B2B PAYMENTS

Michael Salmony 0:12

Hello, my name is Michael Salmony and Ralf and Javier and I would like to welcome you to another episode of the Payments Trilogue, where this time we're going to look at, quite honestly, one of my hobby horses, one that I've been trying to push for years, but not nearly as eloquently as the lady who's very kindly come to join us. The topic is B2B, which I think is a topic that is often ignored by... ⁓

conferences, by papers, by regulations, by even by your organizations, Ralf and Javier, if I may say so. ⁓ So we really want to hear more about B2B. So Erin, please tell us a little bit about yourself and what B2B actually is.

Erin McCune 0:54

⁓ it's great to be here. like Michael, this is one of my favorite topics as well. I'm Erin McCune. I am a long time payments consultant. And to be perfectly honest, I've been on a bit of a crusade trying to draw the industry's attention to the relatively unsexy, unheralded exchange of value and importantly data between business counterparties.

And sometimes it's B2B trade, cross-border, sometimes it's domestic flows, ⁓ sometimes it's transactions originated by businesses, but to consumers, a lot of disbursements and payroll activity. And then of course, a lot of inter-company flows and settlement and funding transactions between the various participants in the payments value chain. So adds up to an enormous amount of money.

⁓ but continues to be less modern. Let's sort of start there. ⁓ industry forces are converging and this world is about to change dramatically and it's very, very exciting.

Javier 1:52

Okay. Okay.

⁓

Michael Salmony 2:15

Wonderful, so you're making this very unsexy topic sexy, I like that.

Erin McCune 2:19

Well, you know, someone's got to try. mean, people get excited. I mean, it's probably eight, nine times the value of retail payments. I mean, and granted. Yeah.

Michael Salmony 2:23

you

Javier 2:29

.

Michael Salmony 2:31

Well, this is the thing that kills me. know, 80

% of payments and the value is in B2B. But we always only talk about consumer. It is...

Ralf Ohlhausen 2:41

Could I just ask

Erin McCune 2:42

Yeah.

Ralf Ohlhausen 2:43

you something or throw in some figures because I asked AI on the size of the market just before and I got two answers. One was global, 1.4 trillion and the other one was 140 trillion.

Erin McCune 2:43

Yeah.

yeah, what'd get?

Ralf Ohlhausen 3:02

And so I asked back, okay, well, how come I'm getting two different figures? And so the 1.4 was the service revenues basically, and the 140 trillion was the overall volume of money moved in the business to business space. So those are the figures I was told. Are they right? Or do you have a different view?

Javier 3:11

.

Erin McCune 3:19

Okay. Okay.

Okay, so let's sort of step back. And I'm gonna be really explicit with numbers, because these are big numbers. So somewhere between 1,250 and 1,500 trillion is global wholesale money flows. And so that's sort of the anchor point. And that is some combination.

Javier 3:42

. you

Erin McCune 3:53

of capital markets, inter-company flows, inter-funding and settlement flows that support all of the activity between industry actors,

core B2B spending, which is business buyers and their suppliers. ⁓ So all of that adds up to the big number. If you look at

Javier 4:21

you

Erin McCune 4:21

Core

B2B flows globally. So I'm Coca-Cola buying sugar, so direct spend. am ⁓ my company making travel arrangements or just someone using a marketing company or whatever. Lots and lots of different purchases that occur. If you add all of that up, it's...

Javier 4:24

you

Erin McCune 4:50

depending on sort of the definitions get a little squishy, like what gets included, but that's somewhere between 125 and 150 trillion.

And of that, depending on the corridors and the type of expenditure and the size of the business and that business's industry, some proportion of that is cross-border. Somewhere between 15 to maybe 30%. However, much to the disappointment of many an investor,

Javier 5:08

you

Erin McCune 5:35

⁓ and wide-eyed entrepreneur, a lot of that cross-border is not cross-currency.

Javier 5:42

Mm-hmm. .

Michael Salmony 5:43

Okay.

Erin McCune 5:43

which affects the revenue. And I think the other really important thing

to consider here is that even though the wholesale flows are ginormous, these are monstrous numbers that are hard to get your head around, the revenue associated with them is not as rich as consumer payment revenue, which is part of why people don't pay as much attention to B2B flows.

And there's just not as much ad valorem or basis points based business model pricing in B2B. And a lot of this is commoditized bank transfers. Like the vast majority of it is commoditized bank transfers. And where it is cross border, if it's business flows,

Javier 6:14

Okay.

Erin McCune 6:37

most, not all, but most businesses are.

are pretty sophisticated about their cross-border and are moving enough money that they have a lot of negotiating leverage with their partners. And if they're really big, they've got a treasury.

Michael Salmony 6:51

But is it...

Javier 6:54

you

Michael Salmony 6:55

You're being quite positive about the corporates being quite sophisticated in that. mean, wasn't so long ago that half of the US B2B payments were via checks?

Erin McCune 7:00

⁓

⁓ we're down to about 26 % if you look at the most recent set of statistics. you know, early in my career, I was involved in commercializing image check processing. So I'm partly to blame for the fact that they've persisted and I've been trying to make up for it ever since. ⁓ Yeah, well, ⁓

Michael Salmony 7:28

because that makes things even worse, right? If you send images, that's instead of replacing it with a

proper process.

Erin McCune 7:35

Yeah, but yes and no. So I think the thing that people don't appreciate is that checks are, when we automated the back office and sort of built those workflows, checks were the dominant form of exchange of value, right? And so the original tools that we were built, sort of the workflows in SAP and the early AP workflows,

We're all built around check processing. And so you don't have to do anything exotic or different in order to process a check. And it is ridiculous that we rely on them in the United States to the extent that we do, but they are easier and better. You don't need to enroll a supplier. Everything you need to know to send them a check is on the invoice that they sent you.

You put it in the mail and yes, you have postage costs, but in terms of the information flow, it all gets taken care of for you. And if you're a large business that receives checks or even a modest sized business that receives checks, your friendly wholesale bank,

will digitize all of that to you and send it to you in an EDI formatted file that your ERP knows what to do with. So sadly, they persist because they actually work pretty well. I had the CFO of a very, very large company, Fortune 20, and I'm pitching him on, you know, oh, automating and digitizing your

Javier 8:59

Okay. Okay.

Erin McCune 9:26

processes and da, da, da, da.

And there was a young whippersnapper at the time. And this guy just looked at me and he said, Erin, I have outsourced all of my financial processes and I got teams all around the world managing this stuff and I didn't get a check for a penny. I was like, ⁓ okay. But you know, that's a six sigma operation. That's not, not your typical business, Michael, to your point. And, and

Javier 9:33

Okay. you

Michael Salmony 9:57

You'll

be saying that sending paper invoices in envelopes and then sort of... ⁓

Erin McCune 10:01

No, that I think is ridiculous.

Javier 10:01

Okay.

Erin McCune 10:05

That I think is ridiculous. and, you know, we just had a big ISO

20022 milestone, of course, over the weekend with, with Swift. And, I wrote a bit of a screed yesterday about it. ⁓ the data rich spec is wonderful. Like there's no question. It's exactly what we need. It's only as good as the information you put in.

Javier 10:15

you

Erin McCune 10:31

We got some work to do. All right, I don't want to defend checks. we talk about better things?

Javier 10:33

Mm-hmm.

Michael Salmony 10:38

On the revenues, you say that even though the volumes are actually much bigger, the actual income through B2B payments business may be lower. But isn't it true that corporates are willing to pay for payments, unlike consumers? And because of these large volumes, it's actually a rather attractive thing and lots of frictions where people can solve things. So it still is a very attractive part of the business, isn't it?

Erin McCune 10:55

⁓ Yeah.

