JPMorgan: Smooth Cash Flow for Automated Payments

Businesses have amassed a decade of learning in two years, and for CFOs and treasurers, that knowledge can be distilled this way: Automated payments are better whether it’s business-to-consumer (B2C) or business to business (B2B).

Speaking with Karen Webster of PYMNTS, JP Morgan Managing Director, Head of Industry — Technology, Media and Telecommunications Jennifer Acosta and Managing Director, Integrated Suppliers, Strategy and Network Chris Christmas discussed changes in the payments landscape and how B2B and B2C are moving in similar directions.

Acosta said there were “two distinct conversations” going on – one on the highly engaged consumer side, where “it’s the consumer saying, ‘This is how I want to pay you, and this is how you need to integrate”. On the B2B side, it’s all about optimization and continues to be.

Acosta said the B2B side of the house is “a bit slower when it comes to getting into some of the new payment types,” while adding that options like same-day automated clearinghouse (ACH) and real-time payments are gaining traction – a good thing, considering “that’s where the world is going”.

Noting that digital payments support a stronger cash management strategy for B2B operations, Claus said, “They’ve been through a few tough economic cycles, [made] a lot of going digital during the pandemic, they’re automating workflows, and with that process, it’s an opportunity to automate and digitize payments.

Capitalizing on this opportunity is particularly important for the B2B sector, which is lagging behind the innovation seen in consumer payments, including the continued use of paper checks by many businesses.

“You see e-commerce spending just exploded,” Acosta said. “What that means is that our consumers are interacting with us digitally, and we need to understand that.”

Now it’s about capitalizing on demand and giving businesses “the opportunity to adapt and create new business models and experiences for the consumers they interact with to make it a positive experience.” “, making people want to spend time in the ecosystem, spend more and ideally use an automated recurring payment, which benefits both parties.

See also: JPMorgan: ‘Digital as a culture’ needs to be more than a talking point

Data decisions

Data is the invisible force that decides where money moves and how fast, and digital payments accompanied by data is the frictionless state that individuals or businesses dream of today.

From Acosta’s B2C perspective, “data is the most important part of the process, because once you start interacting with your consumer on a subscription-based, recurring basis, you know what their preferences, the types of things he buys.”

This opens up many opportunities for product and service recommendations and suggests new revenue streams for consumer brands, which are increasingly being served in contextual ways.

Claus said this is also happening in B2B, where “it’s contextual to media buying platforms, travel booking systems, and generally across businesses in ERPs and other e-procurement systems. This happens not only on the receiving side for the consumer, but also on the receiving side. [B2B] side where the payments are contextual. This digital workflow enables digital payments.

For B2B businesses, digital payments and the data that accompanies them can be transformative.

In imagining a B2B purchasing situation, Claus said: “There is an invoice that is issued or a purchase order. Have the payout go through there and be tied to that actual purchase situation underneath – if there were any trades, shorts, etc. – really helps automate reconciliation. It also provides a mechanism to start offering different compensation arrangements.

“It can be electronic payments, but also faster payments, sometimes for a fee.”

Businesses will pay to get paid faster, and real-time data is a necessary ingredient for this to happen at scale. As in consumer credit, automated payments create reliable revenue.

“We power a number of software vendors and their payment wallets,” Claus said. “There is an opportunity to monetize speed of payment, not just pay in 30-60 days, but do you want to get paid immediately? Faster payments promote cash flow, and it helps both parties. »

Read more: Collaborative commerce helps buyers and suppliers monetize speed

Simplicity wins

Automating payments requires the right stack and the right partners. Digital-first companies naturally have an easier time getting by than traditional operators who are catching up.

Using the example of streaming, Acosta noted that many media companies aren’t digital first.

In those cases, “they had to set up a whole new ecosystem, including web engagement, engineers, technology, investigating all these new types of payments,” Acosta said. “What does this mean for us from a risk perspective? What do we want to accept? Who do we want to engage with? »

Claus added: “More and more business flows are being digitized. There is an opportunity there.

Citing a litany of use cases ranging from in-app payments to tokenization to messaging and identity security, Claus said, “Our ability to provide value-added services to our customers to ease the pain of payments and helping to digitize and automate that is our role in this ecosystem.

The trick is to turn one-time events into return engagements, whether it’s a streaming platform or ordering supplies for a plumbing contractor. Simplicity and the removal of friction are essential for this.

“We’ve certainly seen a lot of interest from businesses to use one solution to allocate all my payments, to make it easier to manage, exchange and communicate with that solution,” Claus said.

Acosta added, “I want to integrate once and then let the bank determine how we engage with these different types of payments in the background. It’s simplicity, ease of integration, and real-time engagement all throughout the process.



On: Shoppers who have store cards use them for 87% of all eligible purchases – but that doesn’t mean retailers should start buy now, pay later (BNPL) options at checkout. The Truth About BNPL and Store Cards, a collaboration between PYMNTS and PayPal, surveys 2,161 consumers to find out why providing both BNPL and Store Cards is key to helping merchants maximize conversion.

Donald E. Patel