Syncing-Up The Fragmented Market Of Corporate-Initiated Payments

Payments are moving toward greater speed, efficiency and choice – and in P2P payments, that’s led to the rise of financial technology giants.

But the industry of corporate-initiated payments – whether that’s business-to-consumer, business-to-business or business-to-employee – has created a landscape of fragmented, niche players, according to Juli Spottiswood, CEO of Syncapay.

Syncapay, the launch of which was announced earlier this week, is a holding company that plans to acquire payments companies operating in the buyer-initiated payments industry. Connecting multiple companies under the fold of a single entity will enable Syncapay to facilitate cross-sharing of industry expertise, services and best practices, Spottiswood told PYMNTS in a recent interview.

Industry consolidation is a lofty objective, and with so much happening in corporate payments – from faster payment initiatives to cross-border payments technologies – where does one start?

In many ways, it can begin in the peer-to-peer payments space, which has offered an example for business payments.

“We can all see that this world has become a place where we’re demanding speed, efficiency and choice,” Spottiswood told PYMNTS. “We see that firsthand in peer-to-peer payments. Everyone seems to have a different application of PayPal and Venmo.”

This newfound requirement for speed and efficiency “transcends” into the B2B, B2B2C and B2E places as well, she said.

“Whether paying a distributed workforce, or a set of contractors and partners around the world, companies are looking for faster, more efficient ways to pay and disburse payments,” Spottiswood continued. “At the same time, they want flexibility, controls and the ability to make payments in multiple currencies.”

Payment companies today are tackling many of these issues. The challenge here, though, is that players address one particular focus of corporate payments, rarely able to target all demands at once.

“P2P payments has not only one, but multiple ten-thousand-pound gorillas,” said Spottiswood. “You don’t see that in the corporate disbursement space.”

As a holding company, Syncapay wants to acquire those niche players and enable them to share what they’ve learned about their particular fields, offering up technological insights or sharing a client base. This collaboration, said Spottiswood, could enable corporate payments to catch up to P2P – including the notoriously slow-moving B2B payments realm.

“B2B payments innovation seems to fall behind B2C and P2P,” she said. “But I am seeing a lot of companies out there tackling this landscape.”

Corporate-initiated payments, and B2B payments in particular, are not going to follow the same path of innovation, adoption and evolution that P2P payments have seen, though. So while the peer-to-peer industry may provide B2B payments innovators with an idea of where to go, Spottiswood said there are particular areas of B2B payments with the greatest potential for disruption – and they aren’t necessarily the same areas that will most effectively disrupt consumer and P2P.

Faster payments, for instance, is an increasingly popular topic in the consumer payments world. B2B payments haven’t necessarily taken up the capabilities so quickly, however, largely attributed to businesses’ need to manage cash flow by strategically timing accounts payable.

Data published by NACHA late last year found that just 6 percent of same-day ACH transactions were B2B; the remaining were consumer-initiated payments to businesses.

“For businesses, it’s more about efficiency, cost and controls,” explained Spottiswood when asked to consider whether faster payments would disrupt the B2B landscape. “It’s not as though companies are sitting around saying, ‘We have to get accounts payable paid faster.’ But they need to figure out how payments can be done more efficiently, streamlined and at a lesser cost – I do see that as a trend in B2B payments.”

Business demand for rich transaction data, too, will be a critical focus for innovators and is a key differentiator for B2B payments today, she said.

“It’s one thing to move money, and banks do that really well,” said Spottiswood. “It’s another thing to ensure you have the right data flow. We’re seeing a lot of trends in technology to support complex data flows to accompany payments.”

Innovators are also tackling B2B payment points of friction, like the need to efficiently move money across borders and make use of various foreign currencies, she added, while regulatory and compliance issues are also a major opportunity for B2B payment service providers.

These trends have significant implications for firms like PayPal and Zelle, which made their names in the consumer-initiated and peer-to-peer payments spaces but have taken steps to increase their presence in corporate payments, too. But they are also at the forefront of dozens, perhaps hundreds of startups and smaller players around the globe looking to become experts at one area of friction in corporate payments. Spottiswood said these players are critical to the advancement of the payments landscape overall, and will emerge as key players with traditional banks.

“I see startup FinTechs as being the emerging technology that complements what banks do, and do well: moving money,” she said.

Syncapay, which made its first acquisition late last year with the purchase of prepaid card company Swift Prepaid Services, will try to support those companies’ journeys of growth and innovation, and foster progress via collaboration. Spottiswood said that will include financial support, mentorship, compliance services, marketing and back-office support. For some innovators, this may be a better option than turning to venture capital fundraising or other sources of incubator-like support.

“Somebody has to own the collaboration between the entities that we acquire,” she explained. “Helping with strategy and innovation, figuring out the synergies between the companies, is critical in how they can benefit each other without having to worry about raising capital on a constant basis.”