New Entrants in B2B Payments: A Specific Focus on Automation and Optimisation

New Entrants in B2B Payments: A Specific Focus on Automation and Optimisation

Gregoire Toussaint
June 27, 2022

B2B payments are growing worldwide due to technological innovations in payment infrastructure, changes in customer expectations, the increasing number of new entrants, and regulatory changes. The cloud, artificial intelligence, and APIs all play key roles in making B2B payments and processes faster, more automated, and less expensive. Many solution providers also emphasise how commercial card technology can address issues and alleviate pain points for buyers and suppliers, specifically focusing on automation and optimisation of B2B processes and payments. Investment and product development related to B2B payments have recently increased as COVID-19 acted as a catalyst to further accelerate the growth of B2B payments.

New entrants in B2B payments include both financial institutions and fintechs

The landscape of actors in B2B payments has evolved significantly, moving from a mainly bank-dominated landscape to a market with a myriad of different fintechs and actors focusing on specific use cases and pockets of profitability.

This translates into the entry of many new players either moving from B2C to B2B payments such as Adyen and Stripe or specialist B2B companies such as Bud, TrueLayer and WEX. COVID-19 has also led actors focused traditionally on T&E (e.g., travel-focused payment providers such as AirPlus and Tier 1 financial institutions like BNP Paribas, Citi or HSBC) to diversify their portfolio and increasingly focus on and invest in B2B payments.

EDC’s analysis – Overview of actors in B2B payments
(Selective and non-exhaustive overview)

This has resulted in a flurry of initiatives addressing buyers’ and suppliers’ key pain points such as manual payments and processes, cash flow management and payment delays, and lack of integration with existing systems.

Leveraging technology to facilitate automation and optimisation

B2B payments are often inefficient and new entrants are leveraging payments technology to facilitate automation and bring benefits to both SMEs and corporates.

Virtual cards automate Accounts Payable and Accounts Receivable

Regardless of the verticals targeted, most new entrants in B2B payments like WEX,, AvidXchange or Tipalti focus on the automation Accounts Payable (AP) – accounting for 90% of opportunities in B2B payments according to analysts – and leverage virtual card payment capabilities.

Virtual cards create many benefits to fasten and simplify AP & AR (Accounts Receivable) reconciliation processes, reduce operating costs (e.g., avoid FX markups, reduce errors), increase control of corporate spending (keep track of budget vs. actual), reduce fraud (with single-use virtual cards), provide financial rebates and enhance data capture (e.g. access to level 3 data). In addition to virtual card benefits, fintechs such as Brex and Stripe have developed additional services beyond payments – either in-house or through partnerships – to serve the SME and middle-market segments with a suite of services to automate processes such as invoice management and cash flow management. Companies can then integrate this AP/AR suite with their ERP or accounting software leading to a significant reduction of their workload, up to 80% according to some fintechs.

How straight through processing differ from traditional payments

One of the key drivers for innovation in the B2B payment landscape is the lack of automation regarding processes and payments. Corporates’ key pain point is indeed highly manual and people intensive processes that are slow, error-prone, and expensive, resulting in issues related to reconciliation, and cash flow. Fintechs such as Boost B2B and CSI (Edenred’s subsidiary) have developed straight-through processing (STP) capabilities to fully automate B2B processes and payments, removing all paint points related to manual processes. With STP, suppliers can conduct a fully automatic financial reconciliation and receive payments directly to their bank accounts. The use of virtual cards combined with STP and Card-to-Account (buyers pay by cards, payment providers receive the funds as Merchant of Record and then transfers funds to suppliers by ACH) provides a more balanced value proposition between buyers and suppliers. This is a key aspect to creating more value for suppliers and increasing the supplier acceptance network of B2B payments, often considered a key hurdle to B2B payment growth. Supplier enablement is another example of new services offered by fintechs such as Boost B2B or Billhop contributing to the development of B2B payments.

The automation of processes is further facilitated by the development of new ecosystems directly linking buyers and suppliers. Tradeshift,
C2FO or Coupa are examples of this new trend to create ecosystems allowing corporates to go beyond automation and optimise financial incentives, working capital or costs. Mastercard Track BPS is another example of an ecosystem connecting buyers and suppliers to facilitate and optimise B2B processes and payments. Many Tier 1 financial institutions are considering or implementing Mastercard Track BPS to create a new range of services for their SME and corporate clients.

Increased focus on profitable niches in B2B payments – example of B2B cross-border payments and blockchain

B2B payments include many specific niches, ranging from B2B travel, B2B marketplaces or B2B cross borders, with high revenue and growth potential that new entrants target. New entrants in B2B cross-border payments address many pain points, ranging from a poor customer experience, payment delays, costs and lack of security and efficiency. In this case, Visa B2B Connect was designed to create a multilateral network delivering B2B cross-border payments that are predictable, secure and cost-effective for financial institutions and corporate clients. Currencycloud is another provider focused on B2B cross-border payments that leverage the innovative capabilities of blockchain by partnering with Ripple. Ripple provides a blockchain-based fast payment settlement system, allowing to process faster payment transactions compared to other alternatives such as SWIFT. B2B payments are being increasingly targeted by myriad actors – both traditional financial institutions and fintechs – who are developing innovative services through smart use of technology. EDC expects this trend to continue as there are many opportunities in B2B payments.

This article was first published by The Paypers, the Netherlands-based independent source of news and insights for professionals in the global payment and e-commerce community.

The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).

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