No.

no. And there's so much value that you can bring to both the buyer and the supplier. What's interesting is that the value is less, is much less about moving the money and much more about contextualizing it and the information that surrounds a transaction and automating the workflows and engendering trust when we have

Javier 11:28

Mm hmm. Okay.

Erin McCune 11:34

new counterparties. you know, we were just, before we started recording, we were talking about GLEIF and, you know, what do I do to safeguard and understand for sure who it is that I'm doing business with and the stakeholders or

owners or beneficial owners of that organization and feeling confident that I'm not.

inadvertently participating in nefarious behavior or getting duped because there's

Javier 12:07

you

Erin McCune 12:08

such extensive, ⁓ business email compromise, identity hijacking, things like that, and fake invoices. So there's a lot of, ⁓ risk mitigation in addition to data and workflow automation, the data will also drive a lot of risk mitigation. And then of course, you know,

Most banks, they make, you they get some nice fee revenue from payments and that's all well and good, but their business is lending money. And the transactions provide an enormous amount of information that allows you to do underwriting. And I think as we sort of step back and think about this, the broad B2B and wholesale flows, look, moving the money is fine, but providing working capital.

Javier 12:41

.

Michael Salmony 12:47

Exactly.

Javier 12:49

Yeah. Okay.

Erin McCune 12:59

and providing working capital in a manner that is responsive to the circumstances of an individual transaction, a counterparty pair, a supplier's needs at a moment in time, a buyer's needs at a moment in time. That's where the real money is and the real value. Yeah.

Javier 13:09

.

Erin, will

maybe you will have to correct me. The rule of thought I follow is that in terms of income, the income in payments is split half and half in between retail and businesses. More or less it depends on the jurisdiction, but it is more or less 50%. So, but I wouldn't

I agree with Michael saying that corporates are willing to pay for even for value added. They are as willing as anybody else. So not certainly not ⁓ a lot. But what I see is that there is a bias towards corporates because authorities and regulators blindly think that if they can't disguise income to corporates, the public, the citizens will not feel that, will not have to finally pay.

Erin McCune 13:50

No.

Yeah.

Javier 14:11

It's the citizen who pays everything. But if it's disguised in a corporate payment, well, or the merchant paying, well, the merchant will include ⁓ that cost in the price, of course. So it's more a political bias introduced in how income is generated in the payments industry. But my question or my mistake is, because I very much agree with you, that people tend to mistake retail and business and

And we may be focusing too much in retail because it's what politically can have a ⁓ loud speaker. But when coming to business, what I see is that it is the big guys, the ones that dictate. And if there is a bias or ⁓ something in the businesses, it is that the big guys, they have the means to negotiate with the providers and they can push costs.

to the smaller actors. And those are the ones who really pay the bill. The ones that cannot negotiate, cannot, they don't have even a voice, they cannot produce. But they are the ones that probably all in all have more transactions, move more value, but they are the ones that have less voice in the payments industry in that regard. And I was just curious about your view on this. Is that right? It is that businesses, the big guys,

Erin McCune 15:35

Yes. Yes. Yes.

Javier 15:38

having a big time and the rest just supporting the others.

Erin McCune 15:43

That's true in both retail and B2B. If you're a large enterprise, ⁓ in your retail transactions, I mean, there's a lot of hue and cry about merchants and all this, but the largest merchants, they're negotiating directly with the networks. They're off the interchange tables. ⁓ Similarly, ⁓ if you're negotiating for anything with a payment provider,

volume means you have much, much cheaper pricing ⁓ and everyone else, those smaller businesses pay the freight. ⁓ That also plays out in the dynamics in B2B between buyers and suppliers. So where we do have penetration of cards in B2B, and granted what happens in Europe is different than what happens in the United States, we are

far more card centric. Although the notion and the phenomena of using cards for B2B and shifting from cards in a T&E expense management context where it's very consumer like and makes a ton of sense and where there is more risk mitigation and the enthusiasm for paying for invoice transactions with a card that

