In a sign of its growing strength, electronic billing and payment technology firm Transactis recently signed on half a dozen new equity owners, including five major North American banks. This reflects the importance financial firms attach to electronic billing in terms of servicing customers.
Capital One, Fifth Third, PNC, TD Bank and Wells Fargo, along with private equity firm Safeguard Scientifics, have invested a total of $30 million in Transactis, which already services a sizable portion of the top banks from a treasury management perspective.
Richard Burke, head of corporate products and services at TD Bank, noted that the bank has been a Transactis customer for more than a year. TD’s investment, he said, reflects the value the bank sees in assisting corporate customers in making their payment operating environments more efficient and accurate. He noted that Transactis is well funded for its current business, given its strong roster of bank customers; and that the new Series E financing assists the fintech firm in accelerating growth opportunities and development efforts.
“For us, the strategic value is being part of a small group of investors that has the ability to work closely with Transactis, to help it shape services that we see as crucial to its future and our customers,” Mr. Burke said. “We believe this is important for our customers and we want to take a leading role in developing solutions that will ‘electronify’ and make more efficient our customers’ back offices.”
The notion of automating the payment and reconciliation process has long been attractive to corporates, but stepping out of their legacy systems and the paper that accompanies them to a fully electronic solution has proved difficult. This has slowed the payment process and, consequently, companies converting payments to working capital, since to do so requires the money to arrive in the proper accounts and to be fully reconciled.
Transactis’ offering is software as a service (SaaS) and allows banks to not only facilitate payment processes but also to go further back in the payment cycle to help clients get out of the paper chase into electronic billing. In the case of TD, its eBill service enables corporate clients to set up a branded payment website that allows them to generate electronic invoices to send to customers. Its customers can click through to the website and finalize the payment. TD eBill, through Transactis, specifically focuses on ACH and corporate card payments.
“When the receiver of that electronic invoice chooses to click on the link and pay, all the billing data that is needed to reconcile the transaction and turn the deposit into working capital is still attached,” Mr. Burke explained. “Many corporates are drowning in paper and looking for the right solution to help them efficiently get out of their ingrained environments and move to one that’s more efficient and effective for them. We believe this can be that solution for many customers.”
The SaaS service is highly flexible and can work with data from a variety of sources, so once it is set up it can capture the data, put it in the right format, and send bills out to customers.
Mr. Burke represents TD as a member of the Faster Payments Task Force, an initiative organized by the Federal Reserve to accelerate the development of a faster, more efficient and a more secure payment system in the US. Mr. Burke said the payment mechanisms and processes that emerge from that initiative could be integrated into the Transactis solution.