One of the most effective conduits toward future proofing an organization and creating agile B2B payments is through partnerships.
Kara Szostek, director of Product Management at WEX, told PYMNTS in an interview that embracing various payment types — such as non-card, virtual card, straight-through processing and multi-card payments — can insulate companies against changing preferences among buyers and suppliers.
Artificial intelligence (AI), she said, can help address the challenges of operating across multiple payment types and far-flung geographic regions, particularly in the never-ending battle against fraud.
Against that backdrop, said Szostek, “what we’re seeing now is that software companies are becoming payments companies. So, they are focusing on workflow — like the invoice to pay companies — or they are creating front-end software, such as is being seen with expense management providers.”
The providers, she noted, are creating and embedding payments functionality within their various applications, which provides what she termed a “unique customer experience where they payment just happens.”
Payments thus can become a new revenue stream for these firms, allowing them to further monetize their business models.
The opportunity is significant, she said, as the B2B space represents a $25 trillion market, measured in annual spend — and half of that tally is tied to checks.
And yet there is a mismatch in “innovation acceleration,” seen on the separate sides of a B2B transaction — namely accounts payable (AP) and accounts receivable (AR). Innovation focused on AP, she said, is moving quickly, and AR is moving relatively more slowly.
“This creates choke points in B2B where digital invoices and payments are increasingly being pushed to suppliers who don’t have the technology or the automation in place to handle these kinds of workflows,” maintained Szostek. “These choke points are exacerbated by legacy transaction pricing and the static economics of ACH and checks.”
Suppliers have been forced to accept cards, and fragmentation creates additional pain points for suppliers. She noted that some buyers will use one AP automation product, while other buyers will opt for still other AP automation offerings that are tied to different messaging formats. Integration is lacking, and partnerships/ecosystems can help bridge gaps in information flows across enterprises.
Moving Across Borders
As buyers and suppliers forge relationships across borders, said Szostek, the partnerships they strike with solutions providers can be more important than the payments themselves, as they navigate payment processes and regulatory environments that can differ from region to region or country to country. The experience of entering and doing business in a new market must be a streamlined one.
“What companies should be looking for is someone with global and local expertise, with access to multiple currencies and knowledge of the regulatory environment like PSD2 for the European market … in short, someone who can make it all easier,” she told PYMNTS.
The risk of fraud is ever present and growing, she said, but advanced technologies can help wage the battle against bad actors more effectively.
“Artificial intelligence has given companies the ability to take on the kinds of nuanced and highly sophisticated fraud that is now being carried out around the world,” she said.
AI can help alert analysts to anomalies and provide trend-based insights, she said, ultimately determining whether a given transaction is fraudulent — or just unusual.
“Companies can mine data across both historical and live data and apply machine learning to locate patterns within customers’ behavior,” she said. “And then they can evaluate every transaction to make accurate predictions about fraud.”
As is the case in bringing new payments offerings to B2B, partnerships are also crucial in building defenses against fraud. Banks, she said, are choosing to partner in order to keep up with the accelerating pace of innovation and new technologies.
Traditional financial institutions (FIs) have the distribution channels and customer relationships in place, but not always the infrastructure, to build or administer the technology. Tech companies, on the other hand, are nimble but lack the scalability needed to expand their reach.
Thus, providers like WEX, she said, can bring FIs and FinTechs together to create new value for their corporate end users — and change the way B2B payments are done.
As she told PYMNTS, “the more that the financial services industry does together to move off of checks and drive digital payments, the more that we all win. There will be more players, more partnerships, more innovation. There is plenty of opportunity for everyone.”
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