How APIs Bridge Modern and Legacy B2B Payment Architectures

Businesses, particularly global ones, exist and transact across fragmented payment ecosystems.

Just ask any organization about their cross-border growth plans and how it’s going from a payments perspective: the absence of standardization and interoperability will become immediately apparent.

Against a B2B backdrop of a growing trend toward digitalization and automation in B2B payments, driven by factors such as cost savings, efficiency gains and the need for remote collaboration; businesses are increasingly adopting electronic payment solutions, supplier portals and other accounts payable (AP) and accounts receivable (AR) innovations to streamline invoicing, payments and reconciliation processes.

While enterprise resource planning (ERP) systems play a significant role in managing payments within an organization by centralizing data and processes, the process of connecting two disparate ERP systems can present several challenges — particularly for firms still relying on antiquated back-office systems.

That’s why, when it comes to B2B payments the three most important letters in RP could be “API,” or application programming interfaces.

After all, API technology can help enable seamless integration between separate systems and platforms, leading to automated data exchange, streamlined processes and enhanced interoperability without requiring a total revamp of accounting infrastructure.

Read more: Transforming Back-Office Functions Lets Firms Move Forward With Certainty

Unlocking B2B Payments Modernization Without ‘Selling the Farm’

APIs act as bridges between different software applications, allowing them to communicate and share data in real-time, regardless of their underlying architectures. This capability has helped unlock a world of possibilities for businesses, enabling them to improve interoperability without the need for a costly and disruptive overhaul of their internal infrastructure.

Traditionally, integrating ERP systems with external applications or financial services providers required custom-built solutions or complex middleware. With APIs, businesses can now leverage standardized interfaces to establish direct connections, eliminating the need for costly intermediaries and reducing integration time and complexity.

“The largest corporations in America are using some very old, very reliable monolithic systems to manage their treasury function,” Ernest Rolfson, CEO and founder of Payments-as-a-Service solution Finexio, told PYMNTS.

And API capabilities are increasingly valuable in a world where no two businesses, or their payment preferences, are the same.

Businesses have diverse needs and preferences when it comes to payments, depending on factors such as industry, size, geographic location and operational requirements. Some businesses may prioritize speed and efficiency, while others may prioritize cost-effectiveness, security or integration with existing systems and workflows.

“Not every buyer is going to pay all of their suppliers the same way … unlike traditional consumer payments, where there’s a standardized way in which consumers pay and merchants get paid — within the B2B arena, no two buyer-supplier profiles are the same,” Dean M. Leavitt, founder and CEO at Boost Payment Solutions, told PYMNTS.

Read more: Standardization Key to Scaling Paperless Invoices Across Fragmented B2B Marketplace

Navigating Fragmentation by Solving for Specific Business Needs

PYMNTS Intelligence in the inaugural edition of “The 2024 Certainty Project Report” found that uncertainty, particularly around payments, costs middle-market companies more than $20 million on average.

Many of these uncertainties stem from incompatible technologies, manual data entry and the complexities of legacy systems.

That’s why, to capture the benefits of payments modernization, B2B firms should first identify the business problems they are facing. After all, the fragmentation plaguing payments can make it challenging to find the right platform that aligns with specific requirements — like meeting emerging expectations around outbound payments.

“There’s a lot of change going on in the industry,” Kelli Svymbersky, vice president of payment at CCC, told PYMNTS. “[There are] emerging needs on value-added services, such as industry-specific dashboards that are going to help the organization with cash management, liquidity and even client insights.”

APIs enable businesses to leverage the capabilities of external applications and services without having to migrate their entire infrastructure. For example, a company using a legacy ERP system can integrate with modern payment gateways or financial services platforms via APIs, gaining access to advanced features such as real-time transaction processing, fraud detection and automated reconciliation.

By connecting ERP systems with external applications and services, businesses can gain real-time visibility into their financial data, enabling informed decision-making and faster response to market dynamics. Whether it’s identifying cost-saving opportunities, mitigating risks or capitalizing on emerging trends, API-enabled integrations empower businesses to stay agile and competitive in today’s fast-paced business environment.

Financial services providers, payment gateways and software vendors can also leverage APIs to offer value-added services and solutions that address the evolving needs of businesses, helping pave the way for a new era of efficiency and agility in B2B payments.