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Sizing the market opportunity Unlike card acquiring, check collection is rarely priced
explicitly by banks, and when it is (as with lockbox
B2B payments today outstrip all other types of payments collections), seldom do the fees top $1 per transaction.
and are on a steady growth trajectory. BI Intelligence Perhaps of greater importance to corporate finance
estimated B2B payments totaled $18.5 trillion in 2016, officers, most receivables workflows evolved around
compared with $5 trillion in business-to-consumer check payments, which generally are accompanied by
payments and $709 billion in consumer-to-consumer documents detailing invoice and customer numbers,
payments. purchase descriptions and other information similar to
Level 2 and Level 3 detail, and support proper crediting of
According to the Federal Reserve 2016 Payments Study, payments to customer accounts.
consumers spent just over $3.1 trillion using credit cards
and about $2.5 trillion using debit cards at U.S. businesses Addressing pain points
in 2015. Meanwhile, the consulting firm Deloitte reported
that B2B payments have been expanding at a combined Evolving technologies and mounting pressures to improve
annual growth rate of 5.8 percent over the last several operational efficiencies have forced many companies to
years and will exceed $23 trillion by 2020. rethink their allegiances to checks, however, BillingTree's
Langlois said. BillingTree has a direct sales staff and works
Unlike consumer-to-business payments, where credit and through ISOs and other channel partners. "We've seen
debit card acceptance is often posited as a necessity of more movement in the B2B market in the last two years
doing business, companies often shun card payments from than we saw in the previous 10 years," he added. "People
trading partners. Nearly half of all B2B payments in the are really seeing the opportunities."
United States in 2016 were made by check, compared to 32
percent by automated clearing house (ACH) transactions There's no one vertical where B2B card payments are a draw,
and 11 percent by credit and debit cards, according to Langlois pointed out. "It's very diverse," he said. Examples
NACHA – The Electronic Payments Association. include distribution, broadcasting, manufacturing,
waste management and hard goods companies, as well
The most widely used cards for B2B payments today as government agencies. "We're interested in exploring
appear to be purchasing cards, which are used by 73 revenue opportunities with companies that are the right
percent of firms participating in the Association for fit," he said.
Financial Professionals 2017 Payments Fraud and Control
Survey. But this number belies the dearth of payment The opportunities for making inroads with B2B have not
activity: the consultancy Celent LLC estimated that just been lost on the card companies. "Visa and Mastercard are
1 percent of commercial payment flows today are made both going after B2B payments," Lane said.
using purchasing cards. Travel and entertainment cards
are the second most used business card type (used by 45 Visa partnered with Billtrust to advance virtual card
percent of firms in the AFP survey); virtual cards ranked payments. It also has a "strategic investment" in the
third with 31 percent. firm. According to Taira Hall, Visa Vice President of U.S.
Partnerships and New Initiatives for Business Solutions at
The reasons why checks are preferred for B2B payments Visa, the arrangement with Billtrust aims to help banks
vary, but generally they fall into two categories: pricing streamline B2B payments for corporate clients. "One of the
and perceived workflow efficiencies. key pain points for companies is the time and resources it
takes to process payments," she said.
"The [interchange] rate structure of cards was not designed
for B2B transactions, which carry much lower risks," said Lane echoed this sentiment. "You can't solve this problem
Flint Lane, founder and CEO of Billtrust. Interchange rates just by changing the cost structure," he said.
for business cards are significantly higher than those for
consumer card purchases – 200 basis points, or more – As the name implies, virtual cards are not plastic cards.
according to experts. Rather, they are accounts that generate 16-digit numbers
for individual transactions and reference transaction-level
That's because most merchant POS devices are not detail (think Level 1 and Level 2 detail) that gets sent to a
configured to capture Level 2 and Level 3 card data, supplier's bank account using a file-based process. Ideally,
which renders the process less vulnerable to fraud. Level they should support integration with B2B portals and
2 data includes details like merchant name and zip code, other accounting systems to deliver something close to
transaction amount and date, tax amount, plus customer straight-through processing (STP).
code or purchase order number. Level 3 data includes
shipping and destination ZIP codes, invoice and order While they hold promise, virtual cards have been slow
numbers, item product and commodity codes, item to gain traction, Lane noted. Murphy said that's because
descriptions and quantities, and other details. most virtual cards miss the mark. He estimated that 95
percent of virtual card payments today are supplier-

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