Interchange fees, assessed by credit card companies on merchants for credit and debit card transactions, have taken center stage. Companies are assessed these costs by financial institutions in exchange for taking the credit risk and handling these transactions. Visa and Mastercard have delayed more than $1 billion in higher fees until next year.
One solution that has emerged is the use of Payment Information Service Providers where money is transferred between accounts without intermediaries. Payments via so-called Open Banking cost less than 1 percent compared to fees for card and wallet-based payments that average 3 percent.
The June Global B2B Payments Playbook® examines B2B payment developments, including why interchange fees continue to rise and what merchants can do to lower the costs.
Around The Global B2B Payments Landscape
New data suggests the demand to speed cash flow across the airline sector has reduced barriers to virtual card acceptance. The study by Coleman Parkes Research, the British data analytics company, for Amadeus, the paymentplatform for airlines, found 74 percent of respondents credited cash flow improvements from short settlement cycles as the major benefit of virtual cards. Researchers reported COVID-19 has accelerated B2B payments in the travel industry. The way travel agencies pay hotels and airlines was evolving before the pandemic, as conventional industry settlement methods and cards were replaced by contemporary digital payment methods.
With the first phase to extend cross-border testing of the digital yuan a success, China and Hong Kong are negotiating to take another step to adopt the currency more widely. The Hong Kong Monetary Authority, the central bank of the administrative region of the People’s Republic of China, the People’s Bank of China’s (PBOC) Digital Currency Institute, merchants and bank staff, are in talks to make the expand the digital innovation. The PBOC is beating other central banks in the race to launch digital currency.
The oil supply disruption of the Colonial Pipeline by ransomware in May raised awareness of corporate cybersecurity and revealed how such an attack has widespread ramifications. Industry oil giants like BP manage huge numbers of invoices. The oil and gas industries face unique hurdles to streamline the procure-to-pay process. But the challenges also present opportunities for innovation, such as blockchain, to boost efficiency. The workflows have typically involved lots of documents and manual workloads. Adding to the challenges in the payment process for gas and oil firms is they routinely involve difficult-to-price services
For more on these and other stories, check out the Trackers News & Trends section
NuORDER on taking a technology-forward approach to combating interchange fees
When it comes to identity verification, artificial intelligence (AI) gets all the headlines. But behavioral analytics is just as important. In this month’s Feature Story (p. 7) interview with PYMNTS, Harris Chen, senior product manager at Alloy, the New York-based identity decisioning platform, said while AI is valuable, it is just another tool in the toolbox for identity verification. As essential, he said, is provided by behavioral metrics, the analysis of a customer’s keyboard and mouse movements to help determine the person is who they say they are.
How high interchange rates impact global commerce and how digital tools can optimize them
Visa and Mastercard ignited a firestorm last year with plans to raise interchange fees. The estimated the annual impact of Visa’s interchange increases are $768 million while Mastercard’s added costs would reach $383 million. Merchants, already beleaguered by the pandemic that was chilling revenues, cried foul. In response, the two credit card giants said they would delay the increases. In this month’s Deep Dive (p. 14 ), we explore the objective to create frictionless payments that can be delivered electronically and uniformly, 24/7, to any country, via any channel and in any currency and at less cost.
Read the full Deep Dive in the Tracker
The PYMNTS’ Global B2B Payments Playbook, done in collaboration with Worldpay B2B Payments, is an exploration in accelerating the B2B payments space, and how smart digitization is now moving business payments with speed, and at scale.
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