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Real-Time Data Closes Buyer/Seller B2B Payments Gap

In B2B payments, the path to making transactions as seamless and invisible as possible is often about closing the gap that separates buyer and supplier.

While a growing population of B2B FinTech solutions has helped to connect B2B buyers and sellers, more platforms can create more friction on either end of the equation. According to Greg Bloh, CEO of Transcard, solutions that target the buyer side and then provide elements to integrate with a vendor — or vice versa — can add extra steps for businesses looking to send or make payments and integrate that information into their own back-end systems.

Technology that can not only optimize a B2B transaction, but can also loop directly into both buyers’ and sellers’ systems, will be key to cutting the friction. This combination of facilitating payment and data connectivity was the motivation behind Transcard’s launch of automated account-to-account (A2A) transactions.

Bloh recently spoke with Karen Webster about the opportunities to optimize B2B payments through A2A capabilities that support a variety of payment modalities — including real-time payments (RTP) — and how data connectivity with the ERP further closes the gap between buyer and supplier.

The Account-To-Account Connection

While B2B FinTech innovation has flourished in recent years, Bloh noted that many emerging B2B payment services on the market don’t necessarily facilitate a deeper connection between buyer and supplier. Rather, they introduce third-party platforms that sit between business partners, often adding an extra step within the flow of money.

“When you insert a platform into the middle of a payment that’s perhaps hundreds of thousands, if not millions of dollars, that can be very problematic,” he said. “Businesses don’t want somebody setting their hands on large payments like that.”

Account-to-account capabilities allow funds to flow directly from buyer to supplier without having to make a pit stop in the middle. Further, via Mastercard Track, Transcard’s A2A service supports this seamless payment flow while still enabling businesses to have choices in payment methods.

One mode supported by Transcard’s new offering is RTP, a faster payment capability that, while quickly gaining traction, may not immediately seem like the right fit for B2B payers looking to hold onto capital as long as possible. On the contrary, said Bloh, RTP isn’t necessarily about speed.

“Everybody calls RTP a faster payment. And it certainly is faster, but it doesn’t necessarily mean you have to get the payment there faster,” he said. “It gives you more control.”

For corporate treasurers, RTP enables a buy-side organization to hold onto funds until a payment due date based on agreed-upon payment terms with suppliers. For vendors, this also means funds are not only received on the due date, but are cleared and ready to be used. On both ends, said Bloh, RTP can enhance cash flow management in ways that slower payment methods don’t support. As A2A capabilities evolve with a range of payment rails, he predicted that these value propositions will likely help RTP achieve ubiquity and emerge as a key tool for treasury management teams.

Deepening Data Ties

Closing the gap between buyer and supplier isn’t only about a more seamless flow of payment from one account to another, however. Just as important — if not more so — is the movement of transaction data that enables businesses to reconcile transactions and manage finances.

For this reason, Bloh said that enterprise resource planning (ERP) integration is vital, and this capability will be a main driver of adoption.

“The biggest benefit I see is not necessarily the payment itself,” he noted. “What’s important is the data that flows with the payment.”

Today, suppliers that receive a transaction may see funds weeks after an invoice is issued. That means any data coming is delayed, too, obscuring visibility into which payment was made for which invoice. A2A capabilities support greater transparency due to not only the flow of data along with payment, but also Transcard‘s ability to integrate that data within businesses’ existing ERPs and the payment instructions they hold.

That direct connectivity enables a far more efficient way to verify payment instructions and confirm that funds have actually landed in the recipient’s account. Once the transaction is complete, organizations have access to richer reconciliation information, too, reducing the need to manually communicate back and forth to verify transaction details.

Data connectivity is a key component of Mastercard Track, an open loop network that keeps a database of payment details, terms and preferences that more closely link buyer and supplier. It will also be the value driver for both buyers and suppliers as B2B payment technology works to bridge the gap between business partners, without standing in the way of the flow of payment and information between them, according to Bloh.

“Getting a connection into an open database to be able to facilitate these connections between trading partners is a key element to make this all work,” he said.

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