It all started with Paypal, which resulted in innovation in the consumer payments space. We now have Stripe, SagePay, iZettle, WorldPay, Yapstone, Datacash, Elavon, Braintree, Square.
B2B are stuck in a quagmire for ages. You buy your coffee from Starbuck which is probably a franchise so they buy their coffe beans from a supplier. There 350 billion non-cash payments every year. Thats a big number! B2B constitutes about 10% of them by number but 60% of the value! If you look at banks and payment providers, around 80-90% of the profits are in B2B payments. This is because there is a lot of competition in consumer space which really squeezes the margins down. That hasn't happened yet for B2B.
Market overview
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- Rediculously complicated
- Generating purchase order
- Invoicing...
- Accounts receivables
- Cross border payments (£15)
- Bad debt
Banks aren't innovating because they don't have an incentive Regulators stepped in
- Payment service directive around 2010s (encourages non-bank companies to challenge banks)
- SEPA Direct debit in 2014 - gives others authority to take money from your bank account in EU
- eInvoicing - no more paper invoicing, the Nordics for example require it, simplifies reconciliation
- Phasing out of cheques (end of 2020)
"Straigh through processing" - in the context of invoicing is that there are no manual steps, and this is not yet common place (in 2013) You can aggregate purchase orders across companies, saving money.
Yes it's diruptive to the banks But it makes it simpler for the businesses. Software is eating the world, removing the need for accounting services.