A new era is approaching in the world of B2B payments. With digitalization, AI analytics, and automatization, it’s becoming more and more clear that B2B payments are approaching an evolution.
But, what are the trends contributing to this shift? And, what will happen in the next several years regarding B2B payments? In this article, we will discuss some of the relevant factors that will play a role in the future of the B2B landscape.
The Digitalization of Payments
Payments going digital is probably the most pronounced trend on this list, and you’ve definitely noticed it too. A shift from physical to electronic payments is happening currently and has been in motion for several years.
Most notably, this entire transition began during the pandemic. After all, with most businesses shifting to a remote working style, even businesses that typically relied on more traditional payment methods, switched to electronic ones.
With all of this being said, it’s important to note that some businesses still largely, or entirely, rely on traditional means of transaction, such as cheques. However, this percentage is definitely smaller compared to the number of businesses that heavily rely on electronic payments. So, the transition is certainly in motion, which may indicate a complete digitalization sometime in the relatively near future.
AI, Automation, and Analytics
The manual aspects of B2B payment processing are on the decline as AI, analytics, and automation become more prevalent. So, rather than depending on intuition to decide payment authorizations or credit lines, organizations are increasingly turning to data-driven decision-making. This is, in turn, resulting in swifter and more informed decisions.
These technologies are also transforming the way various businesses conduct their transactions, providing new levels of efficiency. AI-powered algorithms also offer predictive cash flow analysis, reducing liquidity difficulties and enhancing working capital management. In addition to that, automation is very important since it speeds up operations like invoice production, approval procedures, and payment execution while also decreasing manual mistakes and resource waste.
Analytics offer an extra plus with meaningful insights into a company’s spending habits, supplier connections, and payment trends. These insights can help your business make data-driven decisions, allowing you to negotiate better terms, find cost-cutting possibilities, and enhance collaborations.
With this system, businesses can also build more safer and more transparent payment processes, using AI, automation, and analytics. This contributes to enhanced financial health and overall competitiveness in the vast universe of B2B payments.
Saying No to Complicated Processes
In the era of digitalization, business buyers are getting more and more impatient. And, with this lack of patience, comes a need for faster and more efficient purchases. So, if every purchase your customers make has to be handled additionally through email or via the phone, things aren’t looking bright. In such a scenario, most customers are bound to start looking for businesses that will meet their wants and needs and will turn to your competitors instead.
Additionally, several surveys have shown that customers prioritize smooth payment and checkout when it comes to opting for an e-commerce supplier. This is similar to how you wouldn’t want to stand in front of a store, waiting in line for an item, when you can get it somewhere else without the same hassle.
And, even if you did end up waiting, you’d be unlikely to return to that store again, right? Many customers share this way of thinking when it comes to buying things online.
Customers may also easily give up on a transaction if they encounter trouble during checkout. Depending on the type of problem they encounter, they might read the transaction as time-consuming or even unreliable. With that in mind, preventing these complications from occuring, or at least minimizing their occurrence, can be a make or break for your business.
Also, another important thing to keep in mind is that transactions aren’t the only tricky part of conducting business. Approval timelines surrounding payment terms with excessive delays are another thing customers find off-putting. And, lack of modern e-invoicing options is another concern.
Choice of Pay
Payment choice is already a crucial aspect of e-commerce, and on a margin, the average business has more than one payment option available. Among the numerous choices, wire transfers, digital wallet payments, credit cards, and real-time payments were the most popular.
Nevertheless, with the continuing growth of new fintech startups that offer business-focused payment services similar to what peer-to-peer (P2P) platforms like PayPal or Venmo already provide to consumers, these priorities may soon begin to shift.
In addition to that, despite current market turmoil, cryptocurrencies have a strong potential to become a mainstream payment method. This is especially true if the market aims to focus on only a few types of currencies.
Additionally, buyers aren’t only interested in flexible payment options but flexible payment timelines as well. And, alongside that, BNPL (Buy Now Pay Later) policies are also becoming more and more common.
The Looming Threat of Fraud
Fraudsters and scammers are always on the prowl, and it’s no different when it comes to the B2B sphere. After all, B2B payments are transactions between companies that occur at significant financial levels, which makes them an obvious target for fraud.
Various frauds, such as invoice tampering, corporate email compromise, and identity theft, are made possible by the complexity of business-to-business relationships and the use of invoices, wire transfers, or digital payments.
In short, as long as your business is receiving or spending funds, the threat of fraudsters is very much possible, as they are always looking for ways to insert themselves into the transaction.
Many businesses experience fraud, more or less often, and to varying extents. In certain cases, it can even lead to financial losses. Moreover, the most common attack tactic for fraudsters is vendor impersonation.
Furthermore, billing schemes have been found to be the most common mechanism for fraudulent asset misappropriation. The other two common methods, also related to B2B transactions, were found to be fraudulent expense reimbursements and payment tampering.
Taking all of this into consideration, it’s necessary to adopt proper security protocols in order to reduce the risks of fraud for B2B payments, establish safe payment platforms and maintain secure communication channels.
The Rise of Virtual Cards
Due to a need for higher security and up-to-standard fraud prevention, the use of virtual cards is on the rise. These temporary virtual card numbers provide the same features as an actual credit card. However, they feature limitations that prevent you from using the virtual account to make any additional payments beyond the original and designated payment amount.
Moreover, account data is far less likely to be lost in the aftermath of a data breach as long as this one-time payment information is shared.
Due to this, it is anticipated that virtual cards will persevere over other emerging payment mechanisms, like traditional contactless cards and quick response (QR) codes, to name a few. Along with this, there will also be an increase in the volume of transactions with virtual cards using mobile payment methods.