Author Archives: David Gustin

About David Gustin

David runs a global research and advisory practice centered on helping financial institutions, vendors and corporations understand the intersection of trade services, trade credit, payments and the financial supply chain. His formal education includes an Information Systems and Economics degree from Carnegie-Mellon University, an MBA from Purdue, and a Chartered Financial Analyst designation.

Segmenting the $1 trillion B2B payments market: Our graphical take (Version 1.0!)

The B2B payments market has a lot of solution providers, and it's time for Spend Matters to highlight some key players across the market landscape. But first, let's take a look back.

Let's compare Goldman Sachs' 2018 overview of the $1 trillion B2B payments market with Spend Matters' view of the landscape now. We break out more than 40 B2B solution providers by category.

As coronavirus idles service economy, ‘merchant cash advances’ can help e-commerce vendors


The coronavirus outbreak is shutting down our service economy. Besides the usual suspects — restaurants, bars, gyms, etc. — we have a whole host of products and services where demand is collapsing.

It’s tough sledding when demand is vastly reduced or just plain stops.

One area where we won’t see declines is around digital commerce. As widely reported, Amazon announced plans to hire 100,000 warehouse workers. Many of the sellers on these platforms will be in need of cash to survive or to meet demand, and thus keep workers paid, including employees and gig workers.

While merchant cash advances (MCAs) may not be the cheapest form of generating quick cash flow, they are fast and are not a loan, but a sale of future receivables.

Currencycloud: Vendor Introduction (Background and Solution Overview)

Supplier compliance

The era of decoupled procure-to-pay processes and technology — including B2B payments — within finance are coming to an end. But integration is not just happening within the four walls of an organization (e.g., API-based integration between SAP and Kyriba or Oracle and Basware). It’s happening between bank and non-bank providers and their customers, and customer systems. Specifically, areas such as supply chain finance, foreign exchange (FX), cross-border payments, invoicing and related solutions are increasingly moving from independent applications to ones that are integrated into bank and non-bank partner technology environments.

FX and cross-border payments are two prime examples. Most cross-border payments occur primarily through a correspondent banking network. Yet sending payments through the network can be a costly proposition for fintechs, challenger banks, FX brokers and others that must use banks.

Typically, if you want to send money via such a network, a bank has to keep money on deposit at a Nostro account at a correspondent bank in that foreign country. The funds in the account are used to settle the payment, which is directed by a message sent over the SWIFT network. If the bank does not have a Nostro account directly, it must go through correspondent banks.

This model works. But it is antiquated and inefficient, often resulting in high costs and slow payments. There are a number of technology firms that are providing the infrastructure to upend this process, including Currencycloud.

This Spend Matters Vendor Introduction looks at Currencycloud’s capabilities as a cross-border payments provider, offering an overall introduction and summary, along with insight into how it handles foreign exchange transactions across specific use cases. Banks, non-banks and AP/P2P vendors building out global payment capabilities that are looking to OEM solutions in this area will find this analysis most relevant.

Can you benchmark FX rates for cross-border B2B payments?

I’ve always found that the one area where banks gouge the consumer and small businesses is with foreign exchange rates. FX is one of those opaque transactions where it’s “this is the rate we offer, take it or leave it” for most of us. And if you compare the rates the banks provide from what you Google, you know you are proverbially hosed.

So when asked who provides the best FX rates out of all the fintech players, the answer is who knows. But let's take a closer look at the situation.

Veem: Vendor Snapshot (Part 3) — SWOT, Analysis of Competitors, Summary

Global Risk Management Solutions (GRMS)

Cross-border payments represent a significant opportunity for non-bank solution providers entering the market — and for procurement and finance organizations looking for ways to lower costs, improve visibility and reduce risk.

Today when businesses transfer funds to counterparties in different jurisdictions, they usually use bank channels. To move across borders, the funds must be routed through correspondent banks, which have relationships with both the sending and receiving banks. This complex network of intermediaries carries with it transaction and foreign exchange (FX) fees that, while greatly improved by the SWIFT gbi, can add significant costs (e.g., Goldman Sachs estimates the transaction and FX fees average 4% to 4.5% of volume).

This makes a nice business for the banks, but the margin also puts them in the crosshairs of B2B payments solutions looking to disintermediate this bank product. Within this market, Veem, a B2B payments specialist, is targeting this opportunity.

This final Spend Matters PRO report provides company treasury and procurement organizations an overall assessment of Veem’s capabilities in the cross-border payment space and if their recurring and one-off cross-border payments solution could be right for them. Part 1 of our analysis provided a company background and detailed solution overview, as well as a summary recommended fit suggestion for when organizations should consider Veem for cross-border payments. Part 2 covered product strengths and weaknesses. This final installment offers a SWOT analysis and explores competitive alternatives to Veem.

Veem: Vendor Snapshot (Part 2) — Product Strengths and Weaknesses

Supplier compliance

Payment solutions are increasingly intertwined with procurement and sales activity. Within B2B, this occurs at the enterprise level (e.g., as an extension or component of source-to-pay and order-to-cash, or O2C) as well as at the SMB and contractor levels. And it is happening on a global basis, as trade in both goods and services expands. Indeed, as cross-border trade continues to grow, specialized solutions for cross-border payments are more prevalent, reflecting similar increases in domestic payment options.