That is a global phenomenon, but it's disproportionate in the United States. When we see that happening, it really is limited to those circumstances where the buyer has outsized power over the supplier. And where we've seen the suppliers sort of up in arms about it, and particularly larger suppliers, just like, look, this is enough.

like card issuances move down markets, not just my biggest customers, it's all my customers or many more of my customers want to pay in this manner. ⁓ The AP providers are very, very aggressive to push it. ⁓ And so as it becomes sort of a groundswell, the suppliers will sort of put up their arms. We have instances where there is then bespoke negotiation and we get

the buyer will accept a smaller rebate and the supplier will pay less for those transactions. They may get better data associated with those transactions.

Javier 18:19

.

Erin McCune 18:21

Ideally, they may get paid sooner. That would be good too. ⁓ And then we also are seeing the rise, and this is more a US phenomena than a European phenomena, but this notion of premium ACH or ACH plus, which is

Javier 18:21

.

Erin McCune 18:37

basically an artificial synthetic construct on top of plain vanilla bank transfers where the pricing has been negotiated and it is less than card, but considerably more than a vanilla bank transfer. ⁓ And you'll see situations where the data delivery is

Javier 18:58

you

Erin McCune 19:07

artificially made worse for the plain vanilla in order to incent the supplier to accept a transaction that's 100, 150 basis points as opposed to 250, 300, 350.

Javier 19:23

Yeah.

Michael Salmony 19:23

Just understand what's what's

Erin McCune 19:24

So B2B economics, but yes, the power dynamic

Ralf Ohlhausen 19:24

K-k-k-k-k-

Erin McCune 19:28

absolutely exists. And this is fundamental.

Michael Salmony 19:31

But just to understand that,

what Javier was asking, because I think that's, he rightly corrected that the large enterprises of course don't pay much, right, because they have special negotiation. But 80 % of the market is typically SMEs, right, and those are the ones that pay. So not only is there a lack of focus on B2B, even within B2B, there's a lack of focus on the SMEs, right?

Erin McCune 19:35

Yeah.

Yes. Yes.

Yeah. Oh,

Javier 19:54

Exactly,

exactly. That was my point.

Erin McCune 19:55

and there's a profound lack of focus on the supplier side. Basically suppliers, I mean, I don't know, to be indelicate, they're screwed. Right? Like it is incredibly painful. And the irony is that as we, suppliers pay the most, pay for the, I mean, all businesses,

Michael Salmony 20:08

Yeah.

Erin McCune 20:22

paid to make payments and get paid. They have to pay both sides. That's sort of the way it works. the suppliers get the short end of the stick on the value proposition, but they have more expense associated with these transactions. And that's part of my crusade is, look, let's balance this out. Let's do a better job of

offering true value to a supplier.

Michael Salmony 20:52

So

why don't the fintechs develop solutions for these suppliers, for these SMEs? Why doesn't customer payments at the point of sale, why not do something for this huge market?

Erin McCune 20:56

So they have, yeah. Yeah,

so they're working on it. And you do see, ⁓ I was just, spoke at a conference a couple of weeks ago in London and I was there with a very, very merchant acquiring centric audience to say, all right, can we talk about your customers as you move into more and more

Javier 21:23

Okay.

Erin McCune 21:26

invoiced recurring transactions, many of your merchants are also selling to businesses. So

Javier 21:34

Okay.

