Payments players eye digital B2B opportunity

Cash advance startup Pipe said this week that it has teamed up with the British payments company GoCardless, again, to offer services in the United Kingdom in a revival of its first move outside the U.S. market.

Pipe’s latest tie to GoCardless is currently hosted by Pipe, but will be embedded in GoCardless’ services starting next year, the two firms said in a Tuesday press release. Pipe is also gearing up to launch services in Canada and Australia, the company’s CEO, Luke Voiles, said in an interview last week.

The U.K. launch spooling up next year follows on a pilot program between the two companies earlier this year, and also in 2022, in both cases seeking to attract merchant customers to cash advance and payments services. Pipe, founded in 2019, was previously in the U.K. market with an earlier version of its service from late 2021 to early 2023, a spokesperson for the company said.

Miami-based Pipe, which has raised $316 million and has about 100 employees, turned to GoCardless in the latest partnership following the appointment of Voiles as CEO in February. He brings Pipe his experience working with merchants at the software company Intuit, where he led the Quickbooks capital unit, and for the payments firm Square’s banking unit.

Voiles aims to create a funding service that will have particular appeal to micro small businesses that can’t get traditional lending from banks because of their low credit scores. Pipe is targeting businesses with between $100,000 and $1 million in annual revenue, he said.

“There is enormous demand from micro merchants,” Voiles said. “The banks just don't serve those populations.”

The company doesn’t consider itself a lender, and it doesn’t charge interest, so it doesn’t have to abide by U.S. lending laws, but it does adhere to anti-money laundering and know-your-customer laws, the CEO said. Instead of interest, Pipe charges fees for its funding and therefore must abide by state regulations that require disclosure of the equivalent of annual percentage rates regarding fees charged, he added.

Despite Pipe APRs reaching into the low 40-percent range for some higher risk businesses, Voiles expects the company’s embedded funding services to attract small business owners who may have received startup funding from friends and family and are seeking more capital to grow.

The owners automatically pay back the Pipe advance when they’re making a profit, though they may sink deeper into debt if they’re receiving advances and not making payments. Ultimately, if the business fails, they’re not required to pay Pipe back because the advances weren’t a loan.

Voiles says Pipe is satisfying businesses’ unmet need for capital, and only charging them when they’re making money. “We just wait until the customer processes enough money to actually pay us back, plus a fee over time,” Voiles explained. “If they pay back slowly, or their business is slower, they have a benefit because the annual cost goes down,” he said. “If they pay back faster, we actually cap the fee” to keep APRs, on average, in the low 20-percent range, he said.

An example of a typical Pipe client is a nail salon owner that can access the company’s cash advances digitally in three clicks, Voiles said. “It's usually a female immigrant, no FICO score, business owner,” he explained. “We're able to give that business owner a pre-approved offer and product that she's 98% likely to actually be approved on if she clicks on it, and she's never had access to the financial system before.”

Voiles said he’s not worried about regulators trying to hem in Pipe’s services because there are no legal caps on interest rates for businesses, and the standard APR for consumers on their credit cards range as high as 36%.

“There's a whisper number of 36 [percent] on the consumer side that a lot of folks like to try to stick to, but on the small business side, there is no equivalent,” Voiles said. While he acknowledged there may be a “negative connotation” about APRs that reach into the low 40-percent range, there isn’t an prohibition on such fees. 

Voiles has been reassured by conversions he’s had with Consumer Financial Protection Bureau Director Rohit Chopra and another official at that federal agency about Pipe’s services, which are considered a small business product, the CEO said.

“Some folks don't think it's okay to go that high,” he explained, referencing APRs of 36 percent, and higher. “Many folks do think it's okay to go that high. The regulators don't actually have a straight opinion on this, because there's no actual cap on these APRs.”

Voiles said he sees the Pipe advances as a benefit for small businesses that might not otherwise have access to capital, and ultimately, it’s up to them to manage their funding sources. “Businesses are supposed to be more sophisticated and can handle taking capital,” he said.

Fiserv will have more wherewithal to undercut competitors on price after the payments processing giant obtained a special bank charter in Georgia earlier this month, consultants who follow the payments industry say.