For businesses needing to send or receive payments, many options exist — like PayPal, Stripe, Hyperwallet, Amazon Payments, Transfermate, etc.

Within this market, Veem offers payors (or senders) the ability to pay companies without having to maintain vendor or contractor banking account details in their ERP. It enables payors to lock in foreign exchange rates in advance, to fund payments working with Veem’s Pay Later capability, and to move money without incurring expensive transaction fees.

This Part 2 of the series will explore those areas as well as Veem’s other strengths and weaknesses, providing facts and expert analysis to help procurement organizations decide whether they should consider its analytics capabilities. Part 1 of our analysis provided a company and detailed solution overview and a recommended fit list of criteria for firms considering Veem. The third part of this series will offer a SWOT analysis, user selection guide and competitive market analysis.

With all that in mind, let’s dive into Veem’s product strengths and weaknesses.

Veem: Vendor Snapshot (Part 1) — Background and Solution Overview

FM Global Resilience Index

Cross-border payment transactions accounted for $23.7 trillion globally in 2018, with the bulk consisting of B2B payments. More and more companies must make payments not only to vendors but in support of contractors, one-off buys, landlords, etc. According to a study by the consulting firm Strategic Treasurer that surveyed corporate treasurers, 37% of corporations now operate across at least 11 countries, 34% use six or more banks, and 39% generate payments in six or more currencies.

Fintechs have been leading the way to offer more efficient methods to make recurring and one-time payments, while doing the heavy lifting of compliance, bank account management, API integration, reporting — all while providing a simple user interface. As the service-based economy continues to grow and go global, corporations will increasingly adopt modern payment solutions designed to make the cross-border experience a lot less painful than going through the correspondent bank wire system.

Veem offers that modern payment solution. The company was founded in 2014 by a team of industry veterans with over 100 years of combined experience in payments, payment processing and banking IT infrastructure management. It is headquartered in San Francisco and has offices around the world with 110 employees. Their mission is to change the legacy financial payment system through innovation and improve the costly and outdated payments industry by building a new user-focused financial ecosystem that services businesses globally.

Veem enables businesses to send and receive payments in local currency with a few simple steps using their proprietary multi-rail technology across several global networks. Its aim is to simplify domestic and international payments for small and medium-size businesses.

It facilitates recurring and one-at-a-time B2B payments between companies, particularly small business. Veem’s system allows a buyer to initiate a payment, or it allows a supplier to upload an invoice and request a payment.

The first of the three-part Spend Matters Vendor Snapshot of Veem will provide an overview of the company and its solution as well as a selection checklist. Other parts will provide strengths and weaknesses for the solution, a vendor SWOT analysis and a comparison of competitors to Veem.

B2B payments boring? Think again as companies attract significant venture capital

Technology that facilitates B2B payments is increasingly attracting venture capital money in many areas:

* Pure product plays that look to take market share away from banks in areas like cross-border payments, check-to-ePayment conversion, virtual account structures to replace the need for a correspondent bank network, etc. * Infrastructure plays, which provide the foreign exchange services, Technology, Operations, Compliance and Risk management to enable banks, fintech and money service brokers to offer services to their client base. * Service providers that build B2B payment applications for banks and corporates. Typical areas of focus include cognitive automation, cloud and blockchain. Banks also want to move on from legacy infrastructure and do it incrementally in quick cycles.

B2B payment companies have raised significant amounts of capital recently, including Currencycloud ($80 million), AvidXchange ($260 million), Tipalti ($76 million, Transferwise ($292 million), Marqueta ($260 million), Ripple ($200 million) and Paystand ($20 million). Of course, Mastercard (AvidXchange) & Visa (Currencycloud) are behind some of these investments, driving B2B card use through the rails.

There are number of reasons why VC money continues to pour in here:

The Journey to Multi-Tier Finance

Can visibility of data via deployment of technology — like blockchain, IoT and smart apps that provide product flow and supply chain party information — enable models to develop financing earlier and deeper into the supply chains?

This is a question worth asking, because trying to go beyond Tier 1 suppliers with an approved buyer invoice scheduled for payment tied to a buyer irrevocable payment undertaking is about as far as we have come.

What does Apple Card have to do with B2B lending?

Recently, a tweet caused a big kerfuffle when Danish programmer David Heinemeier Hansson tweeted that his credit limit for the new Apple Card was 20 times that of his wife’s, even though she has the higher credit score. All of a sudden the news picked up stories on gender bias, claiming the credit card's issuer, Goldman Sachs, is giving women far lower credit limits with the new Apple Card, even if they share assets and accounts with their spouse.

But it's impossible to know if the Apple Card — or any other credit card — discriminates against women, because creditworthiness algorithms are notoriously opaque. Credit scores are only one factor in determining credit worthiness, so it’s hard to jump to conclusions.

But if the future is more technology around B2B lending, just how concerned should we be that models built on AI may not be as good as one might think? If we are to believe the capabilities of AI, and I do, then through self-learning mechanisms like self-driving cars, the intelligence should get better with more experience.

But humans design software, and humans have biases. Some examples include: