Bank of the West is planning to offer its small-business customers an ACH payment service that could make costly wire transfers unnecessary. The San Francisco banking company is developing an online banking service for small businesses that will be built around a new money-transfer service from CashEdge.
Moving to ease the burden of small business invoicing and payments, Bank of the West is developing an online invoicing and ACH payment service with CashEdge that could make costly wire transfers unnecessary and help automate what currently is a laborious paper-based process.
San Francisco-based Bank of the West turned to CashEdge to partner on the solution, which promises to alleviate one of the most costly burdens for small businesses who make an average of 20-50 payments a month, each requiring a separate invoice and cheque or wire transfer payment transaction.
The new service will be embedded in Bank of the West’s small business banking website and integrated with its checking account system. The new solution won’t require small businesses to use their account number to log in. Instead, they can use an email address or phone number as a token ID to access a payables dashboard that will show all of a company’s outgoing and outstanding payments.
When a customer sends payments, they can attach an email with the company logo and payment information and also generate official invoices with the push of a button. The service will accommodate multiple payment options, including batch and recurring, and it will allow customers to manage payees and roles. Recipients can pay the invoices using CashEdge’s PopMoney service.
CashEdge will provide a risk management feature that monitors transactions and compares them against a database of multiple financial institutions’ activity to find fraudulent transactions and patterns of behaviour, ideally identifying and stopping risky transactions before they’re able to conclude.
At many financial companies, small business customers fall somewhere between the free online banking sites for consumers and the cash management services for big corporations that generate significant fee revenue, said Matt Macomber, multi-channel banking manager at Bank of the West.
“We have a strong package of consumer online banking solutions and solutions for larger commercial firms up to the $10m revenue size or so, but we see a real opportunity for a dedicated small business platform,” Macomber said. “We’re building a simple, straightforward solution, but one that the small business can use to ease a lot of the day-to-day burden of handing payments.”
Bank of the West has some small business customers on a version of its consumer system, and Macomber said some of them would be willing to pay fees to send transfers through the new service, particularly if such services are embedded in a broader offering that provides electronic invoicing and speedier transactions.
The bank, a unit of BNP Paribas SA’s BancWest Corp, has offered consumers ACH payments over CashEdge’s Popmoney product, which lets people send each other money, routed to their email address or phone number since June.
A later version of the small business Popmoney system will allow businesses to create invoices that can be paid through Popmoney. This is expected to go live in January and Bank of the West plans to introduce it in the first half of 2011.
Popmoney for Small Business provides businesses with the unique capability to pay vendors and employees electronically using only an email or mobile number. They may also pay using an account number. Popmoney for Small Business will also allow small businesses to conduct invoicing, receive payments via ACH or credit card, make and track payments, send invoice reminders and view payment history – all directly from their bank’s online banking portal or mobile application through the Popmoney platform.
“Business owners want financial tools that are simple to use and that make running their businesses easier. The invoicing and payment solution we are implementing will do just that,” said Macomber.
“We have had wide adoption among our retail customers since deploying Popmoney last spring. We’re excited that soon the same convenient service will be available to our small business customers. We’re confident that by launching this service we will continue to provide the most innovative and valuable services to all our customers.”
Several additional financial institutions have plans to launch Popmoney for Small Business in the next six months. This swift adoption follows the success of Popmoney for consumers, which launched in December 2009, and will be live at more than 175 banks, including three top 10 banks, by the end of the 4th quarter.
“We believe it’s all about the network,” said Catherine Palmieri, global head of product and marketing at CashEdge. “Our Popmoney consumer offering has been a tremendous success; with Popmoney for Small Business, businesses can send payments and invoices via email and mobile, and get paid faster electronically. For banks, the advantage is that money moves seamlessly between their consumer and small business customers – providing greater engagement and loyalty on both sides. We’ve worked very hard to make the interface extremely easy to use, and we believe that will drive greater adoption on both sides.”
Macomber praised CashEdge for concentrating much of its efforts on usability of its mobile money product.
“They [CashEdge] have a really solid risk management profile; they are very good at mobile payments and they offer turnkey solutions to banks like us, who want to turn this stuff around quickly,” he said. “They focused on money movement at first, but now they are really working hard on just making it simple.”
Bank of the West also plans to allow businesses to delegate different levels of access. Macomber explained that this would allow a business owner to let an employee track which invoices have been paid without giving them full control of the business’ funds.
“The goal is to develop a platform that is as easy to use as the customer’s personal online banking experience,” he added. “We’re in the design phase now, and that is on everyone’s mind as we move forward.”
Palmieri said: “We see the value of small businesses as the next extension of the Popmoney suite. It adds the ability to use email and mobile to the business payments landscape, which is a huge step forward.”