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APMs for B2B payments – buzzword or next big thing?

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APMs for B2B payments – buzzword or next big thing?

Despite delivering convenience, speed and a better user experience in the consumer payments market, alternative payment methods (APMs) feature less prominently in the world of B2B transactions. It’s high time this changed, argues Pat Bermingham, CEO, Adflex.

To understand why APMs are become increasingly important in B2B payments, let’s first clear up some confusion:

What are APMs?

APM is a catch-all term to describe any payment method that does not require the use of a credit or debit card. There are three main types:

  • Bank transfers: Bank-direct payments and direct debits – essentially, ecommerce transactions where buyers approve purchases using an online banking facility.
  • Wallet-based solutions: A secure digital space, usually on a smartphone, with access to funds – either directly from a bank account or through a debit / credit card. Apple Pay and Samsung Pay are good examples.
  • Cash-ins / pre-paid: Prepaid cards need to be loaded with value in advance of the user performing a transaction, and comprise of cards that run both on and off traditional payment rails.

As a rule, APMs provide flexibility, accessibility, and convenience for users. More often than not, they are also more cost-effective for issuers than traditional payment methods.

So why the hesitation in B2B markets?

When a consumer APM transaction is performed, it is usually low in value and involves just two players, like buying a coffee with Google Pay.

In contrast, B2B payments are usually for larger amounts, and require more complex workflows like PO systems, customer numbers and invoicing processes. They often involve multiple parties, too. The perception is that APMs are not designed for more complex transactions, which is why business demand has remained low. Perception rarely equals reality, however, and certainly doesn’t here. When delivered as an integrated part of a digitised B2B payments platform, APMs can offer businesses just the same savings in time, money, and effort that consumers have been enjoying for some time.

 An APM-ready platform that pays

Integrated payment platforms, provided as a cloud service from dedicated third party specialists, enable transacting businesses to move away from manual payments processes, and tap into a whole raft of new features that both enable greater efficiency and drive down the cost of initiating and accepting payments. They enable automated reconciliation and invoicing, for example, which does away with manual paperwork, streamlines internal processes and boosts efficiency. They increase financial visibility for both buyer and supplier through the provision of bespoke payments portals, and facilitate the rapid onboarding of new suppliers. By promoting easier, faster and more cost effective integration between buyers and suppliers, they open the market up for everyone by giving each party access to a broader range of potential partner firms.

APMs only add to this suite of benefits. Not only do they further increase convenience by enabling B2B payments through mobile devices, they also reduce costs and processing times, particularly in the case of bank-direct payments.

Crucially, APMs also simplify cross border payments in two key ways. First, because most have been designed for use internationally, they were built in compliance with international payments regulations. Reducing the burden of payments compliance when a business is expanding overseas, (or buying or supplying internationally) is hugely attractive to businesses of all sizes. Second, both consumer and corporate buyers favour business relationships that offer more payments choice. APMs not only offer a range of different ways to pay, they also promote familiarity and trust between businesses, since many APMs (such as Paypal, for example) are known and well regarded globally.

As the trading world continues to shrink, the need for businesses to initiate and accept cross border payments will rise. According to the WorldPay Global Payment Report 2017, over half of all online transactions will be made using alternative payment methods by 2021. While initial growth is coming from consumer payments, B2B supply chain payments will soon catch up. The payments platform providers that have the vision to provide early stage APM support, without the need for invasive system updates, will be best placed to serve, and grow, this new market.

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Siemens Healthineers gains EU nod for $16.4 billion Varian buy

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Siemens Healthineers gains EU nod for $16.4 billion Varian buy 1

BRUSSELS (Reuters) – EU antitrust regulators on Friday cleared with conditions Siemens Healthineers’ $16.4 billion acquisition of U.S. peer Varian, paving the way for the German health group to become a world leader in cancer care therapy.

The European Commission said Siemens Healthineers pledged to ensure that its medical imaging and radiotherapy equipment will work with rivals in return for its approval, confirming a Reuters story. The pledge is valid for 10 years.

“High quality medical imaging and radiotherapy solutions are crucial to diagnose and treat cancer. The efficiency and safety of treatment relies on the ability of these products to work together,” European Competition Commissioner Margrethe Vestager said in a statement.

Varian is the leader in radiation therapy with a market share of more than 50%. The deal received the U.S. antitrust green light in October last year.

