Finserv Providers Embrace New Rails For Faster B2B Payments

Recent analysis from Juniper Research found that blockchain-powered cross-border B2B payments are expected to reach a $4.4 trillion valuation by the end of 2024, and $191 billion by the end of this year.

Not only does that figure represent the growing demand among businesses for faster, more agile and more transparent ways to move funds across borders, it also reflects the financial services industry’s willingness to embrace something other than legacy payment networks to facilitate that demand.

This week’s examination of payments rail modernization looks at a range of service providers embracing new rails rather than relying on technology to improve existing ones. While firms like Diamante and SatoshiPay embrace blockchain, traditional players like Wells Fargo and HSBC are relying on RTP to accelerate corporate payments.

HSBC Loops Into RTP

HSBC Bank is introducing real-time payments capabilities to its corporate clients by connecting into the RTP network, allowing businesses to send and receive RTP payments.

The integration will first go live for U.S. business customers, the FI noted. It is part of its broader efforts to support payments modernization in the country with the RTP network, which is operated by The Clearing House (TCH) as a recent addition to the U.S. payments rail ecosystem to support faster transfer of funds.

In a statement, TCH Senior Vice President of Product Strategy and Development Steve Ledford said that RTP can benefit corporates by providing “real-time cash management” capabilities. The bank’s decision to introduce the service to corporates before consumers demonstrates the financial services industry’s confidence in B2B use cases for faster and real-time payment services.

Wells Next to Tap RTP for Corporates

Only one day after HSBC announced its RTP corporate payment service, Wells Fargo announced its own plans to allow business clients to initiate payments via the RTP network, in yet another example of how the traditional financial services industry is eager to embrace newer payment rails.

“Our customers want the ability to make immediate payments and receive timely confirmations to run their businesses more efficiently,” said Wells Fargo Head of Treasury, Merchant and Payment Solutions Danny Peltz in a statement, pointing to not only the speed of RTP, but also the ability for the network to provide corporates with transparency when it comes to transaction data.

The addition of RTP services means seamless integration into corporates’ treasury platforms, greater choice in payment methods and the opportunity to optimize cash flow, the financial institution added.

SatoshiPay Eyes Ill-Fitting Rails for B2B

This week, SatoshiPay CEO Meinhard Benn spoke with PYMNTS about the challenges businesses can face in forcing traditional rails that have been designed for domestic consumer payments to fit their cross-border B2B payments needs.

“Many of these businesses use traditional payment networks based on legacy infrastructures that are not meeting the requirements of globalization, such as speedy execution, guaranteed arrival and transparent, competitive fees,” he said in an interview.

It can be a bit like trying to fit a square peg in a round hole, with some businesses even wielding consumer payment products like gift cards or store credits to pay out funds across borders to employees and business partners, without having to face the FX and other fees charged by traditional global corporate payment services.

For SatoshiPay, the solution is to embrace an entirely new infrastructure based on blockchain technology – which, according to Benn, supports businesses’ need for speed and transparency in cross-border transactions.

“Blockchain technology is built on top of the internet, and therefore borderless by default,” he noted.

Diamante Embraces Blockchain, Too

Another service provider looking to bypass existing rails in favor of blockchain is Diamante, whose corporate payment services aim to address the cross-border B2B payments friction of traditional wires. The Diamante Consortium is developing a new B2B corporate payments network to support faster cross-border business payments using blockchain.

“Many in the industry, small and big players alike, have been blaming the traditional payment structure for the slow growth and post-recession financial slump in the sector, and have been voicing for a reformation,” the company said in a recent press release. “Thankfully, blockchain couldn’t have come at a better time.”

ACI Worldwide Joins Faster Payments Initiatives

Electronic payments and banking solution provider ACI Worldwide recently showed its support for U.S. efforts to bring faster payments to ubiquity by joining the Faster Payments Council (FPC).

It’s a move that supports both the use of existing rails to upgrade payment capabilities as well as the establishment of new payment networks. ACI Worldwide is integrated into The Clearing House, which provides Same-Day ACH services, for instance, though the company also said it plans to support the Federal Reserve’s upcoming FedNow service.

Working with “an independent, solution-agnostic member organization” like the FPC will ensure that the payments ecosystem explores the opportunities in both building new solutions on old rails and building new rails altogether with the goal of accelerating and improving payments, according to FPC’s Executive Director Kim Ford.