CPI Europe Summit 2019 Places Customer Experience at the Heart of B2B Payments Innovation
“More has happened in past three years in the B2B payments industry than in the previous 30 years” noted Nicki Bisgaard, Group Head at PayTech, at Commercial Payment International’s (CPI’s) Europe Summit 2019, held in London’s Canary Wharf.
As the commercial payment volumes of card schemes continue to rise, new developments in technology, the latest wave of payments regulations and new market entrants are shaking up the expectations of users of commercial payment products and services.
Bisgaard commented on the convergence between the consumer and business payments experience as another driver for change in the sector. The demands that corporates have from their banking and card programme partners have evolved rapidly – a theme that was picked up across a variety of sessions on day one.
The corporate perspective
Christina Easton, Managing Director of Seattle-based payments consultancy elemenTEL, picked up on the expectations of today’s corporates, sharing her experience having spoken to a variety of large multinationals to find out their thoughts on B2B payments.
In terms of the corporate customer influence, she noted that in the past 15-20 years there has been a huge corporate evolution in terms of the behaviour of corporate customers. “Purchases used to be made through relationships and had long cycle times” Easton said. “Nowadays, corporate clients have the ability to buy products and services quickly, and through self-service options that weren’t there 15 years ago. Corporates are more sophisticated now and can demand software-as-a-service, for example, immediately without waiting on a sales pitch in person”.
As corporate expectations shift, they highlight where the commercial and consumer experiences still differ and the frustration this can create in current and potential bank clients. Easton listed a number of pain points that corporates mentioned to her, with some of the main issues including time consuming bank portals, lack of support and poor transaction data capabilities in emerging markets, and lack of bank willingness to test solutions in non-traditional markets.
Easton made the point that banks should not solve for payments in isolation. Regulations need to change in line with innovation, and ideally this would be a globalised change. “Governments and regulators need to drive change in B2B payments through mandates. At the same time, banks should be looking to include corporates in their innovation labs”.
Servicing dual customers in the travel sector
When it comes to B2B travel payments, providers are essentially faced with two customers, the business traveller and the central administrator at corporate headquarters.
The traveller will have a consumer-like desire for simplicity and ease of payment. As Mario Zorn, Head of Product Development & Innovation at Lufthansa-owned AirPlus International put it: “User experience is key to travellers. They know how Facebook and PayPal work, and are not prepared to put up with terrible processes from the past when it comes to T&E”.
On the other hand, the T&E programme manager at head office has
requirements revolving around data automation, compliance, and visibility. Zach Ornelas, VP, Global Network Sales at UATP, the airline-owned travel payments network, pointed to virtual cards as one response from the industry to address these demands. “One of the changes that we’re seeing is around virtual payments in B2B, with the control and visibility they bring. They will become increasingly ubiquitous”.
“We don’t do a good job as an industry to defend the value of card” said Francesco Cerlienco, Product Head, Citi Commercial Cards, EMEA for Citi. “Card brings some benefits other payment methods don’t. People want choice, and card needs to compete and facilitate payments as imbedded and seamlessly as possible”.
This is certainly the case for card schemes, even if the physical plastic card may make way for virtual cards and mobile wallets. Zorn commented that the format should be irrelevant to solutions providers, in the sense that they should adopt to what their customers want, and that the customer experience should be at the heart of decision-making.
The corporate payments value chain emerged as a key topic of discussion also in regard to T&E, with incumbents facing a variety of challenges, from fintech market entrants, to capturing the data that is valuable to corporates, and the challenge to facilitate value added services. “It’s a more crowded space” Cerlienco said. “It is key to understand what the right solutions are and for whom”.
“The degree of complexity corporates demand is there” Zorn added. “Corporates want increasing efficiencies out of their processes”.
The supplier challenge in acquiring
Complexity is seen on the acquiring side of the commercial payments equation also, as providers continue to face a challenge of supplier enablement. Dean M. Leavitt, Founder and CEO of B2B payments firm Boost Payment Solutions, observed that while the payment rails were invented for consumer transactions, not for large-scale B2B payments, progress is being made. “The recent advent of straight-through processing technology platforms, creative pricing constructs and the ability to accommodate the complex data requirements of both buyers and suppliers has transformed commercial card products into a simple and cost effective payment method for regional and multinational players”.
“Another point is, acquirers traditionally have never built B2B-specific solutions” Eric Queathem, SVP, Global Enterprise eCommerce at Worldpay said. “Recently, fintechs and card companies are just starting to add value here”.
Geoff Barraclough, Head of Proposition for payment processor EVO Payments, commented that it is important to understand how acquirers operate, with high fixed costs and low marginal costs. “We need scale. Otherwise, there can be a lot of risk and little reward”.
For example, a trade finance deal between a big bank and large corporate could involve hundreds of smaller suppliers. In this case, a merchant acquirer would be obliged to open an account and carried out KYC/AML on every one of these smaller suppliers.
“Don’t force a card solution onto a corporate if it’s not best for them” Barraclough added.
Tackling working capital with commercial cards
Corporates are increasingly pushing for longer payment terms in order to enhance their working capital. An off the record roundtable conversation on day one of the CPI Europe Summit heard that, in terms of T&E, RFPs are showing a demand for extended terms out to 30-60 days. It was acknowledged that this is being driven largely by multinationals, and some corporates will trade off rebate with period of credit.
One participant cautioned that issuers naturally go after multinationals, which is where this driver comes from initially – are these corporates fishing for benefits with their RFPs?
Working capital issues for corporates apply across all verticals. This creates a challenge for banks, it was noted, as commercial banks won’t want to cannibalise their own products and services as the card segment of the bank veer into areas where commercial bankers are selling. However, it was noted that there are places where card payments are not usually used – such as in tax, or customs payments where issuers can operate without stepping on the toes of their commercial bank colleagues.
Internal divisions within institutions don’t help customers. The point was made that cards have traditionally been seen as separate from rest of transaction bank. A level of integration can give banks a holistic view to think about solving customer problems.
When it comes to corporate working capital, issuers were urged to get away from thinking of it as a ‘card programme’ – think of it as another funding source.
The rapidly evolving demands from corporates across all areas of commercial payments are putting banks and card issuers under pressure to innovate their product offerings in a customer-centric fashion. With better communication internally, by applying new technologies and with the support of regulators, financial services providers have the means to address these challenges.