CFOs are realizing the importance of B2B electronic payments, but deciding to ditch the paper check is only part of the battle. What comes next can be a difficult and confusing process of figuring out which electronic payment methods to adopt and how.
It’s a complex hurdle that can challenge B2B buyers and suppliers, and as CFOs strive to overcome it, B2B FinTechs are stepping in to help both accounts payable and accounts receivable teams onboard. tools that can transfer money from one business to another.
Yet B2B payments aren’t just about moving money, as Miles Schwartz, co-founder of Canadian company ZÅ«m Rails recently told PYMNTS. He discussed the value of a blended approach to choosing payment rails for B2B transactions and why optimizing money flows is not enough for treasurers and CFOs today.
In the United States, a CFO who has decided to either stop accepting paper checks or stop sending them (or both) has another important decision to make: which payment rail, or which rail to pay. payment, will fill the void?
In Canada, meanwhile, when checks are scarce, innovation in payment infrastructure has created more options to choose from.
There is no one right answer, of course.
âEach payment method has different advantages and disadvantages,â said Schwartz, noting that as businesses seek to offer more choice to their own customers, they must also consider factors such as settlement, presentation and the ability of a payment method to fit into existing workflows.
EFT (or electronic funds transfer) has always been the most common – and cheapest – electronic payment rail in Canada, but companies on both sides of a B2B transaction are increasingly exploring the value of networks. payment process that can promote cash flow. Canada’s Interact benefits from an email presentation, while Visa Direct offers high compliance and security.
Having the flexibility to choose which payment methods a business can offer to its customers is important for a positive buyer-supplier relationship, but embracing the infrastructure to integrate so many services can be a headache. Additionally, Schwartz noted, it can also expand a company’s exposure to data breaches and other security concerns.
Additionally, he said, Canada’s banking ecosystem – dominated by around five major players – has fallen behind in its ability to connect businesses to these various payment networks in an efficient manner.
âSome people think the banks have it all figured out,â Schwartz said. âBut the banks are actually very late, especially in Canada. The need to innovate is less relevant for banks because they control the market.
For ZÅ«m Rails, consolidating a variety of payment rails (including, so far, EFT / ACH, Visa Direct, and Interac), means unifying this offering under one roof. Working with a single vendor to access these rails can be a much more economical and streamlined way to present this payment choice to customers.
Beyond money movement
For B2B companies looking to embrace the choice of payment rail, the deciding factors go beyond the movement of money itself: the focus on how quickly money moves or how affordable it is. , for example.
As Schwartz noted, businesses need to consider a variety of other factors ranging from security to data integration when adopting new payment methods and services.
âYou need to streamline the integration, KYC [know your customer] and AML [anti-money laundering], then you have to move the funds, âhe said. âThen there’s the transaction side, then you have to make sure there’s a reconciliation, and then close the invoice. It’s not just about moving money from point A to point B.
Security has been a particularly important piece of the B2B payment rails puzzle for ZÅ«m Rails, which recently announced it had achieved SOC 2 compliance, reflecting its dedication to data security, said Schwartz. Other initiatives, including proprietary validation methods, built into FinTech integration and processing workflows have also enhanced data security and integrity.
At the same time, businesses need solutions that optimize the end-user experience and also provide a positive experience for the business customers of users. This means seamless integration and data integrations to promote automated reconciliations.
Businesses know they need a frictionless way to embrace payment choice. Yet, as new payment methods and rails emerge, it can be difficult to understand which infrastructure is best suited for a business, its business partners, and the context of a transaction.
Collaborating with a third party who can not only consolidate payment choices and improve a product with ancillary functionality, but also promote education and awareness of these payment networks will be essential to optimize B2B payments and support adoption of certain younger and less familiar services. there today.
âWe spend time educating people on how the new rails work,â Schwartz said. âEveryone uses EFT, but the changes in payments all happen very quickly. Right now, the main goal is to educate customers about the different methods available in Canada, understand their workflow, adapt our gateway to that workflow, and create the best payment experience in according to their needs.