The evolution of B2B payments in 2021

Today, automation is the driving force behind how the B2C payments landscape. But how much is digital changing the way B2B payments are made?

Paper has already been almost completely replaced by electronic transfers in the consumer landscape.

The huge adoption of real-time contactless payment systems around the globe has been super-charged by the pandemic.

It has delivered us an environment in which consumers, merchants, and financial institutions expect to be able to pay, settle bills, and transfer money on the spot.

But B2B payment options still lag behind despite the desire to have less friction in the payment process. 

B2B procurement, payments and purchase orders

The fact is that business banking is not as straightforward as it is in the consumer world. Plus, business needs can be streets apart, even between businesses.

Much as many businesses aspire to mirroring the seamlessness of the B2C experience, the many steps of B2B transactions — payment terms, purchase orders, invoices, varying payment methods, custom quotes and pricing, and more — still make translating the B2C experience for B2B digital checkout challenging.

For example, the procurement department, billing, accounts receivable, and accounts payable may all have involvement in a transaction.

For many businesses, grappling with legacy payment and financial operations environments, it’s going to require investment and a significant change in how they do things. For treasurers, it is set to make a big difference in liquidity planning and management. But the merging of payments and finance is a growing trend being seen in B2B payments. New FinTech innovation is filling the gap. They are restructuring their offerings, cultivating partnerships with trusted third-party companies for security, as well as building their own products and services to automatically integrate securely and individually with businesses’ own systems.

The Cloud is acting as the great enabler, allowing FinTechs to innovate, be agile, and to experiment quickly and to adapt their payment offerings with, for example, point-of-sale systems, API integrations and crypto.

Many are also piggy-backing value-added services into the payment transaction to give businesses what they need, such as working capital, letters of credit, shipping insurance, credit protection, export insurance and logistics.

The cross-border payment challenge

As the world continues to become more connected, businesses are realising that their supply chains are increasingly international, and not just tied to a single geography.

Now, whether you’re a global manufacturer or a UK wine importer that needs to source Sauvignon Blanc from France, every business needs to be able to make global payments.

Businesses are now looking for real-time, just-in-time cross border payment capabilities.

Cross-border payments have been a driving force for technologies within the Fintech industry, however, so businesses can access multiple global payment ecosystems via innovative payment software.

Happily, the cross border challenge has seen a flood of new FinTech companies bringing solutions to market.

They are developing new back-end networks to optimize cross-border payments and enable interoperability between payment methods and provide senders with more possibilities to reach the receiver.

But there is still clearly a need for greater collaboration between central banks across the world to make real-time international payments a reality. And progress in creation of a truly global B2B real-time payments solution still looks to be some years ahead in the future.