FIS’s $43 billion agreement to acquire Worldpay and Fiserv’s $22 billion deal to buy First Data are largely closing the gaps between financial technology and merchant acquiring. But these mergers are only the first of many steps. What comes next will be relatively smaller projects to disrupt the status quo, such as making open banking more accessible for financial institutions, which previously have seen PSD2 as a costly compliance headache. The deals also smooth the road to developing digital ID and cutting through the long-standing hindrances that keep businesses entrenched in paper billing. To further these goals, “it’s helpful to have multiple assets coming into our ecosystem,” said Elena Whisler, head of global product management, open payments for FIS. ![]()
Commercial payments in general remain fragmented with a lot of disparate legacy systems operating independently across payment transactions, said Gilles Ubaghs, a senior analyst at Aite. For most corporates, accounts payable and accounts receivable still often run on distinct systems, and most vendors are active on one side or the other. Combine that with the smorgasbord of payment channels and tools still being used out there, from checks to virtual cards and it becomes quite a headache for any corporate looking to modernize. “These big payment deals undoubtedly do help these players in being better able to provide automation in corporate payments,” Ubaghs said. "The key benefit [to the mergers] is really just in the breadth of services being offered, enabling real end-to-end service provisioning." Few payment types are more frustrating for technology upgrades than business transactions. In an upcoming PayThink column, Nvoicepay CEO Karla Friede describes B2B as being of staggering size, more than $36 trillion in yearly volume, yet still behind in digitization despite the opportunity to use digital business payments to open up lending, discounting and other services. Friede's not alone, as other executives such as FPX chief experience officer Mark Bartlett have bemoaned the lack of automation in supply chain payments, while Coupa Senior Vice President Ravi Thakur has warned fintech merchant acquirers are a clear threat to banks and merchant acquirers that can't upsell digital B2B. Still, more than half of B2B transactions happen by check, despite the ample cost and time benefits of automating business transactions. FIS’ own data points to the complexity of business payments that usually involve thousands of suppliers for most companies, which a mix of dashboards, APIs and digital faster payment could streamline. “Even if there is a better or different grocery store, you’re still going to use the older store you’re accustomed to — even if the newer one is easier,” said Whisler. As FIS preps to get much larger via its Worldpay acquisition, it’s tackling business payment automation and hoping to seize on momentum that suggests businesses may finally be ready to automate supply chain transactions. FIS will rely on open development and advocacy for faster payments via the ACH rails to boost digital B2B. FIS of course is also pushing its API for business payments strategy, as it awaits the completion of its acquisition of Worldpay. FIS did not comment further on the merger's impact by the deadline for this article. Fiserv also did not comment by deadline. Fiserv's B2B automation strategy includes a collaboration with DadeSystems, with Fiserv providing a connection for financial institutions to access DadePay's accounts receivable SaaS product. Both FIS and Fiserv have assets such as bank processing, interbank and retail payment networks, electronic bill payment and presentment networks, cards and merchant processing that they can leverage for B2B, said Eric Grover, a principal at Intrepid Ventures. “Their ecosystems are getting larger, which means by controlling data and processing across the value chain, there should be opportunities to develop and deliver more coherent B2B payments,” Grover said, adding FIS could use Worldpay’s gateway Paymetric to plug into a range of ERP systems, thousands of software companies in its integrated payment roster and a network of millions of merchants. Fiserv will have similar benefits, according to Grover. Any move to digital payments will create more data faster, which can aid the argument for B2B automation. The sheer volume of data that digital payments can produce is a primary argument to get corporates off the ledge, since it provides more visibility into a transaction than a paper check. FIS is using that logic to encourage banks to bring more businesses to digital P2P. “Data can further quantify a business’ case to move from paper to electronic,” Whisler said. “Without this data you don’t know the risks of holding on to that check or other information about the transaction.” FIS is offering open development tools, or APIs, to its financial institution clients that have business payment operations in an effort to support the capture of more information, which can inform enterprise resources planning and other business functions. “It can help the banks understand the behaviors of these corporations.,” Whisler said. ACH payments contain data elements that can provide context for a payment tied to an invoice that can inform other business strategies, Whisler said, adding digital ACH payments include real-time status updates, tracking and positive pay. “But that hasn’t been utilized to its greatest advantage yet,” she said. There is some traction for ACH payments. In its most recent report, Nacha says ACH B2B transactions jumped 11.5% to 930 million in fourth quarter 2018. But that’s still a small chunk of the overall 1.6 billion online ACH payments, which jumped 14.5% in the fourth quarter. “There are improvements in the methods of capture, so checks don’t necessarily have to get printed,” Whisler said. Corporates and smaller businesses want greater data integration and efficiency across their back office systems and payments is a key plank of that, according to Ubaghs. “A one stop shop scenario from the big players, who are ostensibly now mixing software and services, with a growing focus on cloud delivery will be well positioned for this,” Ubaghs said.