Milwaukee-based Fiserv currently partners with banks to process credit and debit card transactions for merchants. The Georgia Department of Banking and Finance announced on Oct. 4 that it was giving the payments company a merchant acquirer limited purpose bank (MALPB) charter on a conditional basis, allowing it to process those transactions without a partner bank.

Fiserv now “owns the entire transaction,” said Tony DeSanctis, a senior director of payments for the consulting firm Cornerstone Advisors.

Fiserv disclosed that it had applied for the charter in January.

While company executives have pledged to continue to work with banks, consultants like DeSanctis think the payments processor will go it alone with some of its new customers.

Banks charge fees when processing transactions for firms like Fiserv, which means the charter will save the processor money, DeSanctis said.

“This gives them a competitive advantage [over other payment processing companies] from a pricing perspective,” he said.

Specifically, the charter will help Fiserv compete with large payment companies like Worldpay and Adyen that offer discounted or negotiable prices, DeSanctis said. “Square, Stripe and the small merchant processors tend to charge rack rates and are less likely to compete on price.”

Payments companies lobbied for the creation of Georgia’s banking charter, hoping to simplify credit and debit card transactions, said James Stevens, co-leader of the financial services industry group at the law firm Troutman Pepper.

However, Fiserv is only the second company to receive such a charter since it was first offered in 2012. The first, an Israeli business once known as Credorax and later called Finaro before being acquired by Shift4 in 2023, was unable to use it because credit card networks refused to work with the firm, Stevens said.

An established company like Fiserv applying for Georgia’s banking charter may signal that the card networks have come around, said Michele Alt, a partner at the financial advisory firm the Klaros Group.

“Seeing that Fiserv has applied made me think they have been able to overcome reservations from the card networks,” she said.

Spokespeople for Visa, Discover and American Express did not respond to requests for comment, but Mastercard may be open to the idea. “We are currently reviewing the proposed charter and its implications,” a spokesperson for Mastercard said in an Oct. 3 email. “We have not yet made a decision regarding the potential approval of such entities within our network.”

Fiserv has two options: It can keep the money it saves by working with new clients without a partner bank, or use those savings to lower prices and attract more customers, DeSanctis said.

“If you’re trying to compete for Walmart’s business, or Amazon’s business, and you can give [those merchants] another penny off processing costs, then [Fiserv] could win more business as a result,” he said.

Fiserv already has the capacity to offer lower prices than competing payment processors because it has so many customers and can lean on economies of scale, DeSanctis said.The special charter will help the company grow even bigger, he said.

“Fiserv may be able to pass the savings achieved through its MALPB charter to its customers,” Alt said.

Although she noted that the firm must pay fees to the Georgia Department of Banking and Finance for the charter. Those fees include a $50,000 application fee, plus $15,000 in annual supervisory and registration fees, according to the department’s spokesperson, Bo Fears.

Fiserv’s savings will need to surpass those annual costs before it can afford to lower its prices, Alt said.

Fiserv can lower prices “in theory, because there is one less party in the value chain,” he said. However, the reality is a bit more complicated, he stressed.

“A lot goes into pricing and banks offering these services provide valuable related products and services so it is hard to say whether this pricing really can be less,” Stevens said.

A Fiserv spokesperson did not respond to a message seeking comment.

Fiserv’s CEO said the company did not plan on using the charter to compete with big bank partners, but would pitch it to the company’s smaller bank clients.

“This ultimately supports our smaller banks who do not have sponsorship,” Fiserv CEO Frank Bisignano asserted during a February earnings call with analysts.

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As businesses brace for another year of financial turbulence driven by interest fluctuations, supply chain strains, and geopolitical challenges, the role of the CFO has become increasingly crucial. Today’s CFOs are strategic drivers of innovation and stability, navigating their companies through uncharted waters. Central to this journey is the transformation of B2B payments, an area ripe with the potential to fortify financial agility, optimize cash flow, and build trust with partners.

In 2025, B2B payments are not just about efficiency—they’re about harnessing technology for growth and transforming finance functions. Here’s the roadmap.

