Payment systems for business-to-business (B2B) transactions were desperate for an overhaul, and the pandemic only magnified the problem.
The pandemic has wreaked havoc on businesses payments in ways our history has not seen in decades. Long-standing business practices are outdated overnight, causing businesses to scurry. The digital age may not be kind to your business.
Now, employees must work remotely when social distance regulations are fully implemented, and offices are shuttered. Organizations use digital technology in huge numbers (and at unprecedented rates) to adapt. Companies cut three to four years off digitalizing their customer engagements, supply-chain connections, and internal activities. Consequently, their digital product deployments sped up by an incredible seven years.
People still feel the ramifications of this massive transition inside enterprises. Consequently, the payments landscape is finally changing after a lengthy period of stagnation.
B2B Payments Require a Makeover
Historically, businesses have been hesitant to change their payment methods, citing privacy and security issues and a general lack of demand.
Many businesses still use paper checks as a means of payment. Alternatives to paper payments that coexist alongside checks include the Automated Clearing House (ACH), wires, and cards, but each has its own set of problems, as you’ll see below.
Circumstances are pushing B2B firms to fix old payment mechanisms. These mechanics no longer operate in this digital age due to the arrival of this virtual world.
Businesses today want their payment systems to provide more payment alternatives and process transactions more quickly. Convenience is becoming a need. Modern B2B payments must be rapid, simple, and frictionless, like consumer purchases.
Significant advances in internet security and privacy are assisting in alleviating many of the worries that companies previously had. That is to say, particularly as they pertain to eCommerce and e-payments.
Digital Payment Methods Are Becoming More Global
As the shift from conventional to online commerce gains traction, small business payment solutions must evolve to keep up.
Consumers in the business world are clamoring for contactless transactions, which will increase by 41% by 2020. With such a linked world, contactless payment alternatives are internationally oriented.
With antiquated and sluggish systems, this desire still falls flat.
Technology has started to close the gap through internet apps by allowing for more frictionless and instantaneous cash transfers. While costs for calculating exchange rates, digital wallets, and other eCommerce payment methods may still exist, these solutions are less expensive than credit cards.
Furthermore, other methods such as ACH and wire enable money to be sent considerably more quickly. Machine learning and artificial intelligence (AI) will push the frontiers of banking.
That is to say, as technology continues to find its way into the payments sphere. Consequently, producing a far more fair playing field throughout the world.
Artificial Intelligence’s Ascension
The emergence of artificial intelligence in the workplace could not have happened at a better moment.
The pandemic has resulted in a substantially smaller workforce, which is regrettable. Leaders must simplify tasks for more innovative work with fewer team members. AI provides for a smaller workforce while simultaneously lowering the margin of error.
More mundane duties, such as payment posting and remittance monitoring may be done promptly and perfectly by technology. That is to say, we can automate things that are prone to human mistakes.
We may also train AI to do higher-level jobs like payment behavior analysis, which takes time and effort. Artificial intelligence (AI) for analysis gives immediate feedback on payment patterns and payer behavior.
Use of AI by accounts receivable teams to streamline the whole payment process, eliminate human error, and reduce cybersecurity concerns.
B2B BNPL (Buy Now, Pay Later)
BNPL has lately been seen in B2B sectors. The BNPL option reaches a far larger audience of customers, those people who would not have been able to buy in the past owing to a lack of cash or credit.
The controlled and regular installments — typically with no extra costs — also increase the amount spent on every transaction. The “loan” does come with a bit of a fee for the seller.
Still, with AI’s advancement, they may conduct a thorough risk assessment based on a customer’s previous transaction data to ensure payback. This is another example of artificial intelligence (AI) revolutionizing the payment industry.
Payment choices are multiplying due to the emergence of AI and the slingshot effect of the pandemic.
Don’t overlook cryptocurrency when contemplating the future of contactless digital payments. Although there has been an increase in digital payment choices in the last year, we will require a greater emphasis on worldwide solutions.
While digital wallets and QR code payments are convenient, they can have drawbacks. These payment alternatives are related to specific financial institutions and operate in local currencies.
Instead, Bitcoin employs decentralized finance (defi), eliminating the need for private institutions or third-party intermediaries. Furthermore, cryptocurrency’s single currency would remove the need for complicated currency conversion formulae.
Of course, like with everything, there are hazards to consider. Cybersecurity is a significant problem because the whole procedure and currency are online. There is still a lot of progress before the world adopts cryptocurrency and defi, but it is the way of the future.
A crucial conclusion from the pandemic’s digital breakthroughs is that technology evolves at breakneck speed. To be relevant, businesses must stay ahead of the curve.
As your business grows, look to technology for a more streamlined approach to payments and a lower margin of error.