What’s in Store for B2B Payments This Year?

payment options

We regularly write about digital payments for consumers. This space is highly competitive with a lot of innovation. But what about B2B payment solutions? Although the B2B industry has a reputation for moving slower, B2B payments have expanded quite a bit in just a few years. Because there have been so many changes, we want to cover several of them, along with how they may impact your own business.

The Current State of B2B Payments

Before we dive into some specific trends and projections, it’s worth taking a look at the current state of these payments. Analysts believe that in just two years, B2B payments around the globe will pass $23 trillion a year. As far as what businesses want from their payment experience, low rates, reliable service, and security are at the top of the list. Saving time has been a big driver of digital B2B payment adoption, and will likely continue to be over the next few years.

Fewer Businesses Are Using Checks

Now that we’ve covered the current state of B2B payments, we’re going to highlight a few major trends and future projections. The first trend worth looking into is that fewer businesses than ever are using checks. While it’s not surprising to see this trend among consumers, it may come as more of a surprise for the B2B industry.

Just how big of a decline have checks seen for B2B payments? In 2004, 81% of B2B companies used checks. As of 2016, that figure had slipped to 51%. And by 2020, it’s projected that B2B usage of checks will decline to just 34%. In addition to an increase in ACH payments, this decline is being driven by digital payment alternatives.

Important Partnerships and Innovation Milestones

Given the size and scope of the B2B industry, individual companies can only do so much to change the way payments are handled. That’s why key partnerships are playing a big role in driving adoption of digital payments. One notable example that will have a big influence this year and the next is the release of API-enabled interfaces by different financial platforms.

Because APIs are a way for one organization to open up their platform to others, their prevalence is empowering previously difficult actions like cross-border B2B payments. Creating partnerships through API usage can also support the creation of B2B cashflow solutions.

There are several other significant innovation milestones that have recently occurred. One is the maturation of self-service portals. This eliminates the inefficiencies associated with the traditional invoicing process and makes digital B2B payments truly seamless. Finally, blockchain technology is a major driver of online B2B payments and will continue to be an area of significant interest for the rest of the year.

For even more information on the subject of B2B payments, be sure to read our recent post on Visa’s acquisition of Fraedom.

Posted on Wednesday, July 25th, 2018