B2B Payments Sizzle As Checks Face A Looming Fizzle

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Might the check be going the way of the dodo? The way of not-so-fond memory, while trees breathe a silent sigh of relief?

As 2019 ended its first quarter, it may have been the deals worth tens of billions of dollars that garnered the lion’s share of headlines. But beyond Fiserv, First Data, Worldpay and so on … the B2B payments space is heating up a bit.

It’s well understood that B2B payments, in terms of volume, is worth multiples of the consumer payments arena. And yet, paper checks dominate, at about half of payments, in the U.S.

In the latest news, American Express and SAP Ariba announced Wednesday (April 3) a new partnership.

In terms of mechanics, buyers and suppliers will have new payment and financing options on the Ariba Network. American Express will be using Ariba Network APIs to enable its virtual card capabilities within the SAP Ariba process and platform. The companies say that will enable commerce, secure payments and easy reconciliation between businesses on a single platform.

It is the move toward virtual payments that helps speed the procure-to-pay process, that makes cash flow management more efficient (and supply chains, which are getting longer as commerce increasingly goes global).

Separately, Bill.com, in addition to securing $88 million in financing, launched a partnership with Mastercard to speed up accounts payable for joint business customers.

And if that were not enough for a week’s worth of news, Visa announced Tuesday (April 2) that it has introduced Card Payouts, an app designed help mid- to large-sized businesses manage cash flow — and speed payments to gig economy workers, to boot. You may recall our own work that has found that as many as 85 percent of gig economy workers would take on more gig work if they could be paid faster.

Underpinning all of these announcements is a common theme: Technology has come to the consumer, and in some ways, a bit late to the party — but coming to the party nonetheless — are corporates, who realize that there’s got to be a better way to move money from Point A to Point B.

As we noted in this space late last year, with the Tipping Point Playbook, 35 percent of companies say their use of ePayables will increase through the next few years; as many as 61 percent say real time payments would improve payroll operations. There is a real and growing acknowledgement that checks are expensive, costing several dollars to process.

In addition, the ripple effect is palpable — reducing costs means time and money is freed up for companies to innovate elsewhere. The year is young, but deal-making and partnerships — with a B2B focus — are heating up, enough so that this week’s big sizzle is planted squarely in the business payments space.

Sizzle

Push Payments: Getting paid with speed — with a focus on gig economy workers — gets another push as Visa debuts Card Payouts, an app designed to help mid and large sized business manage cash flow and disburse payments to business clients in real time.

5G: Five G? How about lotsa Gs? As Verizon activates 5G internet services in Chicago and other cities, Barclays estimates the technology could be worth big bucks across the pond — $20 billion a year, actually.

IPO Tax Windfall: Amid dizzying IPOs — they’re up and they’re down! Levi’s gains while Lyft sputters, and more are coming to market! — the state of California will get billions. According to The Wall Street Journal, state tax coffers will swell by $13.8 billion as a result of capital gains.

Fizzle

Care.com: Take care when you vet the people who come onto your platform. That’s the lesson that might be learned by care.com, which scrubbed its site of as many as 72 percent of day care centers as a Wall Street Journal investigation found that some places were not licensed, did not exist, did not know they were on the site … and separately, a few individual caregivers were found to have prior police records.

Mall Vacancy Rates: At least some brick-and-mortar is moribund; as noted earlier in the week, vacancy rates at U.S. community shopping centers hit 10.2 percent in the first quarter, up from last year, while physical retailers continue to restructure in the wake of the Amazon effect.

Facebook: The bad news keeps coming for the social media giant. Researchers from UpGuard, a cybersecurity firm, found that hundred of millions of records were exposed on Amazon cloud servers — and third-party app developers had stored the data on those servers in such a way that the data could be downloaded by the public.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our 2019 Where Will We Bank Next Study. 

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