 

(Reporting by Foo Yun Chee)

 

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Battling Covid collateral damage, Renault says 2021 will be volatile

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Battling Covid collateral damage, Renault says 2021 will be volatile 2

By Gilles Guillaume

PARIS (Reuters) – Renault said on Friday it is still fighting the lingering effects of the COVID-19 pandemic, including a shortage of semiconductor chips, that could make for another rough year for the French carmaker.

Renault reported an 8 billion euro ($9.7 billion) loss for 2020 which, combined with gloomy take on the market, sent its shares down more than 5% in late morning trading.

“We are in the midst of a battle to try to manage a difficult year in terms of supply chains, of components,” Chief Executive Luca de Meo told reporters. “This is all the collateral damage of the Covid pandemic… we will have a fairly volatile year.”

De Meo, who took over last July, is looking at ways to boost profitability and sales at Renault while pushing ahead with cost cuts. There were early signs of improving momentum as margins inched up in the second half of 2020.

The group gave no financial guidance for this year, although it said it might reach a target of achieving 2 billion euros in costs cuts by 2023 ahead of time, possibly by December.

Executives said they were confident the carmaker could be profitable in the second half of 2021, but that they lacked sufficient market visibility to provide a forecast.

Renault struck a cautious note, saying it was focused on its recovery but warned orders had faltered in early 2021 as pandemic restrictions continued in some countries.

The group is facing new challenges as the European Union tightens emissions regulations and after rivals PSA and Fiat Chrysler joined forces to create Stellantis, the world’s fourth-biggest automaker.

The auto industry endured a tough 2020 but a swift rebound in premium car sales in China helped companies such as Volkswagen and Daimler to weather the storm.

Auto companies globally have since been hit by a shortage of semiconductors that has forced production cuts worldwide.

“The beginning of the year has shown some signs of weakness,” De Meo told analysts, but added the chip shortage should be resolved by the second half of 2021. “We have taken the necessary measures to anticipate and overcome challenges.”

Renault estimated the chip shortage could reduce its production by about 100,000 vehicles this year.

SHARP HIT

The group was already loss-making in 2019, but took a sharp hit in 2020 during lockdowns to fight the pandemic, which also hurt its Japanese partner Nissan.

Analysts polled by Refinitiv had expected a 7.4 billion euro loss for 2020. The group posted negative free cash flow for 2020.

The 2018 arrest of Carlos Ghosn, who formerly lead the alliance between Renault and Nissan, plunged the automakers into turmoil.

In a further sign that the companies have been working to repair the alliance, De Meo told journalists that Renault and Nissan will announce new joint products together in the coming weeks or months.

Renault has begun to raise prices on some car models, and group operating profit, which was negative for 2020 as a whole, improved in the last six months of the year, reaching 866 million euros or 3.5% of revenue.

Analysts at Jefferies said the operating performance was better than expected. Sales were still falling in the second half, but less sharply.

Renault is slashing jobs and trimming its range of cars, allowing it to slice spending in areas like research and development as it focuses on redressing its finances. It is also pivoting more towards electric cars as part of its revamp.

It was already struggling more than some rivals with sliding sales before the pandemic, after years of a vast expansion drive it is now trying to rein in, focusing on profitable markets.

De Meo told journalists on Friday that the French carmaker will make three new higher-margin models at its Palencia plant in Spain, where manufacturing costs are lower, between 2022 and 2024.

($1 = 0.8269 euros)

(Reporting by Gilles Guillaume and Sarah White in Paris, Nick Carey in London; Editing by Christopher Cushing, David Evans and Jan Harvey)

 

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UK delays review of business rates tax until autumn

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UK delays review of business rates tax until autumn 3

LONDON (Reuters) – Britain’s finance ministry said it would delay publication of its review of business rates – a tax paid by companies based on the value of the property they occupy – until the autumn when the economic outlook should be clearer.

Many companies are demanding reductions in their business rates to help them compete with online retailers.

“Due to the ongoing and wide-ranging impacts of the pandemic and economic uncertainty, the government said the review’s final report would be released later in the year when there is more clarity on the long-term state of the economy and the public finances,” the ministry said.

Finance minister Rishi Sunak has granted a temporary business rates exemption to companies in the retail, hospitality, and leisure sectors, costing over 10 billion pounds ($14 billion). Sunak is due to announce his next round of support measures for the economy on March 3.

($1 = 0.7152 pounds)

(Writing by William Schomberg, editing by David Milliken)

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