Erin McCune 21:35

let's talk about what that looks like and how you can foster better connectivity from the acquiring side into the procurement AP departments. Some subset of those transactions, the buyer, even if it's a business buyer, will

purchase in a consumer modality. They'll just click on a pay now link and pay it. That's maybe 15%. The 85 % of it is going to be paid in a traditional procurement AP driven B2B modality where

a function within the, a person, if it's a small business, their job is to pay all the invoices and they're going to review them and see if it's okay and schedule their payments. And that is not going to get paid in a consumer like traditional acquiring mode. It's the buyer who's going to originate the transaction. And so making that clear and then helping that audience understand that in many cases, the

Javier 22:38

Okay.

you

Erin McCune 22:47

buyer side of the AP of the B2B value chain is more than willing to entertain a discount to accelerate funds availability to a supplier. They want to pay with a card. will, they want help to

drive acceptance of card where businesses are willing to do that. This whole sort of premium construct around ACH.

and the need to deliver the information to the supplier in a manner that the supplier can, it's machine readable and postable, that there's an enormous opportunity

Javier 23:23

Okay. you

Erin McCune 23:29

for the supplier side and the acquiring side to work collaboratively with the buyer vendors in order to bridge the information and allow more agency.

on behalf of the supplier to say, actually, I will take a discount for this because I do need the cash flow, or I would prefer this information in a manner that is machine readable so I don't have to log into your supplier

Javier 23:52

Okay.

Erin McCune 23:59

portal or the portal that the buyer's side introduces. So there's a lot of more attention to suppliers in the last few years than I've seen in a long time.

and it's very encouraging. We still have a long ways to go. But I see much less

I mean, I think we're getting to the point where we're moving toward genuine interoperability between the buyer and the supplier side and a recognition that these sort of walled gardens of B2B networks aren't going to work. We're to have many B2B networks and they have to connect to one another. We're getting there. So it is generally better. Interestingly, and Michael knows this, I am...

Javier 24:53

you

Erin McCune 24:55

I had a stablecoin rethink summer. sort of felt that I needed to check my knee jerk.

Javier 24:59

but but but but but

Erin McCune 25:09

reaction to sort of the whole crypto world and really

consider in a sort of disciplined, fulsome manner how not just stable coins, programmable money writ large. So tokenized bank deposits, CBDCs and the geographies where that's going to be important, all like three of them. ⁓

Javier 25:21

you

Ralf Ohlhausen 25:36

Well, if I could, ⁓ you guessed my next question here because ⁓ I think if you don't mind, let me just try to dig a bit deeper there into this digital transformation, which I think it is going a bit slower than on the retail side. And we actually had Tony McLaughlin here who explained to us that, well, stable coins are actually travel checks in disguise.

Erin McCune 25:36

And this is where things get interesting.

yes!

⁓ Tony.

Yeah.

Ralf Ohlhausen 26:05

So

it sounds a bit like in the US you are replacing old checks with new checks. And what's your view on that?

Michael Salmony 26:10

question.

Erin McCune 26:12

⁓

Javier 26:15

Yeah.

Erin McCune 26:15

Tony's got a good shtick.

⁓ I know Tony and I like Tony.

Okay, let's step back. in the context that we, the conversation we've just had, we've talked a lot about the value of the data. We've talked about sort of workflow driven payment automation writ large. And we've talked about

working capital and sort of both sides of the equation, whether it's the buyer or the supplier, wanting at any given point an opportunity to

avail themselves of working capital. But the way that we do that today tends to be cumbersome.

Javier 27:14

Okay.

Erin McCune 27:15

So given all of those sort of observations,

the realization I had during my stablecoin rethink, whatever, which was broader than stable coins to be perfectly candid, ⁓ B2B, if there's any use case that really matters where programmatic money movement will be profound, it's B2B.

This is the best use case for programmatic money movement. And all of the logic that is going to determine those smart contracts, that is going to govern the release of funds, that's going to set the constraints or the preconditions for the funds movement is absolutely

Javier 27:51

you

Erin McCune 28:15

dependent and predicated on information that is in the back office. And that is what has got me very excited because in order, because of the bank FOMO about stable coins, because of the fundamental rethink that's going on in terms of interbank liquidity management and wholesale money movement.

Javier 28:41

Okay.

