NACHA has acquired the Business Payments Directory Association (BPDA), seeking to advance efforts to develop a B2B Directory that would provide corporate treasury professionals with extended remittance information.
BPDA will now exist as an independent, self-governed, member-led group within NACHA. BPDA was established in 2016 to advance efforts by the Federal Reserve’s Remittance Coalition to create a standardized, market-driven B2B directory to enhance the payments ecosystem.
Last month, George Throckmorton, managing director, strategic initiatives and network development for NACHA, gave AFP's Treasury Advisory Group (TAG) a peak behind the curtain into how the BPDA/NACHA partnership came to be. He was part of the small group of industry professionals that split off from the Remittance Coalition to form BPDA. “We had one goal,” he said. “It wasn’t to talk, do presentations, or go on road shows. Our goal was to build a directory for the industry.”
BPDA worked for about a year and a half, coming up with specifications, participant rules, etc. The only aspect that is still unclear is the business model, Throckmorton explained. “We don’t know who to charge and how to charge them—yet,” he said. “We should do that, but in the beginning, we had to decide what it is that we’re talking about. We got to the point where we had enough information that we could do an RFP.”
After doing the RFP and receiving responses from various technology firms, BPDA concluded that the blockchain would be the best technology for the directory. “I don’t like blockchain for moving money,” Throckmorton said. “But creating a record on a ledger that cannot be changed—blockchain is perfect for that.”
In fact, every firm that responded to the RFP proposed using blockchain for the directory. Throckmorton noted that the reason may have been that all of these companies had invested in blockchain but had yet to find a reason to actually use it. “I think someone in the corner office said, ‘How many millions have we put into this?’ Show me something you can do,” he said.
Of course, funding was an issue; BPDA’s membership was only five people and a project of this magnitude would be costly. And so that’s why NACHA got involved and began the process of acquiring it.
BPDA chose Discover Financial Services as its technology partner on the proof-of-concept, which is scheduled to launch in the fall. Throckmorton said at the time that the B2B Directory was “about 65 percent built.”
The B2B Directory
Jane Larimer, chief operating officer of NACHA and a speaker at AFP 2018, noted that historically, B2B payments have been a challenge for financial services and corporates. “Businesses are often consumed with onboarding vendors, obtaining and maintaining accurate payment information and ensuring the proper remittance is included for cash application,” she said. “As a strategic initiative, NACHA works to enable solutions that will support the easy routing, posting, and application of ACH and other payments, particularly in the B2B environment. Aligning with BPDA will allow us to develop and deliver such a solution, leveraging the recognized work and expertise of BPDA.”
The forthcoming directory will be structured as a network of sub-directories that will store trusted and validated payee information, which can be accessed through credentialed service providers. Payers will be able to obtain payment information on a single payee or multiple payees, and payees will be able to manage their information in real time. In addition to blockchain and distributed ledger technologies, the platform will also leverage standardized application programming interfaces (APIs) developed by Afinis.
“I am very pleased we can announce this news finally,” said Magnus Carlsson, AFP’s manager of treasury and payments and also a member of BPDA. “Getting the BPDA under the NACHA umbrella makes perfect sense. It fits right in with the Afinis work on standardized APIs and other developments.”