First our salary is direct deposited, then we pull out our smartphone to pay bills. Who still writes a check?
But while electronic payments have largely taken over among consumers, those pieces of paper still hold their own when it comes to business-to-business (B2B) payments.
Strange as that might seem in 2019 there are valid reasons. B2B involves a lot more than “give me your bank account and routing numbers and we’re set.” Company A has this way of billing and receiving payments while Company B uses another system. And don’t even ask about Company C. Each company may be listed in a different directory and, of course, none of the directories talked to each other.
You know what? Just send a check.
One of Nacha’s priorities has been to solve the challenges hampering B2B electronic payment and remittance adoption. Nacha has a unique advantage in that we bring together three things: a broad set of financial industry stakeholders, cutting edge technology, and standardization.
By no means did we go it alone. While Nacha is guiding and leading, we’re also listening and responding. The best way to solve industry problems is collectively, not individually. That means an abundance of outreach—seeking out the many interested parties about their wants, needs and concerns. After all, when it comes to a payables and receivables department, the behemoth internet provider is different than the neighborhood caterer.
The result is what we call The Corporate Experience.
Company A will easily be able to electronically pay and send needed information to not only Company B and Company C, but also Companies D-Z. Each will still use its own system, only now those systems will be interoperable.
The bedrock of what we’ve developed is the Business Payments Federated Directory. It’s built on blockchain, but you don’t need a degree from MIT to use it. In fact, while it maintains the highest levels of security, we designed it to be easy to use, whether you’re a mom and pop shop or a multinational. That way, a business can focus on what it does best, not on making and receiving payments.
Now, one directory will be able to talk to many others. Buyers can safely look up a vendor and request the information they need, including payment preferences, remittance information desires, account numbers and contacts. The Directory leverages Afinis Interoperability Standards APIs to make this an immediate and seamless experience. And because the directory is federated, it means that the information is more secure because information isn’t kept all in one place.
And let’s be clear: This isn’t a Google search. Vendors can selectively share their information by approving or denying access requests.
In fact, it cannot be stressed enough that security is paramount with the Directory, just as it is for the ACH Network, although the Directory is open to all types of payments within the ecosystem. Reduced payments costs and greater efficiency do not come at the expense of security.
Another part of The Corporate Experience is the Remittance Validator. It facilitates straight through processing by ensuring that vendors get all the remittance details they want, in the format they want, so that everything is hassle-free. And vendors can ask for as many details as they like, because this builds on a longtime ACH Network strength: the ability to move large amounts of information with a payment.
The Corporate Experience will hopefully mean businesses can send their checkbooks the way of switchboards and mimeographs.