Erin McCune 28:46

the early forays of enterprises experimenting with some

of these tools themselves. And then finally, the whole FinTech ecosystem building.

their own bespoke infrastructure based on these new capabilities. We're going to be able, if assuming that it is infused and that it's interoperable with one another, TradFi has to remain interoperable with the new stuff because think about the many to many and B2B, right? That buyer and supplier are making independent.

Javier 29:14

you

Michael Salmony 29:29

That's what Tony's working

on, right?

Erin McCune 29:31

Yeah, and they're all making independent choices about their banks, their software providers, and all of that stuff has to interconnect. And I look at this world and I think, ⁓ that programmatic logic is incredibly valuable if we can solve the interoperability, which would then allow a representative of the supplier to provide to the supplier the level of agency

Javier 29:33

Mm-hmm.

Okay.

Erin McCune 30:01

at the transaction level to determine

the attributes of a transaction and to use the information in a manner assuming there's probably going to have to be decoupling of the tokens that represent the value and the tokens that represent the information, particularly as we're trying to move cross-chain. ⁓ And there's some early forays of how that might work and what that might look like.

But I think this is a profound opportunity and yes, it's going to take a long time, but you know, between this, it's between the programmatic money renaissance, guess, for lack to be ridiculous. ⁓ and then. Agentic and AI and the large language models ability to deal with all the unstructured data. Cause let's be honest, all the data in this world is.

Javier 30:33

Mm-hmm.

you

Erin McCune 31:00

The unstructured data is the problem in B2B. That is our problem. If it was structured, we'd be in great shape. We would have automated all of this forever ago, but we haven't because it is unstructured. So, I mean, I can't retire, but it's going to take the rest of my, well, certainly the rest of my career, but possibly the rest of my life.

Javier 31:14

So every.

I have a question connected to your last comments, which is based on another impression I have that the worst overlook on business payments comes from the regulators, because they are too focused on individuals. They identify them as voters and they want to do rules to please or to appease individuals. But they are missing the needs of the businesses. And I will give some examples. For instance, at least in Europe,

Erin McCune 31:27

Yeah! Yeah!

Javier 31:55

when enacting instant payments regulation, they were just thinking of the individuals and an occasional instant payment has nothing to do with the need of processing, I don't know, tens of thousands of transactions instantly. And nobody thought of the real needs of that happening. don't know, providers, paying payrolls or whatever. That was missed. VOP.

verification of the has nothing to do in between the retail and the business world. And regulation was designed thinking of the individual, but then who's thinking of the businesses and coming to programming and cryptocurrencies and stable coins here as well, at least in Europe. When you talk about it, it's CBDC retail CBDC. That's the only only topic we discussed. And we are

Erin McCune 32:26

I know.

I know.

Javier 32:51

forgetting about the needs of business. So my question is, how can we better educate regulators not to forget businesses and their needs?

Erin McCune 33:02

This is my life's work, Javier. I show up at these conferences, I pigeonhole them, I talk to them privately. I'm like, look, great, okay, good job. Now we have all this real-time payments infrastructure.

Javier 33:04

You

Michael Salmony 33:05

Thank

Erin McCune 33:22

So you think it's going to be used for B2B. Okay. So how are we going to address these transactions? If I have the bank account credentials for my counterparty, I'm going to debit them or I'm going to push them money. like, like I can do that today. And why, when most of my transactions are scheduled, do I need real time? Now I think there is some fallacy there. think real time. Well,

I'm not interested in real time necessarily. It gives us some flexibility in terms of paying at the last minute. I get into these ridiculous conversations with, in the United States about, well, I like my check vote. I'm like, why didn't you pay your invoice at the last possible minute? You could do that. ⁓ That's an aside. But I think that I agree with you. And I find it incredibly maddening, particularly when you consider

the economic consequences of streamlining and driving efficiency in B2B and the ability to provide profound working capital benefits to

Javier 34:35

Mm hmm.

Erin McCune 34:37

smaller businesses, which are the lifeblood of most economies. They are responsible for an enormous amount of employment and local revitalization.

