B2B –Business to Business payments are gaining impetus in the modern era –both in the number of transactions as well as the total value of transactions. The global market of B2B payments is estimated at a total value of around $38 trillion by the time of 2020. The market for B2B payments in the United States market individually is valued at around $25 trillion while growing at a rapid rate of CAGR at 5.8 percent. Business to Business (B2B) Payment Trends to Watch in 2020
Payment Trends to Watch in 2020
B2B payments are driven by the innovative cloud technology. This helps in accelerating the process of digital transformation of the entire payment industry while providing the customers with a series of seamless payment methods. The given shift is happening because the consumers are constantly looking forward to leveraging on-demand & instant access to all the features.
As leading banks have been inconsistent in delivering in the first instance with respect to B2B payments, reputed fintech firms from all around the world have entered the given market with the intent of disrupting. To understand more about this lucrative industry, let us take a dive into the latest B2B payment trends you should know about. Here are some for you to look into:
- Digital Payments: With a major number of B2B payments being still processed with the help of checks, digital payments aim at conveniently closing the gap as more businesses are considering going digital. In a report, it was reported that around 81 percent of businesses made use of checks for payments in the year 2004. However, by the time of 2016, the given value went down to reach as much as 51 percent. Across the globe, digital forms of payments are estimated to reach around $23.7 trillion by the end of 2020.
With the commencement of the leading ecommerce marketplaces, digital B2B payments have gained huge momentum. As per the reports of the Credit Report Association and NACHA, 32 percent of B2B payments have now become ACH (Automated Clearing House) form of payments. At the same time, the industry is expected to increase to as much as 45 percent by the end of 2020. While wire and digital payments have witnessed an overall increase in utilization, the instances of check payments have been going down steadily.
From mobile wallets to online forms of card payments, both merchants and consumers have been selecting digital alternatives for paying for the respective goods & services. Digital payments are known to offer the overall benefits of being quick and delivering ease of integration into the existing setups. This helps in lowering the overall processing costs while streamlining workflows. This is the reason why digital payments have helped in seamlessly revolutionizing the global B2B payment market.
- Automated Payments: As per the leading credit card service providers, businesses that go forward with automating the payments related to AR (Accounts Receivable) can look forward to managing incoming cash flows effectively. This leads to reduced liquid cash and cash flow problems. Automated payments and their processing help in allowing businesses to manage the respective payments efficiently. This leads to quicker invoices while allowing the merchants and suppliers to receive the respective money quickly.
The given fact has led to the rapid adoption of the process of automated payments for businesses. In fact, some fintech companies have even designed customized automated payment as well as service solutions into the respective suite. With the respective services ranging from customer reminders, contractor reminders, recurring payments, and so more –businesses can make use of the same for speeding up the payout and payment processes.
- Incorporation of Machine Learning and AI: Increasing the overall efficiency and reducing manual errors are core aspects of any business out there. With the help of machine learning and artificial intelligence technologies, the businesses all around the world aim at streamlining the overall payment process through their incorporation. This leads to fewer manual errors while making use of AI for analyzing transactions and providing insights for optimizing the way payments get processed.
The use of machine learning and AI can also help with effective fraud detection and cybercrime prevention –important aspects of security while dealing with B2B payments. The adoption of high-end technologies like ML and AI has also led to the increased utilization of virtual assistants. This is because they help in increasing the overall procurement efficiency for speeding up the overall processing times and reducing errors. The utilization of AI & ML can lead to fewer issues with respect to pricing and invoicing. At the same time, the adoption of these technologies in B2b payments also helps in identifying alternative suppliers while providing vital information to collaborators and partners instantly.
- Cross-border Payments: B2B transactions with respect to cross-border payments were capable of generating as much as $125 billion in total revenue during 2018. These continue growing at a rapid pace. For addressing the boosting opportunity, there are several new players that have entered the given space. The collaboration of providers of cross-border payments and players in the field of digital payments had led to the overall increase in instant and affordable digital payments.
Self-employed, freelancers, and various other professionals still tend to receive the B2B payments with the help of banking networks and wire transfers. This could be highly time-consuming and challenging –leading to increased issues associated with payment clearance. The exchange rates that keep fluctuating and wire or bank transfer fees –all of these tend to make the existing conventional solutions less attractive. This helps in creating the right environment for ensuring disruption.
Blockchain & Cryptocurrency
The advent of the blockchain revolution has been transforming both fintech as well as finance sectors with B2B payments being no exception. Both the solutions can help in assisting businesses with AML compliance specifications and KYC (Know Your Customer) features.
B2B payments have been observed to undergo a gradual, yet noticeable change across the globe. By knowing about the latest trends of B2B payments, you can analyze the right way to manage such payments on a global level.