Trading, digitising, crossing borders – the B2B payments 2018 retrospective

There have been mergers and acquisitions to spare, paving the way for a whole new era in payments infrastructure. Blockchain has truly become a thing of the present, especially in cross-border payments, and alternative payments channels, with lenders already beginning to make the best of the regulations and systems that will change the face of payments in the years to come, such as PSD2 and Open Banking.

BBVA, Fidor and the platform model

Competition with fintechs and new players in the alternative lending niche have led banks into rethinking the way they package their services, focusing more and more on the platform model. In this sense, BBVA has launched a Banking-as-a-Service product in US after the BBVA Open Platform program moved out of beta. BBVA’s Banking-as-a-Service solution allows companies to connect into a core digital banking platform, through which they can access APIs including the Move Money, Identity Verification, Account Origination, and Card Issuance services.

Banks such as Fidor followed suit in US, after already taking over several European markets, BNP Paribas has just implemented the Backbase omnichannel banking platform in December 2018 and HSBC US Commercial Banking announced that its Digital Partner Platform will go live in early 2019, to allow cross-border account opening across international markets, while giving partners the ability to participate in the ecosystem.

Global payments infrastructure and the „Ripple” efect

2018 was a tumultuous year for Ripple, the real-time gross settlement system, currency exchange and remittance network that started out in the US and shook things up to the core with its advances in integrating distributed ledger technology into the cross-border payments infrastructure all over the world. As Ripple specialists explained in their Blockchain in Payments Report, much of the world’s value currently resides within an international payments infrastructure, and moving money across this system has ecountered issues with fragmented connectivity. However, blockchain and digital assets have helped with solving this problem, by easing the cross-border payments process, and making them transparent and reliable.

Partnerships such as the one with Santander, back in March, the bank’s OnePay FX Ripple-based app launch, or Ripple expanding into India and Singapore in May, through Standard Chartered are just a handful of examples of how blockhain is connecting banks, remittance processors, and payment services.

Furthermore, Asia is taking blockchain by storm, with instant payments and cross-border FX services booming in the last couple of months, especially as its descentralised native cryptocurrency known as XRP became the second largest coin by market capitalisation, according to Forbes. Furthermore, the Blockchain in Payments Report reveals that the adoption of blockchain-based global payments is reaching critical mass in 2018 and organisations are already looking to incorporate digital assets into payment flows.

The trade finance game with blockchain tuttelage

Built on the IBM Blockchain Platform and Powered by the Hyperledger Fabric, we.trade emerged as a platform for managing, tracking and protecting trade transactions between SMEs. Apart from this, it helped connect the subjects of a trade deal all in one place and facilitated the access to trade finance. Originally known as Digital Trade Chain, the consortium was rebranded as we.trade in 2017. The trade association was established by Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Societe Generale and UniCredit, in the bid to address the expectations of their customers in making cross-border trade more straightforward.

In July 2018, the we.trade initiative successfully confirmed that the first live trades have taken place on the platform, and recently, CaixaBank, Erste Group and UBS joined as shareholders and banking partner. we.trade managed to create real collaboration across multiple banks and increased the connectivity of the trade ecosystem.

In an exclusive interview for The Paypers held in October 2018, Patrik Zekkar, the global head of trade finance & working capital management at Nordea, shared that, at this point, we.trade is expected to grow rapidly into additional markets in Europe (and further afield), as Nordea estimates a coverage of around 30% to be grown to 50% of the SME market in Europe. Thus, geographical expansion to Asia comes naturally as a priority.

2018 brought SEPA updates

The Single Euro Payments Area (SEPA), the payment-integration initiative of the European Union for simplification of bank transfers denominated in euro, saw some notable changes in its Credit Transfer Rulebook. According to the European Payments Council, new SCT updates are about to be established after January 2018, when version 1.2 of the SEPA Rulebook will be published.

As discussed in an in-depth interview with Javier Santamaría, chair of the European Payments Council, in July 2018, the biggest benefits of SEPA Instant Credit Transfer stem from its real-time nature. This allows the electronic transfer of money in less than ten seconds, as well as its permanent availability (24/7/365) - since real-time payments will be possible at any time and on any day of the year, including weekends and holidays. This will enable PSPs to meet the demand of their customers for a payment experience in line with the digital world they live in.

The Internet of Things and a glimpse into the B2B payments future

The Internet of Things (IoT) is not a new trend. Connecting gadgets with a wide range of functionalities are already heavily used in the home, and it is expected to rise. According to a Gartner study, it is estimated that there will be 20 billion internet-connected things by 2020. The B2B payments sector is no stranger to this wave of technological advancement.

The Internet of Things became a hot topic in recent news mainly for the value that lies for companies in the possibility of connecting payment streams, supply chains as well as the ability to track results and deliver new and improved products along the way. And by putting together the advantages of Internet of Things with a subscription-based model, a recipe for success quickly emerged in the business to business landscape.

In the wake of the rise of IoT, alternative payment channels such as contactless and wearables gained traction. For instance Bank of America and Fit Pay, a subsidiary of NXT-ID, haa announced an agreement to extend contactless payment services to BoA customers. As a part of the agreement, Bank of America will participate in FitPays Digital Wallet Program, which enables manufacturers of Internet of Things (IoT) and wearable devices to add contactless payment features to their product, making it possible for consumers to pay for goods and services at near-field communication-enabled (NFC) point-of-sale terminals with a simple tap.

A close eye on the future

For The Paypers, 2018 was a very exciting year. The B2B Fintech: Payments, Supply Chain Finance & E-invoicing Guide 2018 was launched in April, covering topics such as how the emergence of Financial Utilities could overcome high operational costs and slow transfer times in international payments; how blockchain technology is changing the financial industry, what is the impact of distributed ledger technology on cross-border payments, or how artificial intelligence can tackle the issue of late payments as just a glimpse into the topics.

The B2B payments scene is undergoing continuous and relentless transformation. With PSD2 coming into effect next year, trade finance networks such as we.trade are gaining more and more terrain, and digital transformation is becoming an increasingly debated topic, along with cross-border and instant payments becoming the main focal points of innovation. However, this is the premise of a new story, soon to be written in 2019.

Until then, don’t forget to keep track of the latest news and trends in B2B payments, e-business, e-procurement, supply chain finance, e-invoicing, automation, instant and cross-border payments, and much much more in The Paypers’ news section and to keep an eye out for the reports we are cooking up for next year.

We hope you enjoyed our headlines retrospective for 2018, and we want to take this opportunity to thank you for following us and reading our stories this year!

Happy holidays from The Paypers!

About Alexandra Constantinovici

Alexandra is a Content Editor at The Paypers, specialising in B2B payments and fintech, as well as lending, e-procurement, e-billing, supply chain finance, e-invoicing and accounts payable automation. A passionate writer, Alexandra has an extensive background in journalism – as a graduate of Journalism and Communication studies –, as well as editing, publishing, and marketing. Together with the team of editors, she strives to bring forward the latest trends for our readers, while investigating and sharing with our community the upcoming innovative industry shifts.