Yeah, I'm on this crusade with you. Let's do it together. It's gonna take some time.

Javier 34:55

Okay. ⁓

Michael Salmony 34:55

Let's just be a bit contrary at that

point. There are some businesses I talk to who say, thank God the regulator is ignoring us. We can actually do the things we

Erin McCune 35:03

Well, I'm glad

Javier 35:04

Ha

ha ha!

Erin McCune 35:05

to.

You know, I think once again, we need to bifurcate our observations about large enterprises and smaller businesses. I've had the pleasure of doing a lot of work related to sort of financial inclusion adjacent. ⁓ When I was at Glenbrook, a lot of my colleagues did a lot of that work.

Javier 35:32

Mm-hmm.

Erin McCune 35:37

from a retail and a consumer perspective, but I would get pulled in when we were thinking about micro businesses and small businesses and formalizing ⁓ sort of the smallest businesses in an economy. And I think that's all really important.

All of those big businesses do a lot of business with smaller businesses and they can get their large counterparties to exchange EDI files with them. I mean, we did that back in the seventies and the eighties. Like I did that in the early part of my career. ⁓ but the long tail, that's where all the friction is. So there's actually mutual benefit. If as an industry back to my

haranguing the merchant acquirers. ⁓ There's incredible benefit in bringing together the constituents in the industry that represent smaller businesses and the constituents that represent the larger ones and tying, knitting this together in order to exchange the information that allows the agency

Javier 36:28

Okay.

Erin McCune 36:48

and the ability for the small business to avail themselves of working capital when they need it.

and not get abused as aggressively by their providers and their counterparties.

Javier 36:57

Okay.

Michael Salmony 37:05

Okay, we're gradually coming towards the end of our time slot, but

I would quite like to pose a question to Ralf and to Javier, about what you said, because we've identified here very clearly that B2B is an enormous topic, and within B2B, the SMEs are an enormous topic. And I haven't really had a good answer why the banks and the fintechs are not addressing this. I mean, I am an SME, and the service I get from my bank is miserable.

Erin McCune 37:30

Mmm.

Michael Salmony 37:34

I have nothing about billing, about ⁓ invoicing, about ⁓ if I were to need capital. know, is absolutely, know, Deutsche Bank, of course, does wonderful things for Daimler-Benz, right? That's not the problem. But for the SMEs, I get very poor service from banks and from fintechs. Am I wrong? Or do you, or how would you see that?

Have you?

Ralf Ohlhausen 38:02

Well, I should

Javier 38:02

Yeah.

Ralf Ohlhausen 38:04

ask from my perspective, one of the biggest problems we have from open banking is the ⁓ great resistance on the bank side to basically protect their corporate customers and their corporate business. So whilst we struggle a lot on the retail side, we struggle a lot more on the corporate side.

So this is where banks are much more even more defensive and where they are playing basically with the tools they have with the APIs, are their direct customer APIs being much better than what they offer to third party providers. There is ⁓ tools like EBICS and questionable requirements around SCA. ⁓

Javier 38:37

. .

Ralf Ohlhausen 38:56

not being there and while we are loaded with SCA not once but twice you know

oftentimes so I think it is ⁓ really really made very difficult by banks for anyone else to get into that space.

Javier 39:12

Well, in my view, I think the SMEs segment is a competitive one. I think there are many ⁓ providers which are struggling and they are really thinking on how to serve better those customers. Now SMEs, I think they fundamentally have a problem, which is that they...

bring the nuisance of ⁓ maybe ⁓ an individual without the income of a corporate. So many times they bring the problem without bringing any benefit to a payment provider, maybe. But overall, I would say that more and more I see ⁓ banks striving to better serve those customers and that they are perceiving and that they are learning.

that they can become a very profitable segment in their wallet. But of course, probably here as well is that when you talk about SMEs, there are medias of SMEs and each one is different. So trying to get a common understanding of SMEs, think it's hopeless. I ⁓ think we should focus on more specific, more targeted segments.