Digital Transformation and Cloud-Based Payment Solutions

In recent years, CFOs have witnessed the power of digital transformation to reimagine financial processes, and B2B payments are no exception. By adopting cloud-based payment solutions, companies break down silos and accelerate payment cycles, enabling seamless transactions and improving cash flow visibility. This shift allows finance teams to move away from legacy systems to dynamic, scalable platforms that adapt to business needs and provide real-time data access.

Consider a finance team burdened by manual bottlenecks. With cloud-based solutions, they process payments faster, reduce errors, and enable easy data access from anywhere, supporting continuity and scalability. By embracing digital transformation in B2B payments, CFOs optimize efficiency and build resilience in times of change.

Automation and AI: The Financial Team’s Secret Weapons

With the rise of artificial intelligence and automation, finance teams are freed from routine, time-consuming tasks. Automation reduces invoicing and reconciliation errors, freeing finance teams to focus on strategic objectives. By deploying AI tools, finance leaders gain real-time insights into payment behaviors, identifying patterns that can preempt cash flow challenges.

For example, AI-powered forecasting can analyze customer payment patterns and external factors to predict cash shortages or surpluses, empowering CFOs to make proactive decisions like adjusting payment terms or securing financing before issues arise.

Blockchain: Reinventing Trust in B2B Transactions

Blockchain is more than a buzzword; it’s a game-changer for secure, transparent transactions. In an era where trust is paramount, blockchain enables an immutable ledger of each transaction, bringing a new level of accountability and transparency to B2B payments. CFOs leveraging blockchain aren’t just protecting their firms against fraud—they’re setting a standard for reliability that resonates across business ecosystems.

For a business with global supplier networks, blockchain eliminates the hurdles of traditional cross-border payments–high fees and delays–allowing for faster, cost-effective transactions.

Cash Flow as the Compass in Stormy Seas

In today’s high-interest climate, cash flow is a company’s lifeline, enabling growth and resilience without costly financing. A critical tactic in cash flow management is to incentivize profitable payer behavior. By encouraging customers to use low-cost or fee-free payment options, CFOs can accelerate cash inflows and reduce transaction expenses. This approach reduces transaction fees, boosts the bottom line, and speeds up cash receipt.

By optimizing receivables timing and choosing efficient payment rails, CFOs can create a strategic cash buffer, strengthening financial resilience in uncertain times.

Financial Agility: A Business Imperative

2024 taught CFOs one lesson: the value of efficiency. As we enter 2025, agility has become the cornerstone of financial resilience and growth. Today, companies thrive because they pivot quickly in response to market changes. Agility isn’t just a mindset; it’s supported by real-time data and robust tools that allow finance leaders to make rapid, informed decisions.

Agility is about adaptability. CFOs with agile finance operations can respond faster to economic or industry shifts, repositioning their organizations as challenges or opportunities arise.

The Path Forward

As CFOs chart their course through 2025, transforming B2B payments is essential. Leveraging digital tools, embracing blockchain, optimizing cash flow, and fostering financial agility are critical steps for finance leaders. This roadmap empowers CFOs to transform payment processes into strategic assets that fuel growth, resilience, and stability.

Brex, the expense management fintech, has launched an embedded payments tool to chase the potential the company sees with partnerships, expanding its reach beyond direct sales.

“This fundamentally opens up a big way of going to market through these other partners versus only selling directly,” Karandeep Anand, Brex’s chief product officer and president, told Banking Dive. "It opens up a massive time and opportunity for us" to capture a larger slice of the $1.5 trillion business-to-business payment pie.

The new Brex application programming interface-driven tool combines providers using various integrations, including Mastercard’s virtual card platform, which allows software vendors to integrate Brex’s corporate card and payments capabilities into their platform without taking on underwriting, onboarding, and credit risk, the company announced Wednesday.

The tool, called Brex Embedded, enables software vendors to embed Brex virtual cards with higher limits, competitive rewards, local currency payments in some 50 countries, and quick customer onboarding, the company said.

The fintech launched the tool broadly Wednesday, but it’s already in use by clients like Sabre, Coupa, DoorDash, Boomi, and ScaleAI.