Commercial payments in general remain fragmented with a lot of disparate legacy systems operating independently across payment transactions, said Gilles Ubaghs, a senior analyst at Aite. For most corporates, accounts payable and accounts receivable still often run on distinct systems, and most vendors are active on one side or the other. Combine that with the smorgasbord of payment channels and tools still being used out there, from checks to virtual cards and it becomes quite a headache for any corporate looking to modernize. “These big payment deals undoubtedly do help these players in being better able to provide automation in corporate payments,” Ubaghs said. "The key benefit [to the mergers] is really just in the breadth of services being offered, enabling real end-to-end service provisioning." Few payment types are more frustrating for technology upgrades than business transactions. In an upcoming PayThink column, Nvoicepay CEO Karla Friede describes B2B as being of staggering size, more than $36 trillion in yearly volume, yet still behind in digitization despite the opportunity to use digital business payments to open up lending, discounting and other services. Friede's not alone, as other executives such as FPX chief experience officer Mark Bartlett have bemoaned the lack of automation in supply chain payments, while Coupa Senior Vice President Ravi Thakur has warned fintech merchant acquirers are a clear threat to banks and merchant acquirers that can't upsell digital B2B. Still, more than half of B2B transactions happen by check, despite the ample cost and time benefits of automating business transactions. FIS’ own data points to the complexity of business payments that usually involve thousands of suppliers for most companies, which a mix of dashboards, APIs and digital faster payment could streamline. “Even if there is a better or different grocery store, you’re still going to use the older store you’re accustomed to — even if the newer one is easier,” said Whisler. As FIS preps to get much larger via its Worldpay acquisition, it’s tackling business payment automation and hoping to seize on momentum that suggests businesses may finally be ready to automate supply chain transactions. FIS will rely on open development and advocacy for faster payments via the ACH rails to boost digital B2B. FIS of course is also pushing its API for business payments strategy, as it awaits the completion of its acquisition of Worldpay. FIS did not comment further on the merger's impact by the deadline for this article. Fiserv also did not comment by deadline. Fiserv's B2B automation strategy includes a collaboration with DadeSystems, with Fiserv providing a connection for financial institutions to access DadePay's accounts receivable SaaS product. Both FIS and Fiserv have assets such as bank processing, interbank and retail payment networks, electronic bill payment and presentment networks, cards and merchant processing that they can leverage for B2B, said Eric Grover, a principal at Intrepid Ventures. “Their ecosystems are getting larger, which means by controlling data and processing across the value chain, there should be opportunities to develop and deliver more coherent B2B payments,” Grover said, adding FIS could use Worldpay’s gateway Paymetric to plug into a range of ERP systems, thousands of software companies in its integrated payment roster and a network of millions of merchants. Fiserv will have similar benefits, according to Grover. Any move to digital payments will create more data faster, which can aid the argument for B2B automation. The sheer volume of data that digital payments can produce is a primary argument to get corporates off the ledge, since it provides more visibility into a transaction than a paper check. FIS is using that logic to encourage banks to bring more businesses to digital P2P. “Data can further quantify a business’ case to move from paper to electronic,” Whisler said. “Without this data you don’t know the risks of holding on to that check or other information about the transaction.” FIS is offering open development tools, or APIs, to its financial institution clients that have business payment operations in an effort to support the capture of more information, which can inform enterprise resources planning and other business functions. “It can help the banks understand the behaviors of these corporations.,” Whisler said. ACH payments contain data elements that can provide context for a payment tied to an invoice that can inform other business strategies, Whisler said, adding digital ACH payments include real-time status updates, tracking and positive pay. “But that hasn’t been utilized to its greatest advantage yet,” she said. There is some traction for ACH payments. In its most recent report, Nacha says ACH B2B transactions jumped 11.5% to 930 million in fourth quarter 2018. But that’s still a small chunk of the overall 1.6 billion online ACH payments, which jumped 14.5% in the fourth quarter. “There are improvements in the methods of capture, so checks don’t necessarily have to get printed,” Whisler said. Corporates and smaller businesses want greater data integration and efficiency across their back office systems and payments is a key plank of that, according to Ubaghs. “A one stop shop scenario from the big players, who are ostensibly now mixing software and services, with a growing focus on cloud delivery will be well positioned for this,” Ubaghs said.
