TransCard CEO Greg Bloh knows that paper checks are a sticky challenge in B2B payments.
“There are well-documented instances of how much reliance organizations still have on checks, even though this has been something that has been trying to be addressed for 10 to 15 years,” he recently told PYMNTS. “There are still a lot of checks and traditional means of pain that businesses have not been able to move away from.”
It presents major opportunities in the B2B payments space, the executive of the corporate payments company added. And while industry experts agree there are payment rails far better than checks — like ACH and virtual cards — making the switch isn’t just about presenting a better option to corporate payers.
“It’s not a one-size-fits-all issue,” he said, adding that a corporate’s decision to migrate to a certain payment rail for disbursements and other types of payments is not going to address all of the points of friction that exist. “The most important thing is to have options out there,” he said.
One of the largest factors that complicates a company’s decision to shift to different payment rails is the recipient of those payments. Whether it’s an employee or a supplier, payees each have different needs that corporates must keep in mind, Bloh said.
“Corporations need to get more than just a payment. They want to get information,” the executive noted. While larger companies can use Electronic Data Interchanges, smaller businesses (SMBs) that lack the capacity and resources to integrate such a tool have trouble gaining remittance data and other information they need when they receive a payment.
The CEO explained that businesses making a payment are trying to extend a workload out to payees. For suppliers, that means seamlessly receiving payment and integrating transaction data into their own systems and having those systems communicate so both buyer and supplier are on the same page.
But there’s another hurdle to making this type of connection possible, according to Bloh.
“It’s also about what businesses are comfortable with and willing to give,” he said. “There are a lot of small businesses that would prefer not to give bank account credentials to one of their suppliers. They’re worried about it for fraud reasons, and they’re worried about having their credentials out there.”
Addressing concerns like data connectivity and fraud — on both sides of the transactions — means a corporation cannot simply decide to begin making payments via ACH or virtual card or the like and expect payees to conform to that decision. Businesses need an array of payment rail options to offer their suppliers and must support a gradual shift in how companies pay and get paid, said Bloh.
“There are a lot of variables [in how a company chooses a payment rail],” the executive noted. “It’s the purpose of the payment, but it’s also on the recipient’s side and what works for them. The key is optionality — not pushing one payment methodology on the recipient, but giving them options for what they are comfortable with and desire.”
That doesn’t mean B2B payers and payees should be complacent in sticking with the paper check, though.
“There is also a need to educate the recipient on better and faster ways to receive the payment,” said Bloh. “If they’re used to receiving payment via ACH or via check, that may have a several-day lag time, making them aware that there is a faster, more efficient way to receive their funds … giving them that option while still embracing their existing preferences is important.”
TransCard recently inked a partnership with ExpenseAnywhere to help businesses provide payment rail options to their suppliers. According to Bloh, its service is about giving businesses choice, which is part of an “evolution” in B2B payments — a gradual, not immediate, shift toward faster, data-enriched payment rails.
“This is really an evolution product for recipients,” he said. “They can revolve around existing payment methods without forcing suppliers into receiving payments in a different manner right off the bat.”