Sherri Haymond, co-president of global partnerships at Mastercard, noted how large enterprises have transformed businesses in the digital landscape and the need to offer innovative solutions. 

The new Brex tool “puts corporations in control with a simple, safe and easy way to manage connected payments experiences,” Haymond said in a statement Wednesday.

The test programs the fintech ran with Coupa and Sabre materially shaped what the embedded tool needed to look like, according to Anand. 

Though the current solution is based on customer feedback, there’s an opportunity for the company to build out the tool, he added.

Issuing credit cards using an API is the easy part, Anand said.

“The hard part about building a fintech is, how do you do risk? How do you do credit modeling?” Anand said. “While we own credit card offering, we own expanding software, we also want to power hundreds and thousands of other businesses which want to embed payments into their product.”

Founded in 2017, Brex, the brainchild of immigrants, has built the corporate credit card for startups, he said. As startups like DoorDash grew, Brex created a software stack to orchestrate a growing company’s expense management, travel, accounts payable and procurement in addition to payment methods.

A ‘hardened’ platform

“When you're touching somebody's money, you are in a trust game,” Anand said. 

Having a global payments footprint has “hardened” the stack of payment solutions through the number of licenses, approvals, and checks the platform required, he noted.

“We co-create and harden with early adopters,” Anand said. “So, by the time it goes on, it is compliance-hardened, regulatory-hardened, and enterprise-grade before it gets opened up.” 

As Brex readies to become a public company — the timing depends on market condition — investments in compliance and regulatory policies become more critical, he said. 

Three-way win

Brex customers that used to be non-digital required weeks and months to get their workflow payments done, Anand said. A faster process improves user experience, he noted.

And for software partners, offering the embedded tool can attract more customers and create increased revenue through payments processing share, Anand said. Meanwhile, those vendors avoid the costs of building in-house risk solutions for know-your-customer and fraud checks.

“This is a unique offering in the sense it's not even win-win, it's a three-way, win-win-win across the customer, Brex and the partner,” Anand said. 

Citing entrepreneurs' growing desire to get small-business tools from a one-stop shop, U.S. Bank is counting on its ability to provide both merchant acquiring and banking services to stand out in a highly competitive market.

The Minneapolis-based lender, which owns merchant acquiring unit Elavon, faces no shortage of rivals in serving small-business owners. JPMorgan Chase is the biggest merchant acquirer, and Bank of America and Wells Fargo have stakes in the market, too.

A number of financial technology providers, including Shopify, Stripe, PayPal, Block-owned Square and Fiserv, with its Clover unit, are also angling to serve that segment of merchants. 

The ability to tap both banking and payment services through U.S. Bank resonates with small-business owners, and the bank aims to stay “very competitive” from a pricing perspective, Shruti Patel, U.S. Bank’s chief product officer for business banking, said Wednesday in an interview. 

The bank has also invested heavily in its product suite and digital app capabilities, although Patel said the bank hasn’t disclosed the amount it’s spending on business banking improvements this year. Business banking generated $3.6 billion in revenue for U.S. Bank last year, and the lender sees an opportunity to grow that by up to 30% in the medium term.

Patel manages banking, payments and software for the bank’s roughly 1.4 million business banking clients, who generate up to $25 million in annual revenue. She worked at Shopify and JPMorgan before joining U.S. Bank last year. 

For Patel, the results of a recent survey of business owners in different areas of the country offer insight into what the fifth-largest U.S. retail bank should be focused on to meet client desires. 

“We hear small-business owners wanting more and more banking and payments integrations, to provide a much more seamless experience,” she said. 

The bank is working to bring together banking and payments products in a more unified way, and that’s an area of strategic investment, too. 

The desire for simple solutions has only become stronger, Patel noted. That’s indicative of how consumer banking and payment preferences have shaped what’s expected on the business side. 

“For small-business owners who want very simple payroll solutions – they’re running anywhere from two- to 10-employee shops – they don’t want something very complex,” she said. “They’re looking for a place where they have all of their banking products, they have all of their payment products, in terms of money movement capabilities, but also very simple software solutions to run their small business.”

