B2B payments have historically caused problems in the financial services industry. Vendor onboarding, keeping current payment information, and ensuring the proper remittance are massive, time-consuming tasks that are only growing more complicated as real-time payments become a bigger factor.
NACHA, through their October 1 acquisition of the Business Payments Directory Association (BPDA), is taking direct aim at that problem through a new B2B payments directory meant to dramatically simplify payments and remittance.
In August of 2018, the BPDA partnered with Discover Financial Services to begin work on a proof-of-concept platform for a B2B directory built on blockchain technology.
“Blockchain was our approach from the beginning,” said Micah Kerr, Head Architect of Commercial Payments with Discover Financial services, in an interview with the Association for Financial Professionals. “It allows us to provide a centralized directory service that at the same time provides immutability so we know we don’t have bad actors on the network. It’s always accurate to the best of our abilities. It also protects BPA at the end of the day.”
The directory, as envisioned, will be structured as a network of credentialed service providers who have access to stored electronic payment methods such as ACH. Payers will be able to query the network for information on payees, and payees will, in turn, be able to manage their information in real time to ensure current information. The platform will leverage standardized APIs – developed by the member-led organization Afinis Interoperability Standards – and, most critically, distributed ledger blockchain technology.
“One of the key elements is you have to be able to trust the data that’s in the directory,” Kerr said. “If there’s any reason for you to doubt it, you’re going to be reluctant to participate in any form of directory, particularly one that has info about how you’re going to make payments. We’re building in security to build that trust, and that’s the key element as to why we chose the blockchain as the core of our technology stack.”
NACHA’s acquisition of the BPBA is intended to lend real industry weight to the initiative, which the organization has supported from its outset. The ultimate goal is to bring a directory to market that isn’t just reliable, but also broadly accessible.
“From the beginning, we’ve seen this as an opportunity to be low- or cost-free,” Kerr said. “We have a great chance of being able to deliver that with this partnership. That low cost free ability to operate in this world is a great opportunity for businesses, and it highlight’s Discover’s responsibility in the realm of commercial payments.”