Payment Rails Search For Harmony In B2B Payments

Innovation in the payments arena has provided more rails upon which to move money. In B2B payments, though, legacy tools continue to lead.

New research from Tipalti, conducted by Levvel Research, found that when it comes to cross-border B2B payments, wire transfers remain the most common method (cited by 69 percent of survey respondents), despite the high fraud risks and sluggish speed of the tool. Local and global ACH transfers are used by 29 percent (the same portion of businesses that write checks to make international payments), while 17 percent use prepaid debit cards.

All of these payment methods come with their drawbacks. It’s why payment innovators are working to either develop and deploy entirely new payment rails or establish technologies that can sit on top of legacy rails to improve their performance. Below, PYMNTS explores the latest advancements in the payment rail innovation efforts of the B2B payments industry.

Accenture Backs Blockchain

Professional services firm Accenture is backing blockchain in a big way, announcing this week that it will collaborate with TradeIX to support corporate onboarding to the blockchain-powered trade finance platform of the Marco Polo Network.

According to reports, Accenture and TradeIX will not only support corporates’ use of blockchain to access trade finance, but explore additional use cases for the distributed ledger solution to strengthen data sharing between buyer and supplier. While they did not specifically mention payments, it’s not a stretch to consider whether it might be a use case worth watching in the buyer-supplier relationship.

MUFG’s Unconfirmed Digital Currency

Another show of support for blockchain-powered payments comes from Japan’s MUFG, though the bank declined to confirm the exact nature of its joint venture with human resources company Recruit Holdings. Reports in The Japan News said that MUFG and Recruit are collaborating on a possible digital currency with the potential to facilitate B2B payments, and with plans to launch their joint venture in the first half of next year.

Credit Unions Embrace RTP

Corporate America Credit Union (CACU) announced recently that it has become a funding agent for The Clearing House’s real-time payments (RTP) network, RTP (one of the newer payment rails in the U.S.), enabling it to manage the settlement and liquidity of transactions made via RTP for its 500 credit union members.

“Access to the RTP network is key for our member credit unions wanting to serve their members with the most up-to-date technology,” said CACU Chief Innovation Officer Lisa Coffey in a statement.

Profituity Aims To Elevate ACH

ACH payments continue to gain traction in B2B payments, but that’s not without its drawbacks. Profituity recently discussed that challenge with PYMNTS, particularly when it comes to customer onboarding. According to the company, rather than force businesses to rely on expensive third-party payment processors, service providers can help corporates become their own processors for greater cost savings, efficiencies and data integration into their back-office platforms, allowing firms to address ACH’s largest pain points that prevent adoption.

Credit Unions Mix Blockchain With Existing Rails

While credit unions are eager to add RTP to their list of payment capabilities, CULedger recently revealed its proof of concept, CUPay, a technology that wields blockchain and existing payment rails to facilitate payments between credit unions.

The solution will first facilitate electronic funds transfers (EFTs), which move over ACH rails. However, by using R3’s Corda Settler application, the technology will be able to integrate with additional payment rails moving forward, the company said, pointing to blockchain’s ability to accelerate and streamline the movement of funds across existing payment rails.

MoolahGo Explores The Interoperability Challenge

While wire remains the top choice for corporates when making cross-border B2B payments, the global payments arena faces a larger challenge that requires more than the use of this single rail. As funds move across borders, they must often jump from one national payments network to another, a hurdle that MoolahGo CEO John Hakim recently told PYMNTS can add significant friction to transactions.

There’s opportunity, however, for non-bank players to access national payment networks, he said, allowing technology innovators to focus on integration and connectivity between these networks for faster global payments.

M10 Eyes Central Banks’ Rail Demands

While central banks play a key role in enhancing existing payment rail capabilities to address rising demands for speed and efficiency, M10 said that central banks also have their eyes set on emerging payment rails — like the one operated by M10. Though M10 isn’t the only new rail to have emerged, the company said it wants to bypass the current interbanking system, which is still in use by even newer rails launching, like SWIFT’s gpi service.

“If you are doing Open Banking [through those other rails], you are still going through the corresponding bank system,” said Steve Kirsch, CEO of M10, in a recent interview with Karen Webster. “It’s moving slowly.”