If payments can be aspirational, then B2B transactions could, should and will look like consumer transactions done online.
The good news, according to a panel of experts, is that it can be done. The panel convened as part of the monthlong PYMNTS/Visa B2B Payments TV series “What If? Reinventing B2B Payments for the Digital Economy.”
The panel included FIS Senior Vice President of Commercial and Retail Payments Norman Marraccini, ChemDirect Founder and CEO Tyler Ellison, J.P. Morgan Chase (JPMC) Managing Director and Global Head of Real-Time Payments Cyrus Bhathawalla, Airbase Chief Financial Officer Aneal Vallurupalli and Wells Fargo Head of Digital, Commercial Bank and Corporate and Investment Bank Reetika Grewal.
The technology is there to streamline payments between buyers and suppliers, and to make invoicing and agreeing on terms — even extending requests to pay — as simple as clicking a mouse, the experts told Karen Webster.
As JPMC’s Bhathawalla said, from the big bank’s point of view: “Clients are demanding the same experiences in their corporate life that they’ve already experienced in their consumer life.”
To put it bluntly: Commercial payments are not a job to be done; they should be part of an overall experience.
The overarching principle, said FIS’s Marraccini, is that treasurers and financial professionals need to move their money, whether cross-border transactions or foreign exchange (FX) rates are involved, or whether invoices need to be embedded into the flow.
“I want to be able to scan it with my phone and upload it and have all of my invoice information captured on the first try. I don’t want to do it multiple times,” he said, adding that “I don’t want any problem.”
But getting to that simplicity is complicated. Wells Fargo’s Grewal said that some differences are inherent in corporate banking relationships, where most companies come to the table with a set of tools that “live” around their banking. That’s opposed to the consumer side, where there’s a relatively simpler roster of tools with which to work.
“A big part of the drive for simplicity is making sure you’re driving automation through all the tools that a company uses and connecting the dots to make sure they don’t have to take on the burden of the reconciliation and the origination,” said Grewal. “So, that ecosystem of tools that sits around a commercial bank or corporate investment banking client also needs to be part of the equation when thinking about simplicity of payments,” especially as accounts payable (AP) and accounts receivable (AR) departments talk to one another.
What to Expect
Past is prologue for what to expect. Consumers have gotten used to — and indeed dependent upon — banking across mobile channels, which has led to the emergence of mobile apps for treasury teams. That has led to a roadmap to real-time, 24/7 business payments. Marraccini said virtual card processing and straight-through processing can help companies get there, as they make the move away from checks and ACH.
Airbase’s Vallurupalli stated that finance leaders in many organizations are scaling into those new tech solutions with an eye on efficiency and speed. FinTechs are helping with that transition.
Along the way, two-sided marketplaces are bringing buyers and suppliers together, and as ChemDirect’s Ellison said, suppliers can set up online storefronts where buyers can browse and make their purchases. As he told the panel, “Our design strategy was really about ‘How do we create a B2B and B2C experience in a B2B marketplace?’ The word marketplace is overused. You go to a marketplace in Paris. You don’t get quotes for a set of peaches or pears; you actually buy them.”
Vallurupalli contended that automation — from collecting invoices to managing card spend to reimbursing employees — ultimately means that companies spend less time on manual tasks.
“We don’t want to have our corporate customers become bankers,” said Vallurupalli. “We don’t want the treasurers to become bankers and use payments’ language and nomenclature. We want them to be able to do their job.”
As of yet, there’s no “killer app” or “use case” that is evident, but as Bhathawalla said, killer capabilities will be built around requests to pay, where payment for delivery of goods and services can keep supply chains more efficient. The market is still fragmented, with a range of solution providers for B2B invoicing, for example, and dynamic discounting. But with real-time payments, he said, “we now have this industry-wide rail that you can start to put these fragmented solutions on top of. We don’t need to get rid of them or replace them, but we can bring them together. And I think that’s where you start to see the request-to-pay volume growing.”
As the panelists noted, faster payments can break the inertia of B2B interactions between buyers and suppliers (a surprising number of firms still embrace the paper check). Marraccini predicted we are about 12 to 18 months away from a “big bang” with real-time payments, as we get closer to seeing how the Federal Reserve and The Clearing House work together — and as the returns on investment become more readily apparent, Vallurupalli added.
In moving toward higher levels of automation, partnerships between FinTechs, financial institutions (FIs) and marketplaces are critical. The FinTechs push other stakeholders in the B2B ecosystem to innovate — and to do it quickly.
Just a Few Words … and the Last Word
Asked to choose two to three words that come to mind when talking about business payments and user experience, the panelists replied: not there yet. Digital wallets? Not there yet, either. Efficiency? A concept that is overused and not well-understood. Buy now, pay later (BNPL) has its promise (after all, invoicing on a quarterly or monthly basis is akin to installment payments). And, overall, as ChemDirect’s Ellison noted, payments can serve as a “direct enabler” of customer satisfaction, and ultimately, of sales.
As Vallurupalli summed it up: “Everyone here at the table has a critical role over the next 5, 10 or 15 years in B2B. And I think we’re about to see a transformation in the space like we haven’t seen over the past 50 years combined. The tools, the mindset and the opportunity for change are here. The inertia that used to hold progress [back] has really dissipated over the last 18 months.”
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