Innovation can drive consumer and business demand in B2B e-payments
Today’s electronic payment scenarios are varied, with multiple payment verticals required at various and diverse points in many supply chains. These can include a number of differing payment cards: consumer-to-business, custom-loop, closed-loop, business-to-consumer (incentive cards) – and finally, in B2B, supplier payment cards.
Also called virtual cards, supplier payment cards may be used to optimize supplier payments for accounts payable organizations, said Eric Mettemeyer of Store Financial.
“In the supplier payment space, we’re seeing a bit more velocity and activity,” he said. “The reason for that is there continues to be so much friction in the process of paying suppliers – you can tell that when you see the number of checks still in the system to pay suppliers today. That shows the value of an ACH or P-card transaction must be fairly low, because otherwise you’d see a lot more transactions moving from checks to those forms of payment. So I think there’s a lot of opportunity, and people see that.”
Focusing strategic attention on that payment flow in supplier payments, he said, can lead to significant process improvement and increased efficiency by eliminating additional check-writing.
Mettemeyer added that his own organization has innovated to stimulate increased adoption of alternate payments methods. The barriers, he noted, are not insignificant:
“A lot of times the supplier will look at a card and say, ‘Well, all you’re doing is increasing my cost.’ But you need to approach it by saying there will be a cost, but the supplier will be paid earlier, and from that perspective, it can be a win-win. We’re trying to look at the entire process of accounts payable and insert our programs where they most benefit.
“In supplier payments, we’re focused on having a very consultative approach to accounts payable and making sure that we have the right tools in our toolkit to fully maximize supplier acceptance of cards,” he said. “One is certainly having different levels of cost to accept cards for suppliers, and two is having the tools available to properly educate the supplier and having a very good, well-rounded supplier enablement team and process.
“Between taking advantage of the smartphone and the app on the consumer side, and innovating around the structure of the way payments work through the networks on the B2B side is where we’re focusing our innovations.”
Educating suppliers in the B2B environment is a key strategic point, he said. That education takes time, but ultimately increases adoption, he said.
“In the past, the large issuing banks have gone out to their treasury management clients and delivered a p-card, but there wasn’t any education and it didn’t work very well. Adoption was very low. So a lot of buyer organizations don’t even want to talk about virtual card programs because they think it’s going to fail – they’ve been through the p-card process before. So there’s been a lot of education, change, and innovation in attacking the problem with more thought this time around. You’re seeing more adoption and companies are certainly making end roads.”