Though facing barriers, the B2B payment industry in APAC is not lacking innovations. Our recent research on the topic found that B2B payment innovations and trends in the region come from three dimensions.
Technology and infrastructure upgrades modernize B2B payment processing
Technologies such as cloud and APIs and new payment data and messaging standards such as Request to Pay (R2P) and ISO 20022 are making B2B payments faster, simpler, and cheaper.
Payment infrastructure innovations speed up transactions. Payment infrastructure innovations are centered around enriching payments with data insights, which makes payments faster and more transparent. R2P is one such innovation. India has built the real-time payment infrastructure UPI (Unified Payments Interface) with R2P features for B2B payments. The ISO 2022 new payment messaging standard is another example. It helps standardize and enrich the data embedded in B2B payments messages to speed up transactions. Fintech vendors such as Fiserv have built enterprise payment platforms to deliver these new features to banks and regulators more quickly.
Cloud payment solutions come of age. Cloud-hosted B2B payment solutions are gaining strong tractions in the industry, as cloud enables more efficient, cost-effective, flexible, and scalable B2B payments. Rapyd has built a payment cloud solution to modernize invoicing, trade finance, and supply chain finance. Payment clouds can complement treasury solutions such as Kyriba to combine digital payment and treasury management. TreviPay's platforms and solutions are all hosted in the public cloud, which accelerates solution deployment, reduces costs, and improves integration for its business customers.
APIs simplify cross-border B2B payments. The fragmented payment rails across different APAC countries create barriers for instant cross-border B2B payments. Worldfirst, Ant Group's cross-border payments arm, leverages virtual accounts, APIs, and Ant's digital technologies to enable B2B companies to collect their overseas payments as easily and instantly as when they collect money domestically. Hong Kong-based cross-border payment fintech EMQ has built a single and customizable API that can integrate with both banks and companies to offer fast localized payouts and affordable foreign exchange rates across multiple countries in APAC.
Integration and interoperability ease the complexity of the B2B payment value chain
B2B payments are complex, involving multiple systems such as enterprise resource planning (ERP) solutions, accounting platforms, and electronic banking suites. They also leverage a mixture of near-real-time and batch data processes spread across multiple silos, making it difficult for that data to be automatically reconciled. Firms in APAC need better integration and interoperability to enable end-to-end processing and unify multiple systems, vendors, and technologies. Providers are innovating to respond to this request.
Simplified integrations and user interfaces offer a streamlined payment experience. Processing B2B payments used to take multiple partners and systems, which resulted in a convoluted and often disjointed customer experience. Worldpay from FIS offers a single platform that can integrate with multiple ERP, customer relationship management (CRM), e-commerce, and payment systems to bring a simplified B2B payment experience. Rapyd offers a single client portal to help B2B firms manage all the banks' connections and payment methods in one place by leveraging APIs.
Virtual accounts bring interoperability to respond to new digital business models. The thriving e-commerce and gig economy in APAC has given birth to a highly fragmented payment landscape in the region. Small and micro businesses involved in these new business models usually prefer to use non-banking payment rails such as digital wallets, which add complexities for their counterparts. Virtual accounts can ease the complexity by providing interoperability. Kingdee developed customized virtual accounts systems designed for merchants that frequently use non-banking rails for B2B payments to allow them to manage both banking and non-banking payment methods.
New entrants and value-added services deliver a joint payment and financing experience
B2B payment is not a stand-alone process in a company's operations, and it is closely related to finance and treasury operations. These processes remain mostly disjointed, however. We see many innovative players in APAC that aim to connect them and bridge the siloed experience by leveraging technologies to offer new value-added services.
Non-financial digital platforms offer payment and lending solutions. ERP, accounting software, and e-commerce companies leverage their massive B2B data troves to digitalize payment and lending services. China's ERP player Kingdee provides streamlined digital payment and lending services to small- and medium-sized enterprises (SMEs) by leveraging customer data insights from the ERP platform. New Zealand-based accounting software Xero leverages small-business customers' financial and accounting data on its platform and partners with banks to offer a variety of B2B financing services such as invoice financing and a B2B credit card.
Value-added services add flexibility and agility to B2B payments. B2B companies increasingly demand value-added financial and treasury management features built around payments. B2B fintech TreviPay offers a credit-as-a-service solution that extends credit lines and offers flexible payment terms to improve working capital efficiency and accounts receivable operations for B2B firms. China's digital bank MYbank leverages Ant's blockchain-based Duo-Chain platform to tokenize and split accounts receivable between multiple corporates and SMEs. This helps create more flexible credit-based payment terms and extend credit to underserved small and micro businesses.
This post was written by Analyst Meng Liu and it originally appeared here.