riding the AI wave, Emagia on Tuesday launched an AI platform designed to streamline B2B payments orchestration for global enterprises.

B2B Marketplace Moves

B2B credit card platform Pliant is planning to expand after raising $19 million. The funding round, announced Wednesday (April 17) was led by PayPal Ventures and brings the Berlin-based Pliant’s total Series A financing to north of $53 million.

Spend management platform Ramp said it is now a $7.6 billion company, as it wound down a $150 million Series D-2 funding round, while AffiniPay has expanded the availability of its payment processing solutions for attorneys and accounting professionals to Puerto Rico. Digital payments platform WorldFirst has debuted a solution, WorldTrade, to help small businesses speed cross-border payments.

The digital transformation of banking continues to reshape how financial institutions are meeting evolving consumer expectations. Central to this evolution are partnerships, which play a pivotal role in enhancing customer experiences and streamlining financial processes.

The question of whether it is best to buy, build or partner when it comes to facilitating cross-border payments to foster growth.