Bank of America: Gateways Become Cash Flow Engines for Merchants

Payment gateways might be thought of as the workhorses of fund flows, whether it’s for B2B or consumer-facing transactions. It’s the technology that gets payment data moving.

But with the emergence of new technologies — particularly APIs and payments automation — gateways can be used strategically to improve cash flow and commerce itself, Bank of America Managing Director, Head of Global Banking Merchant Product Juan Garrido told PYMNTS.

“We’ve seen a tremendous evolution as payment gateways have now become a one-stop shop, giving you the ability to connect to all payment services with easy integration through an API, which gives you the ability to optimize your business,” Garrido said during Outlook 2030, an October B2B payments event hosted by PYMNTS.

Several verticals have been embracing payment gateways, especially retail, which has “led the march,” as well as healthcare, Garrido said.

Modernizing B2B

Gateways are proving key to modernizing B2B interactions, Garrido said. They can automate invoicing and speed up collections between buyers and suppliers through features such as recurring/subscription billing and “pay by” links that offer payment optionality and the ability for buyers to pay in installments. B2B payments are also seeing an increased embrace of commercial cards, offering discounts and other options to get suppliers paid more quickly.

Payment gateways have increasingly become integrated into accounts receivable management, a result of the digitization of the back office, he said.

“You’re seeing integrations into systems like Oracle and SAP,” as well as EPIC and Cerner — among other systems — in healthcare, he said.

“This allows for easier reconciliation and for ‘faster’ receivables,” he said.

With these integrations, there can be a 30% increase in AR productivity and a 25% reduction in days sales outstanding, Garrido said.

Faster collections translate into more visible cash flows, and a steady stream of data through gateways’ enhanced reporting can help chief financial officers and other executives more accurately forecast cash flows that have yet to materialize, he said.

“We’ve seen that there are a lot of merchants out there that are leveraging unique APIs for the data, for the reporting to ingest a lot of what you see from a payment gateway into their internal processes, so that way they have a better view into what’s to come,” Garrido said.

Beyond the Back Office

Beyond improving the back-end functions tied to strategic cash flow management, payment gateways enable new capabilities for merchants as they move more fully into omnichannel commerce, Garrido said.

Providing a broad range of payments options is key to improving customer loyalty, as merchants’ customers demand digital wallets and alternative payment methods such as buy now pay later (BNPL) and Paze, he said. Expanded payment options, contactless transactions and tokenization (with automatic card updates) directly address cart abandonment.

“The transactions are an effortless, and positive, experience,” he said.

Asked by PYMNTS about the future of payment gateways, Garrido said that “merchants are going to look to those gateways to help with their push away from manual processes to automated processes.”

Pay by bank looms as a burgeoning use case, “and what you’re going to see is that there’s a lot of innovation around the challenges that merchants face and the solutions that are going to be embedded in the payment gateways,” he said.

“The payment gateways are beginning to get the respect they currently deserve in the market,” Garrido told PYMNTS.

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