But I don't see that they are not well served. At least in Europe, see that many banks are specializing in serving those kinds of customers.

Michael Salmony 40:38

I mean, there are plenty of surveys where you ask the banks how well are they serving SMEs and they will say we're serving them very well. But if you ask the SMEs how well are they being served by banks, you get a slightly different response, right?

Javier 40:51

Yeah,

but probably, probably SMEs, yeah, probably SMEs have the same opinion on any service they get, which is, which is very legitimate, which is very legitimate.

Michael Salmony 40:57

That's moving family, that's right.

Erin McCune 40:57

you

And there are plenty of options. An SME does not have to bank with a bank that's serving them badly. There's all kinds of offerings for them. I would observe that regardless of the size of the business and the sophistication of the bank, data files and integration capabilities,

B2B should be embedded in the workflow of the business, whether the business is using an ERP or an accounting platform, whether they're using an industry vertical specific software platform that allows them to affect payments as well as handle their CRM and all the other things they need to do. ⁓ Or whether they're using

an office of the CFO solution that is buyer-centric or supplier-centric. All of the transactional rich context is in those workflows. It is not something that the bank can do. The bank is going to move money and they're going to lend money. But none of us

large or small enterprise wants a back office workflow solution from our bank. And like, let's be really clear about how that's going to work. And that's why the agentic and the programmatic stuff is so interesting.

Michael Salmony 42:36

Yeah, I mean, I'm not expecting a decent...

Javier 42:41

Mm-hmm.

Michael Salmony 42:42

I mean, I'm not expecting an ERP solution from my bank, but I mean, if I look at Revolut, for example, I mean, they are just brilliant for their business customers. They do finance, they do FX, they do billing, they do invoicing, they do cash management. And I'm not seeing that in my normal bank, right? So I think there is a percentage. Yeah. Okay. I think it's time to wrap things up. Exactly. That's the point I'm trying to make. I have firsthand experience of this. Absolutely.

Erin McCune 42:49

Yeah, so use them.

Yeah, yeah, yeah. So you should be banking with Revolut.

Javier 43:02

Thank

Erin McCune 43:04

Sorry. You're in a small business!

Yeah, yeah, yeah.

Michael Salmony 43:11

Yeah. Yeah.

Erin McCune 43:12

If it makes you feel any better, my giant bank is terrible too.

Javier 43:16

Yeah.

Michael Salmony 43:19

Okay, Erin, it's been wonderful. You've been incredible. Thank you so much. I mean, it's been interesting to see the various differences. mean, the US has made this amazing transition to only 50 % B2B checks and now to 25 % checks. But you also have still a lot of cards going on, which I think is, as you said, is very good.

Erin McCune 43:20

even though I know who to call.

This was really fun. Thank you.

Yeah, of course.

Michael Salmony 43:43

But I think you made a lot of very good points that we can completely relate to. So thank you very much, Erin, for your time and as always being very capturing on this ⁓ very prickly subject. So I think you've really made the unsexy sexy. Thank you so much.

Javier 43:59

Yeah,

thank you very much. It was a huge pleasure, Erin.

Erin McCune 44:02

⁓ the pleasure's all mine. I thank all three of you. Thanks for having me and thanks for the robust, sophisticated conversation. I enjoyed it.

Ralf Ohlhausen 44:05

Thank you.

Michael Salmony 44:08

Thank you.

Javier 44:12

You

Michael Salmony 44:13

I hope you didn't mind that we challenged the odd thing. I think that's always more fun. ⁓

Erin McCune 44:17

no! I want to be

challenged. I'm tired of what I think.

Michael Salmony 44:21

Okay, I think it's time to sign off. So Ralf, Javier, and particularly Erin, thank you so much for this lovely dialogue and thanks to all for watching and look forward to seeing you next time.

Javier 44:21

Hahaha.