With sole proprietors, “you very often see them more attracted to consumer banking products than business banking, because their needs are very simple,” Patel said. 

That’s inspired U.S. Bank to tweak its banking product suite in its micro small-business segment to feel more like consumer products, since those entrepreneurs crave simplicity and ease of use, she said.

The survey findings also underscored that the number of stand-alone software offerings in the market has increased, and the wide array of solutions available “overwhelms small-business owners,” Patel said. 

This marks the second year U.S. Bank has conducted the survey, which provides insights that flow into the lender’s product development cycle, Patel said.

U.S. Bank is also leaning heavily into providing small-business customers with access to capital, since obtaining funding to support their business is among entrepreneurs’ top stressors, Patel said.

The bank is constantly evaluating how to connect with potential customers in that endeavor, through such avenues as advisers and programs focused on serving Black and Hispanic business owners, or women-owned businesses, she said.

To stand out from competitors, U.S. Bank is also keenly focused on providing Small Business Administration loans, Patel noted. For the fiscal year that ended Sept. 30, 2023, the bank approved 2,264 SBA 7(a) loans, totaling $406.9 million. Thus far this fiscal year, the bank has approved 2,746, amounting to $557.5 million – putting the bank in the top five lenders by loan approval amount, according to the SBA.

“Access to capital and making sure that small businesses have that need met at the time of growing their business or starting their business is very big,” she said. “We have actually expanded that program over the last year, significantly.” 

For the bank, it’s a prime opportunity to give businesses a leg up early on, with the goal of retaining that customer as they grow. 

“It’s primacy,” Patel said. “You want to make sure you’re driving engagement and primacy to the banking product.”

Aeropay CEO Daniel Muller has big dreams for ushering in the next era of payments in the U.S., but that doesn’t mean it’s going to happen anytime soon.

Muller, 37, founded Aeropay in 2017 and has been slowly expanding the company’s pay-by-bank brand of payments one vertical at a time.

Pay-by-bank is part of a broader account-to-account, or bank-to-bank, payment method that relies on the ACH Network. It has been gaining ground in the U.S. for years, mainly because it’s a lower-cost means of sending payments, but ACH transfers are often slow, unless a user pays up for same-day service. 

Last year’s launch of FedNow, the Federal Reserve’s instant payments system, has the potential to speed up bank-to-bank money movement, and that could increase the allure of such payments. However, that requires the uptake of FedNow by more banks.

“There is a lot of interest around this concept of pay-by-bank, being able to use your bank account essentially as the way that you would use cash,” said Peter Tapling, a payments industry consultant based in the Chicago area.

Nonetheless, merchants and consumers aren’t that familiar with the concept at this point. “Pay-by-bank is evolving — everybody doesn't understand how it works yet,” Tapling explained. “So, one of the things that Aeropay offers is portions of that ecosystem that help the merchants and the consumers understand how it works.”

Starting with SMBs, moving to gaming

Aeropay began by catering to small and mid-sized brick-and-mortar merchants looking for a cheaper way to receive payments. Then, it turned to providing payments for cannabis clients with unique regulatory needs. Last year, the company zeroed in on gaming companies in a big way, now channeling billions of dollars in volume on Aeropay’s platform for millions of users. 

Aeropay’s gaming segment accounts for about 80% of the company’s revenue, with clients that have tens or hundreds of millions of dollars in annual revenue and thousands of employees, Muller said during an interview at the company’s Chicago headquarters this month. 

One of Aeropay’s biggest customers is PrizePicks, an app-based fantasy sports service that lets users place bets related to professional sports players.

Beyond gaming and cannabis, Muller considers lots of other use cases as ripe for the company’s account-to-account approach. Potential growth areas include payments on online marketplaces as well as for subscriptions, rental payments, utility bills and in retail and travel, the CEO said.

“Being able to do a deposit on a digital wallet, whether it's for a fintech use case or for a sports gaming app, as well as being able to make a purchase online on an e-commerce site, whether it's for delivery or pick-up in store, those are all things we do a ton of,” Muller explained.

