APIs Put Velocity In Business Payments

Initially dismissive and then distrustful, businesses mostly lost out on phase one of the instant money phenomenon. At this point in time, corporate treasurers are still more likely to have personally used a peer-to-peer (P2P) app than to have sent a real-time B2B vendor payment.

That just seems so…last year.

Digging into the March 2020 B2B API Tracker®, powered by Red Hat, we discover that legacy banks and traditional financial institutions (FIs) are now streaming into the open banking and application programming interface (API) spaces with a true sense of urgency and purpose. There’s catching up to do.

And while there’s no shortage of fresh investments or new partnerships now that B2B has widened its gaze to include APIs, there will likewise be no scarcity of dastardly types looking to break in and cash out on the trend. The latest B2B API Tracker® covers it all in-depth.

Data Lights the Way

Profiled in the March Tracker for its expansive vision of APIs for business, HSBC believes that today’s most popular uses of APIs – instant transfers and real-time everything – is “just the tip of the iceberg” of what APIs will deliver to banks and their customers before long.

“Companies are looking for simple technologies to improve visibility into their cash positions, which would enable them to better manage investment opportunities,” the latest Tracker states. “Many have thus begun connecting their enterprise resource planning (ERP) systems with bank accounts via APIs for detailed, real-time financial status information. Plenty of business customers of different sizes are becoming interested in the technology.”

Relative to that, Nadya Hijazi, HSBC head of eCommerce for global payments and receivables finance, told PYMNTS, “If I, [as a treasurer,] can see [real-time data], I’m making decisions on where to sweep my money based on what my balance is now, rather than [at] end of day.”

The real-time information that APIs provide is, in some cases, almost as important as the money. It’s hard to beat cybercriminals at their own game without real-time visibility into pending transactions and other vital account data, for example. Instant money only truly works over the long term with prevention methods that actually prevent theft – not find it after the fact.

Along those lines, the B2B API Tracker® details the new effort by the National Automated Clearing House Association (NACHA) to create its new Phixius payments data-sharing platform.

Keeping Eyes on Your APIs 

It’s been kind of a puzzler why B2B remains a holdout on instant payments, still doing close to half of its payments by paper check last year. The best explanations are caution and inertia, and a fear of blundering with new technologies and new ways of doing things. And while their worst fears about open banking haven’t been realized, issuers and processors are right to be concerned.

“APIs are critical to businesses’ successes, streamlining internal data flows and enabling them to more easily integrate with third-party services,” the report states. “Such features and conveniences should not compromise security, however, meaning organizations competing in API-driven business environments must be ready to fight authentication abuses, DDoS attacks, hackers and more. Getting ahead of the competition requires adopting both advanced capabilities and robust, ever-evolving safeguards.”