However, if we start thinking in terms of transaction volumes and where the most high-stakes mobile for change lies, Business-to-Business – especially focused on financial mobility across geographical borders – is the backstage king of innovation-drivers. In 2018, SWIFT and McKinsey & Company found that B2B cross-border transactions accounted for USD 125 billion in revenues, while the next-highest category, consumer-to-business (C2B) cross-border payments, paled in comparison at just USD 54 billion. Just for contrast, Juniper Research data shows that the total value of B2B cross-border payments – and just the ones immutably stored on blockchain – will exceed USD 4.4 trillion by 2024; up from USD 171 billion in 2019.
These figures alone show not only the relavance of the topics for the players in the B2B payments value chain, but also make a great foundation for understanding all the machinations of last year’s most important stories happending in the B2B cross-border payments global ecosystem.
Going above and beyond – expansions and partnerships
One of the most disrupting news that occured in the B2B cross-border payments scene in 2019 came from Visa, who launched Visa B2B Connect (after an 18-month pilot) based on blockchain architecture to serve businesses seeking to make payments across 30 markets, with 90 more corridors expected to be covered by the close of 2019. They kept to their word too, for as the year went on, news of the networks expansion appeared and in September 2019 Visa has announced it could connect to 62 markets, with an eye towards 100 countries in 2020.
Another company that dared greately in 2019 was InstaReM, a fintech focused on cross-border money transfers, who issued a payments facility to boost trade between Singapore and China in August 2019. Not long after, the company launched its services into Canada, and also launched an FX payments solution. Asia is on everyone’s lips these days, and companies are looking into connecting emerging markets and established fintech hubs – Flutterwave, for instance, a company offering B2B payments in Africa, connected with China’s Alipay to streamline cross-border digital transactions across continents.
Better, faster, stronger – and repeat
As Marco Fava from CleverAdvice explained in his analysis within the B2B Payments and Fintech Guide, ”the average revenue per commercial card used to be 3-4 times higher than revenue per consumer card due to higher spend, annual fees, and most of all interchange fees. Interchange Fee Regulation capped interchange fees to low levels reducing margins on consumer cards to a fraction of what they used to be […]. Depending on spending levels, in some countries, the commercial-to-consumer revenue ratio is close to 10:1”. Hence, the focal lens placed over this business opportunity can be quite easily understood.
High-stakes acquirers such as Visa have started partnering with fintechs and developing virtual commercial cards payment services. One such relevant example is Mesh Payments, who offers a global B2B payment service that has been built for small businesses and powered by payment service providers.
Banks have not shied away from taking advantage of the innovation opportunity in cross-border payments aimed at corporate, with Citi launching a cross-border B2B payments platform, Citi Global Collect,
We need to talk about Transfermate
Cooperation in B2B global payments Analysing the most relevant news in the B2B cross-border payments world from last year, one company visibly stood out. After launching an API integration platform for B2B cross border payments in June 2019, Transfermate signed several tech and geographical expansion partnerships, with names such as Dwolla, AccountsIQ, Wells Fargo, and Tradeshift counting themselves on the list and adding to both the technology and the reach of the Ireland-based B2B cross-border payments service.
Other players in this field were sought after by banks – from incumbents to challengers – in order for them to gain access to better payment options for their corporate clients. J.P. Morgan looked to fintech acquirer Boost to automate the delivery of J.P. Morgan’s single use commercial card accounts and Starling Bank teamed with UK payment platform Tribe to get real-time access to UK and European Payment Schemes.
Moreover, e-payments specialist PPRO teamed with enterprise software-as-a-service company HighRadius in May 2019 to offer merchant clients more options to accept payments from their buyers, allowing for the discovery and support of local payments throughout the European region. Ixaris, a payments optimisation company, has teamed up with financial service infrastructure provider Banking Circle to support cross border travel payments. The partnership aimed to connect Banking Circle’s Virtual IBAN tech to Ixaris’ payment products, since, traditionally, seamless cross border B2B payments required companies to have a physical footprint and open a physical bank account in the territories they wanted to operate in.
On the topic of B2B travel payments, US-based travel payments, Sabre Corporation and Visa also announced in May 2019 a partnership to support B2B virtual payments in the travel industry.
SWIFT, EBA Clearing and Europe building bridges
SWIFT, provider of secure financial messaging services across several geographies, launched a new service meant to deliver global instant payments by integrating SWIFT gpi into domestic instant payments systems around the world. Through a combination of gpi and domestic real-time payments networks, SWIFT, together with gpi banks, has set out to deliver instant international payments with up-front fee and FX transparency for senders, while also ensuring ubiquitous availability of instant cross-border payments. The news came two month before the company moved on to announce the initiation of the development phase with EBA CLEARING to migrate the large-value payment system EURO1 to the ISO 20022 standard, marking the next step in a transformation journey they began together in 2019.
It has become apparent, especially since Sibos 2019, that there have been discussions about the move to the new global messaging standard, ISO 20022. According to declarations made by SWIFT at Sibos, ISO 20022 is becoming the new global standard language for financial transactions. In the next five years it will be the main language for high-value payments, supporting 80% of the volume and 89% of the value of transactions worldwide, as major market infrastructures prepare to adopt the standard by 2021.
All this news coming from public and privately own payments infrastructures speak volumes on the willingness of companies to come together in order to make instant payments possible and the norm itself – be it B2B or B2C – and, moreover, to work together with regulators and central banks so that the ”cross-border” to stop being cumbersome payment experience.
Furthermore, we are witnessing a boom in cooperation for innovation, with initiatives such as P27 within the Nordic bank spectrum, working to create an integrated domestic and cross border real-time payments platform, or the much-rumoured, but still enigmatic move on the side of European Banks to create a pan-European payment system, in a financial environment where the SEPA zone has already started becoming a fertile ground for building on this desired unity (with single bank accounts for the Euro Zone, instant credit transfers, or less charges for cross-border payments in Euro).
What can be said, without a doubt, is that 2019 paved the way for exciting change in the following year. Technology will probably find a plateau soon enough, like it usually does, but in order for companies to reap its benefits throughout the foreseeable future, and for the word ”global” to finally stand for more inclusive than divisive connotations, especially for companies seeking to expand, they key seems to lie in working together.
About Alexandra Constantinovici
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