Payment Rails Present Many Paths To B2B Payments Optimization

In the journey to improving B2B payment processes, it’s unlikely that any single solution will be the silver bullet to combating friction. Rather, a mix of strategies can be key to nudging buyers and suppliers in the right direction.

In this week’s examination of payment rail innovation, PYMNTS explores the latest efforts to tackle B2B payments pain points. Some solution providers have opted to improve upon existing infrastructure — for example, digitizing certain aspects of the paper check, but preserving the payment method.

Others, including the Federal Reserve, are establishing entirely new payment rails that aim to improve B2B workflows from the ground up.

Deluxe Preserves The Check Workflow

Paper checks have long been the bane of many accounts payable (AP) and accounts receivable (AR) departments, but the workflows associated with the payment method are familiar, and often even preferred.

While encouraging buyers and suppliers to embrace electronic B2B payment tools is an important part of migrating the ecosystem toward digitization, Deluxe Division President of Payments Michael Reed recently spoke with Karen Webster about the value of preserving the paper check and its familiar workflows, while implementing technology on top of check payments to digitize the process.

“Checks will be around for a while. They’re foundational, and a lot of people still like using them,” he said.

He recommends digitizing key components of paper check payments, including the automatic capture of payment data and integration with firms’ enterprise resource planning (ERP) and other back-office systems.

“That is definitely the secret sauce, relative to speed and ease of integration, because corporates can disburse payments digitally and reconcile them through their systems as though they sent a check,” said Reed. “It really minimizes the disruption.”

GreenBox POS Adds Same-Day ACH Support

In a new feature designed to connect businesses to revenue in a faster manner, point-of-sale (POS) solutions provider GreenBox has added support for Same-Day ACH, which links funds processed via its POS to sellers’ bank accounts. The deposits enable companies to access their money on the same day if funds are requested before 11 a.m. Eastern Standard Time, the company said.

In addition to supporting the enhancement of the ACH legacy payment rail, GreenBox is embracing a newer infrastructure to facilitate these payouts. The service is fully automated using the company’s proprietary blockchain platform, the company said, adding that the feature can help support businesses’ own supplier payments and cash flow management as a result of having quicker access to funds.

Fed Forms FedNow Community

The Federal Reserve Banks have recently announced the formation of a new community around its upcoming real-time payment rail, the FedNow Service. The creation of the FedNow Community group aims to promote collaboration between industry stakeholders to ensure that the product roadmap remains optimized. According to the Fed, the rollout of FedNow remains on track for 2023 or 2024.

In a statement, Kenneth C. Montgomery, the Federal Reserve Bank of Boston’s first vice president and chief operating officer and FedNow program executive, said the community “will help influence FedNow Service design and our development roadmap by providing input on desired service features, technology and implementation plans.”

Collaborators Develop New B2B Payment Rail In Pakistan

National Institutional Facilitation Technologies (NIFT) and B2B FinTech Haball are collaborating to develop a new digital payment rail to facilitate B2B transactions in Pakistan, the companies recently announced.

The companies are combining their technologies to launch NIFT ePay to digitize supply chains via a contextual funds transfer (CFT) payment rail based on the ISO 20022 payments messaging standard, integrated into company ERP systems and other platforms throughout the supply chain. The companies said their solution aims to enhance the visibility and efficiency of B2B transactions, which have been largely left behind despite accelerating FinTech and payments innovation.

Haball and NIFT added that while financial institutions (FIs) offer digital solutions for their corporate clients, these tools are often closed-loop, limiting interoperability between banking institutions and adding friction.

PYMNTS’ Deep Dive Into The Digital Paper Mix

In a recent Deep Dive, PYMNTS explored the gradual, and sometimes bumpy, migration of AR and AP departments toward digitization, examining how the B2B payments landscape is balancing paper in an increasingly digital world.

While electronic payments are often touted as more secure than the check, growing fraud in digital B2B transactions may actually be encouraging businesses to retain paper. As the Deep Dive noted, 81 percent of businesses were targeted in a fraud scam last year, with ACH credit fraud accounting for more than one-fifth of that total.

At the same time, however, businesses are linking their paper check payments to digital networks to safeguard their transactions by tracking payment data, tying paper checks to electronic invoices or embracing automation to identify fraud risks.