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Aging networks can't handle new B2B flows

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The rapid changes that have swept through the financial services industry show no signs of slowing. The digital transfer of funds, whether between people or businesses, is growing more varied, adaptable and faster as the industry evolves.

Powering these trends has been a drive to hasten and broaden the means of moving money outside of the constraints that once limited access, resulting in choke points - namely aging networks and technology.

Some of the most innovative financial services applications revolve around the area of payments, whether it's in the context of peer-to-peer money transfers, e-commerce, or from employer to employee.

Small and mid-size businesses often struggle to manage their cash flow. In the U.S., more than three-quarters of small businesses fail due to cash flow management problems. Net 30-, 60- or 90-day terms can be challenging for businesses that have not yet built up the reserves to cover out-of-pocket expenses in order to deliver their product or service and still make payroll.

How the payment industry addresses this need is another area that’s poised for growth. New services have emerged that enable businesses to use available credit on a card, even if the recipient doesn't have an existing merchant account. Allowing businesses to pay traditionally cash-only expenses like rent via credit card can help them maintain better control over their cash flow because it frees up their cash for other needs.

Conventionally, a business would be required to make a payment that lowers available cash via a check or ACH transfer. The flexibility to use a credit card for traditionally cash-only expenses gives businesses unprecedented control over their cash flow.

In addition to the cash-flow management benefits, efficiency and security are greatly enhanced by emerging B2B payments technology. Payments carry context via email and via secure portals with summary data so both parties know who is paying for what. Moreover, neither party has to expose their card or account information to the other party, so concerns about vendor or customer IT security disappear.

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