Pitching across service fronts

Aeropay pitches four main offerings that can be purchased separately, or in a bundle. Those pay-by-bank related services include bank connections, risk management, money movement and fixing failed transactions. It’s a business-to-business play that also eventually reaches to consumers.

While rivals compete on some fronts with Aeropay, none of them have put all of those pieces together the way that Aeropay has, Muller argues, referring to Trustly and Plaid as rivals in certain areas.

The company has been in stealth mode to some extent, but now it’s seeking to gain more visibility, first in selling its services to merchants, but ultimately with the end-user consumers, the CEO said. 

“We are dead set on having a payments brand that is consumer-friendly,” Muller said. “With our complaints, we try to reply to everything. We want to make sure people see us, like we're real people. We're going to answer your call, your email.” 

While Aeropay takes on each industry as a commercial proposition, it also focuses on each vertical’s particular compliance needs. For instance with cannabis, there were obstacles to resolve in handling a product that was still illegal on a federal basis despite being legal in some states. Putting standards in place to meet the regulatory requirements of the cannabis industry have better prepared Aeropay to embrace its next areas of growth, Muller said. 

Taking on the credit card industry

The company has picked up a string of investors as it has evolved. Muller’s mentor and a former Google group manager, John DiCola, was an early seed investor, then came Continental Investment Partners and Chicago Venture, and the latest $20 million round in May was led by Dovi Frances’ Group 11 Los Angeles-based venture capital firm.

Those backers are already potentially benefiting from their investments. Aeropay is a profitable business, Muller said, though he declined to detail the company’s revenue or profits beyond saying that the projected annual revenue this year is expected to be four times what it was last year, and the company has a goal of doubling this year’s revenue next year.

As Aeropay expands its business one vertical at a time, it’s seeking to push aside debit card payments, cash and electronic check use. Eventually, Muller sees moving past credit cards too, doing away with the complicated card processes that include so many middlemen profiting along the way. 

Still, he has no illusions about replacing the credit card industry soon. He understands many American credit card users are tied to their rewards programs, and that there isn’t a robust system in place allowing merchants to use pay-by-bank at the point of sale. 

Tapling also notes that credit cards offer consumers a service beyond being a means of payment, and that is the credit that lets them buy goods and services when they don’t have money in the bank. In addition, an increase in pay-by-bank use would generally mean changing consumer habits. “Consumers are malleable, but their appetite for new things is not infinite,” Tapling said.

There are a slew of rules constructed around credit card use addressing fraud, disputes and other issues that aren’t as well-defined in pay-by-bank, he said.

Real-time payments, in the form of FedNow and its private sector rival, the RTP network, are likely to give a push to account-to-account services, said Rocio Wu, a principal at the venture capital firm F-Prime. Wu notes that Aeropay is also connected to FedNow and RTP for faster payments.

“The consumer demand is there, and I think a lot of startups are starting to realize that leveraging real-time payments can really help them to drive payments efficiencies and also increase the overall competitiveness of their product offering,” said Wu, whose firm hasn’t invested in Aeropay, but does have a portfolio that includes fintechs. 

Building the next payments grid

For now, Aeropay’s pay-by-bank services are a complement to credit cards. Still, Muller’s ultimate objective is to build a new network that will be more cost-efficient for merchants, and ultimately consumers.

“The real long-term vision here is we want to be the next great, next-generation payment network,” Muller said, acknowledging it’s an ambitious goal. Visa and MasterCard “are incredible businesses with unbelievable unit economics and global distribution — that is where we want to go. We want to be the better way.”

Overall, executives in the payments industry have been dismayed with the slow U.S. progress in modernizing the payments system, Muller said, citing the overall lack of around-the-clock services as one example. “I would say there's national frustration that we're not where we could be,” Muller said.

Still, he praised the Consumer Financial Protection Bureau’s recent move to update Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to promote more open banking policies in the U.S.

And Muller is working with Federal Reserve officials and industry professionals that have organized as part of the Chicago Payments Forum in an effort to advance the U.S. payments infrastructure. He’s hopeful that some of his company’s real-world experience can help upgrade the country’s payments infrastructure.