Originally published on Revue
This quarter I’ve been looking at how advancements in financial technology are changing the nature of the $2 trillion global payments ecosystem. As I’ve written previously about financial inclusion, I believe capital is the world’s universal language and I’m eager to get ahead of how and where the money is flowing to see what opportunities exist therein. I’m especially interested in payments infrastructure because it’s ubiquitous and makes for a great business.
Consumer payments is a well-worn track with robust infrastructure thanks to the likes of Visa, Mastercard, Amex and innovative challengers like Square and Stripe. But what about B2B payments, what about the trillions of dollars that flow from one company to another? Or a company to a person? Yes, Bill.com but where is corporate Venmo? Should that exist?
Comparatively, today’s corporate payments infrastructure is buried in legacy systems at the bottom of techosaurus-rexes like Fiserv, IBM, SAP, and Oracle. They are often managed in spreadsheets by number-crunching controllers, good ‘ol fashioned human-power. Newish corporate payments solutions like Bill.com and Freshbooks have cropped up to attempt to solve invoicing, accounts receivable and reimbursement. But compared to user experience advances in consumer payments, it’s only a matter of time before B2B payments start to get some innovation love.
I posit there are three vectors for disruption in corporate and B2B payments:
- Corporate API-Banking Infrastructure: Like Plaid and Yodlee did for consumer banking infrastructure, which has enabled the growth of challenger banks like N26 and Monzo, there is an opportunity to build API-centric application infrastructure for the enterprise to connect siloed corporate financial systems. Modern Treasury is a startup in San Francisco that is taking a data and infrastructure level approach to custom payments operations, enabling web developers to easily build custom applications that will drastically improve the efficiency of corporate payments. This is also an area where trustless blockchain-based solutions may be particularly apropos.
- Workflow-based Payments Software: Possible in a category with heavy workflow and large dollars at stake, over a long-ish period of time, I’m interested in companies that are combining workflow with payments. Two category examples of this would be in Construction and Healthcare. Construction is a process that involved many vendors who get paid over a long period of time, based on race conditions milestones that are met. It’s a complex project management task with many disparate endpoints. Rabbet, in Austin, TX, is a “construction finance platform that intelligently parses documents and connects information for frictionless transactions.” In Healthcare, a company like Health iPass is workflow software that is “improving the patient experience from appointment to payment.” They combine workflow, patient communication and payments in one product to enable doctors to capture more revenue sooner, and patients to have a clearer view into insurance contribution and their own responsibility.
- Ecosystem-based Payments Networks: Not universally applicable, but some industries have a unique network and ecosystem effects that enable payments to flow more easily thanks to a higher level of trust and data flow. San Francisco-based ApplePie Capital is a financing network for SMB franchise lending that is a crucial hub of information between franchise brand, entrepreneur, bank and other service providers, where they have an opportunity to capture payments flow around the ecosystem.
These are just a few examples of innovations in B2B payments, and I’m actively looking for more. If you have some thoughts on B2B payments or know of companies building in the space, I would love to learn about them. Please reach out!