It was only a matter of time. Banks have seen their payments margins squeezed amidst increasingly tough competition. So it was inevitable that one of the biggest upstart consumer payments platforms—Paypal—would make a move into the corporate payments landscape.
The payments processor that started life as a complementary service to eBay, and has since grabbed up a huge chunk of the online B2C payments market, has launched Paypal Business Payments.
The new offering is likely to once again cut into banks’ dominance of this space, as it offers payments transmission and receipt for a flat fee of $0.50. It is already being offered as a payments mechanism for business solutions such as Bill.com and Concur’s expense management platform.
Paypal noted in a release: “The pricing is designed to lower overhead, reduce invoicing costs, and accelerate expense reimbursements for business services such as payroll, disbursement and rental payments.”
It could be a great tool for small and medium-sized businesses to take some more cost out of these processes, whether they use the service directly or get access through their solution vendors.
And regardless, it is another sign that the business payments market is in the midst of a revolution. Change is under way as new entrants drive down costs and increasingly make it simpler for companies to automate both internal and external payments.
Those larger-scale providers—banks and their partners—that want to keep their toe-hold in the payments are going to have to adjust to this new market reality and partner with the upstarts in the industry to provide cheaper, more innovative solutions for business payments.
See my blog here for a vision of on possible re-imagining of the future payments landscape.