FinTech firms are taking on real-time payments for business-to-business (B2B) use cases – and teaming with banking partners to drive innovation. AvidXchange, for instance, worked with Fifth Third Bank to enhance B2B payments while leveraging the inherent capabilities in the RTP network from The Clearing House. The team was named the overall winner in the recent RTP Buildathon with its submission that offered supplier alerts to provide discounts to buyers, immediate supplier payments, real-time funds availability inquiry capabilities and full payments transparency between parties.
While consumers may be able to wrap their heads around real-time payments for, say, lunch, the firm aims to be more selective for use cases in the B2B space. The company seeks to prove out the technology and, more importantly, to “bring value to both our buyers and our suppliers,” AvidXchange Senior Vice President of Supplier Services Denise Leleux told PYMNTS in an interview. She said the use case the company chose to work on with Fifth Third Bank “did exactly that.” Buyers need to be able pay invoices faster so they can take advantage of early pay discounts, Leleux noted, while suppliers want to get paid faster for cash flow purposes.
With the submission by the companies, buyers allow real-time balance checks on their disbursement accounts to ensure there are available funds that can be used to accelerate the invoice. Avid then scans and indexes the invoice while capturing the early discount terms through its existing infrastructure. The buyer is then told the amount of the early pay discounts. “We do the heavy lifting,” Leleux said. The buyer can prioritize that invoice and approve it through Avid’s existing workflows. The buyer confirms the approval and the payment is executed in real time. The supplier sees all remittance details, such as the discount terms under which the payment was made.
Beyond news of the solution itself, Leleux said an almost bigger story was that a bank had worked with a FinTech and they had won together. (As previously noted, banks and FinTechs may make for the perfect marriage, as each works to leverage their unique strengths and opportunities.)
AvidXchange is no stranger to Fifth Third Bank: The companies inked a partnership in 2017 and brought a product to market for Fifth Third customers in 2018. Fifth Third was also the first bank to join the Mastercard B2B Hub powered by AvidXchange, which is a digital payment solution for small and medium-sized business (SMBs) that helps improve the speed, ease and security of commercial payments. In the age of new approaches to payments, the RTP Buildathon marks one of the first creative collaborations between the firms.